2022W24 - WTF happened in Bitcoin this week?
Bitcoin is a human movement
TLDR: Bitcoin falls under 2017 high, Fear & Panic in the Markets, Development goes on.
Hey there niblings, it’s uncle Bam again, with a summary of the most insightful events in the Bitcoin space. Back at it again digesting all the important news for you.
This week has been a tough one, not going to lie. As the price drops ~30% in a week, reaching low levels we first experienced for the first time in the 2017 top, inflation printed an 8.6%, the highest levels of the last 40 years, friends & family continuously asking what is happening with bitcoin.
Wasn’t it supposed to be a store of value?
Wasn’t it supposed to be an inflation hedge?
What is happening to it?
Do you think it will recover?
Are you ok? Will you continue investing on it?
These and many more questions your uncle Bam keeps receiving after naturally been preaching it over the years. So what do I think from my non expert opinion and humble?
Bitcoin is not supposed to be anything, no store of value, no inflation hedge. Bitcoin is a human movement, and it rely on us humans, to make it thrive or let it go towards its demise. Bitcoin is just a decentralized peer-to-peer network, which due to its properties it fits perfectly with what humans want, or NEED to use as money. A new kind of money, that exists digitally and ruled by rules and not rulers. So it is not supposed to be a store of value, but it is growing and becoming one as it reaches mainstream adoption.
Now mainstream adoption on a free market has great things, but some downsides too, which might be temporal, but they exists. As it becomes popular, and institutions came into play, greed was just another factor which played into it all which facilitated the purchase of Bitcoin & other cryptocurrencies with loans and using them as collateral. It appears that some of them and many individuals got reckless and there was huge amounts of leverage in the system, for the new ones, basically people were borrowing money on behalf of their bitcoin, to buy either more Bitcoin or even worse, ultra-risky digital assets (ok lets call them shitcoins), and as those assets dropped in price, they were forced to sell their bitcoin to pay their debt.
So where are we now?
“Bitcoin isn’t going anywhere because you and I are not going anywhere” –Svetski
This is completely true. Bitcoin doesn’t care about all of this, is just an asset, which for the first time gives us the opportunity to separate money from state, potentially allowing billions of people to escape financial controls from authoritarian regimes and a tool to fight against monetary debasement. So coming back to the human movement, it basically depends on us to make this network flourish. So don’t worry it will be ok, because theres many people out there just tired of the current broken financial system.
Am I ok? Will I continue?
Let’s now move on to the news!
THE NEWS
ADOPTION
1. Vueling is partnering with cryptocurrency payment provider BitPay and global payment solutions provider UATP to accept Bitcoin payments by early 2023.
2. Farfetch, the luxury retailer will begin accepting bitcoin as payment in select locations as a trial with plans to extend to the whole customer base.
3. TBD’s Web5 takes a different approach than Web3 on how to build a properly decentralized internet, with Bitcoin being the single blockchain used in the project.
4. Shock The Web 2 is BOLT FUN’s follow up to its debut Bitcoin Lightning Network hackathon held this past March, meant to on-board new builders into the ecosystem.
5. Wasabi’s latest update optimizes the coinjoining process with preset profiles that allow customizable privacy settings with an improved user experience.
6. Japan’s largest Lightning Network community Diamond Hands is partnering with a top real estate firm in Tokyo for a joint-research project to further adoption.
MINING
7. CleanSpark will acquire 1,800 Ant Miner S19 XPs in a purchase agreement and TMGcore will provide 257 immersion-cooling tanks with colocation capacity.
8. Mawson Infrastructure increased its ASIC fleet by 4,000 machines, driving up its hash rate and delivering a record-breaking revenue of $3.8 million.
9. A proprietary cooling method from JETCOOL Technologies uses less resources, lessens costs, and improves bitcoin miner efficiency over normal immersion cooling.
10. Gazpromneft, the third-largest oil producer in Russia, is partnering with Swiss-based bitcoin mining company BitRiver to mine bitcoin with excess resources.
POLITICS
11. Brazilian congressman, Fábio Ostermann, sees bitcoin as a means to make tools of the state obsolete and allow for technology to set people free.
12. The new Engage Raise platform will enable federal political candidates to raise campaign funds through bitcoin and other cryptocurrencies starting in July.
MACRO
13. Inflation data shows a 106% increase in fuel oil year-over-year with an unexpected 40-year high Consumer Price Index report of 8.6% as bitcoin dips to $29,500.
14. The Federal Open Market Committee (FOMC) has decided to raise interest rates by 75 basis points on Wednesday, the largest rate hike since 1994.
As a summary note..
The main reason I believe we are experiencing this mess, is due to the seek of earning yield which spawn’ed all of this irresponsible companies which want to risk your bitcoin in order to make some return and pay yo back a percentage.
To start, in the most simple scenario (best case), you are lending them your bitcoin for people to trade it against you. Yes they will borrow it, and sell it in hopes of bitcoin decreasing in price, to buy it back later and bank the difference, in other words, they, through you, are helping the price go lower. But the other and more scary one, is the company’s are basically using it to invest in some ultra risky new coins such as the Luna and Terra situation, where they get offered 20% yield for the risk they take, with your coins, while offering you only ~6%.
So for that little of a percentage you are risking the best asset ever to existed, and gaining the exponential risk, because we now know that if they become insolvent, you don’t get your coins back.
“If you dont know where the yield is coming from, then you are likely the yield”
Take care out there, cherish your stack as if it was worth 100x more, and claim your financial sovereignty by holding your keys.
Have a great weekend niblings.
Stay humble & stack sats.
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