Bitcoin Fundamentals Report #183

This week... Bitcoin performs by staying stable, Ukraine/Russia model in evaluating the fog of war, bitcoin price analysis, mining sector current events and developments.

Bitcoin Fundamentals Report #183

A weekly newsletter summarizing important sectors in bitcoin

by Ansel Lindner

This week...  Bitcoin performs by staying stable, Ukraine/Russia model in evaluating the fog of war, bitcoin price analysis, mining sector current events and developments.

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Market Commentary

Weekly trend Range bound, bullish
Media sentiment Neutral
Network traffic Low
Mining industry Stable and strong
Market cycle timing Consolidation

Hello Bitcoiners!

I'm coming to you this week from deep in the Smoky Mountains. I'm taking this week slow, enjoying some beautiful views, hiking, fire pit and quality family time.

I've been watching the news, but not with nearly as much dedication as normal. Good thing it's been another building week for bitcoin, without any earth shattering news.

It is huge that bitcoin has been so stable despite all the bad press and geopolitical uncertainty in the last few weeks! I'll be covering the Fed rate hike this week on Fed Watch, so none of that here. Today on the report I concentrate on bitcoin and Ukraine.

Let's hit this week's top stories...

Bitcoin's Performance Under Recent Stress

From bitcoin's bottom on Feb 2nd, which covers the whole Russia-Ukraine thing and the latest CPI print and Fed rate hike, the price is up 10.9%, the S&P 500 is down 3.2%, and gold is up only 6.9%.

Bitcoin, S&P, and Gold since Bitcoin's bottom on 2 Feb.

This comparison is even better for bitcoin when viewed from the actual start of military operations on 24 Feb. (Bitcoin +15.8%, S&P500 +5.8%, Gold -1.1%).

Bitcoin, S&P, and Gold since Russian military operations began

The picture is different when you look at the YTD with gold outperforming and bitcoin doing worst. However, I think it goes without saying that the last 6 weeks have been the biggest test for store-of-value assets and should get more focus than the preceding 6 months.

The gold bugs narrative of surging gold, crashing US stocks, and the end of the evil evil dollar bullies, is once again shattered.

Ukraine Update

I've been asked on our Discord community about my continuing thoughts on Ukraine and Russia and where I get my information. I thought it'd be interesting to answer it here as well as on Discord.

For the second part of the question, I start with my model. Everyone must have a model of the world/market/geopolitical situation by which to weigh developments and headlines. I can then listen or read several different sources and quickly incorporate that into my understanding of the present situation.

My model is pretty simple but not politically correct. It has been how I have been able to predict most big events relatively well over the last decade. From bitcoin, to the dollar, to recently China and Russia. The things that have so far failed to materialize are the fall of ethereum, EU breakup, and most recently oil prices. I have to take those failed timelines back into my model and see if it needs adjusting.

Several quick points can summarize the model.

1) US dominance is due to geography, not evil or luck. It will very likely continue into the foreseeable future (in a pre-WWII form).

2) Geography dictates culture and economy in the long run. The recent cultural degradation of the US (and the West) has been the direct result of access to easy credit based money. It has enabled brats be believe in socially destructive ideas instead of producing something. That trend is ending with deflation like all credit bubbles. As this happens there will be a strong subconscious reversion to traditional American values in the US, and local/regional animosities elsewhere. We are returning to historical norms.

3) The Rest of the World (RoW) has been built during US dominance. They don't know what they are about to experience. The "third world" became "emerging markets" as the US guarded the free trade international order and kept disruptive war to a minimum. They will return to third world status over the next decade or two. These countries cannot sustain current standards of living without US protected access to cheap credit and trade. As a result, they probably won't be able to sustain their current governments either.

4) Demographics will add to the long-term credit cycle bust and the effects of geography, to utterly wipe out most other Western and Eastern leading economies. The US has the best demographics of the developed world.

5) The US is done hollowing out its economy for the sake of those who demonize us, and especially for globalists (Clinton, Bushes, and Davos). The US people won't sacrifice as easily, if at all, for foreigners. We'd rather buy American, and take care of ourselves at home.

6) Populism is on the rise. American populism is protectionist and prosperous, European populism is authoritarian and prone to continental war, and Eastern populism is imperialist and repressive.

7) Western media are a bunch of liars. You will be more close to the truth if you believe the exact opposite of what CNN, AP, Fox, BBC, etc say. Also, what is being censored, shamed, and illogically blamed usually resembles the truth more than the officially approved narrative.

Okay, back to Ukraine.
Here is a great video to summarize some unpopular angles of this conflict. I don't don't agree with all their economic musings, but it's very much worth the listen.

My opinion is this military operation has been overblown by the media. The markets overreacted and priced in quagmire, massive supply disruptions during inflation (another false narrative) and WWIII. The military result was never in doubt, and has gone much to plan for the Russians. Tales of Russian failures is fake news by those media liars.

It's no surprise that oil topped out the very day I called it. On the day of my recent interview with Luke Gromen, who was all on the gold, inflation, and massive oil disruption bandwagon. So far, about 10 days later, I've been more correct, but we'll have to see if it remains so. I don't see why not.

I don't like war (I was a NAP-loving libertarian in the military for 10 years, and it was hard), but I am not a pacifist. Self-defense is always justified, and I understand that violence will happen. In fact, violence is the normal state of the world. We thought we had evolved in the last 50 years to be peaceful animals? LOL It's only in a very few select eras and locations that have enjoyed relative safety and peace. I'll also add that it has been under the US dominance that the world has continually become more peaceful. That's ending.

Therefore, Asia (and probably Europe) are about to explode in violence. Russia is much more powerful by an order of magnitude than Ukraine and even the EU. Russia wants to hold onto most of Ukraine, so they wouldn't indiscriminately bomb civilians. The Ukrainian regime on the other hand is a Western puppet regime, desperate for NATO and the West to intervene on their behalf. Like the Syrian false flag attempts of the last 10 years, it's not a surprise that Ukraine might conduct their own false flags, or propagate false flag narratives in order to secure that American involvement.

We can't be sure what to believe, but you must have a model in order to evaluate the news, else you will succumb to the constant propaganda and lies.

Russia will get most of Ukraine for themselves. I do not think they can occupy the whole country, but they will conquer the whole country and then give some back (eastern half) to a new regime they control. Europe doesn't have the ability, and the US doesn't have the will, to resist.

The US and EU reaction to this conflict will only serve to hasten what is coming. A more violent world reaching for sound neutral money, bitcoin.

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Quick Price Analysis

Weekly price* $41,740   (+$3,066, +7.9%)
Market cap $0.791 trillion
Satoshis/$1 USD 2,401
1 finney (1/10,000 btc) $4.16

Bitcoin Daily Chart

This week, I've added a red box to show the critical price level that must be broken before we can definitively start the next rally. I've also added the 50-day EMA. This is the 50-yard line for trend. Above it the trend is more bullish, below more bearish.

One thing that stands out big time is the compression in price over the last few months. In 2022 so far, price has been very stable. While price could still drop out of this pattern, the longer bitcoin holds its own in the face of geopolitical stress, the more people will view it as a legitimate alternative in the transition period the financial system finds itself in. And then, what happens when the bitcoin price inevitably surges again?

Last week, "I predict price to hold the lows from January, and remain bottled up in this range this week." That has happened pretty well. This week, my concern about the lower highs is the same, but we're in a fundamentally stronger position than last Friday. I expect price to test the high from March 9th of $42,600, and perhaps reach for the resistance zone at $45,900.

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Mining and Development

Previous difficulty adjustment -0.35%
Next estimated adjustment +6% in ~11 days
Mempool 4 MB
Fees for next block (sats/byte) $0.47 (8 s/b)
Median fee (finneys) $0.35 (0.084)

Mining News

Kazakhstan Crackdown Forces 106 More Crypto Mines to Close
Notable political and business figures were said to be behind some of the mines, including the brother of former President Nursultan Nazarbayev.

(Archive link here if you don't want to support Coindesk altcoin scammer site)

Presented with little comment other than to say that most countries will have to pull a 180 on bitcoin mining over the next few years. They are chasing all hash rate to North America!

Bitcoin Mining Pool Protocol Stratum V2 Is Making Progress
If widely adopted, this mining pool protocol could help Bitcoin become more robust and decentralized.

Statum V2 is a new protocol that allows mining pools to act more like individual miners. As it works now, individual miners (or large mining centers) aim their hash rate a "mining pool". This pool constructs the block by ordering transactions, and waits for their group of miners to solve the PoW puzzle. Statum V2 however allows for these miners to also order the transactions.

This is important because mining pools could be vulnerable to regulation about which transactions can be included in a block. This hasn't been a problem yet, but bitcoiners think 10 years ahead, build 5 years ahead, while governments are 5 years behind.

This attack by governments would significantly diminish a person of interest (like a Canadian trucker, independent journalist, or Russian oligarch) from transacting if the pools refused to include that transaction. If independent miners are able to pick the transactions, that vulnerability basically vanishes.

Crypto: EU proposal seen as de facto Bitcoin ban fails in vote
The proposed clause was defeated with 23 votes in favour, 30 against and six abstentions.
A proposal that would have effectively banned the mining and transactions of energy-intensive cryptocurrencies such as Bitcoin in the European Union failed to win approval by a parliamentary committee, as the bloc pushes ahead with regulation of the fast-growing sector.

The EU’s Economic and Monetary Affairs Committee voted on a final draft of the Markets in Crypto-assets (MiCA) legislation on Monday, which included a clause pledging to make cryptoassets traded or issued within the bloc “subject to minimum environmental sustainability standards.” A final tally of the committee’s voting showed the proposed clause was defeated with 23 votes in favor, 30 against and six abstentions.

Difficulty and Hash Rate

Hash rate has steadily risen this week, despite the difficulty adjusting downward by the smallest of margins (-0.35%). The hash rate has been extremely stable right near ATHs during this tense geopolitical time, signaling that the deep fundamentals are also stable and bullish.


That's it for this issue. Have a great weekend. See you next week!!!


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March 18, 2022  |  Issue #183  |  Block 727,950  |  Disclaimer

Meme via: Me

* Price change since last week's issue