Bitcoin Fundamentals Report #231

Bitcoin winning the war vs BIS apparently, ordinal / inscriptions update, macro events, price, mining and lightning news.

Bitcoin Fundamentals Report #231

Snapshot of Bitcoin

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General Bitcoin Headlines
Weekly trend Breakout attempt
Media sentiment Very Negative
Network traffic Elevated
Mining industry Surging
Price Section Market Pro tier
Weekly price* $23,221   (-$1,694, -6.8%)
Market cap $0.449 trillion
Satoshis/$1 USD 4,308
1 finney (1/10,000 btc) $2.32
Mining Sector
Previous difficulty adjustment +9.9535%
Next estimated adjustment -3% in ~11 days
Mempool 30 MB
Fees for next block (sats/byte) $0.88 (16 s/vb)
Median fee $0.72
Lightning Network**
Capacity 5,434.66 btc (+0.01%)
Channels 73,905 (-0.01%)

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“That battle has been won,” Carstens said in a Bloomberg TV interview on Wednesday. “A technology doesn’t make for trusted money.”

Far from being a gotcha celebration, this admission by the BIS shows they are far more worried about Bitcoin than they ever would admit. Did they ever say they were at war in the first place? No, Bitcoin has always been officially written-off as unserious. Now, it turns out they were scared.

I think the FTX debacle has given them a false sense of security. Bitcoin is, at the time of writing, $23,400, roughtly 10% higher than in November PRIOR to the FTX collapse.

  • Woke cancel culture rears its head in bitcoin

I don't want to link to the specific tweet in order to not give this person more attention. Suffice it to say, the "crypto" crowd is getting more intense in their hatred of basic Bitcoin arguments. And using stronger language and insults in an attempt to keep new people away from becoming actually looking at the arguments.

Don't forget, "bitcoin maximalism" was first coined by Vitalik as a way to poison the well against Bitcoin's irrefutable arguments. Bitcoiners quickly appropriated the term as a positive. A couple years later, scammers in "crypto" tried to dirty it up in order to make the term distasteful. They now use "bitcoin maxi". Calling someone this is a logical fallacy, both ad hominem or inference. They don't take the time, usually on purpose, to actually engage with the arguments.

  • Ordinals update

It looks like the "NFTs on bitcoin" thing as peaked for now. It will likely get a second wind as the bull market progresses, demonstrating it is fundamentally a fad.

There are also some other developments like people using Stacks. Stacks is several years old, but never found much adoption. It is a smart contract layer for bitcoin, so appears to be interesting to the ethereum crowd wanting to relive the 2021 days of NFTs and defi, only on bitcoin this time.

These projects will come up against major unsolvable technical difficulties. The fundamental trade-offs they have to make mean decentralization is a bug for them. I'll say it again, NFTs belong on a centralized database somewhere.

On top of daily inscriptions falling, the mempool is nearly clear. More on that below in mining.

Daily ordinal inscriptions, Dune


The problem, as a team of Citigroup analysts declared last week, is that China today looks “strikingly similar” to Japan in its post property bubble era.

These guys are on to something. They would have been there several years earlier listening to Bitcoin & Markets. These are all things I pointed out long ago.

Between 2010 and 2020, capital formation represented an average 43 per cent of Chinese GDP growth, according to the World Bank. When its bubble burst in 1990, Japan’s capital formation proportion was at roughly 36 per cent, and considered very high.

Japan and China also financed their growth in a similar way. Japan’s bubble era was fuelled by indirect financing provided by commercial banks, which were nudged by the authorities into funnelling soft loans towards favoured industrial sectors. Similarly, says Citigroup, China has developed a financial system mainly dependent on indirect financing.
  • US PCE for January surprised to the upside

This has led to many more calls for "inflation" being persistently higher. Of course, none of these people acknowledged the 6 month rate of under 2%, yet were again quick to jump on the persistently high inflation bandwagon.

Don't bite. This is not "inflation" due to money printing or credit expansion. There was a small effect, some call it a "reacceleration" of prices due to the rally in Treasuries. The 10-year, for example, rallied from 4.33% to 3.5%. This has the effect to make collateral more valuable and acts similar to money printing.

  • China enters the Ukraine conflict

This week, there was tons of news on China's potential involvement in the Ukraine conflict. They have offered to play mediators for a peace settlement, and Zelenskyy has actually shown some interest in this.

One thing most people are underestimating in macro today, is that Ukraine is over sooner than expected, and much of the sanctions weight is removed. Bakmut is as good as taken, the outcome of the conflict is becoming more clear to everyone (a reason China is willing to risk involvement), and US support is wavering.

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Weekly chart

The death cross (50-200 day moving averages) has rejected price for now. However, it is holding up quite well in the grand scheme of things. This morning, we almost broke back above $24,000 and the 50 MA.

Bitcoin weekly chart with 50 and 200-period moving averages
Bitcoin weekly chart with 50 and 200-period moving averages

It is much harder to break through resistance levels that are all converged at one place. For instance, we had horizontal resistance along with both the 50 and 200 week moving averages. As the moving averages seperate, price can chip away at them individually. Traders will become split. Some will concentrate on the 50, while others on the horizontal level, and still others on the 200.



The Montana State Senate passed a bill on Thursday protecting crypto miners from a range of possible actions against the industry.

The proposed law passed 37-13 in the Senate and next will go the state's House for its approval. The bill protects at-home mining, prevents discriminatory utility rates for miners and stipulates that crypto used as payment will not be subject to additional taxes.

The legislation also takes power from local governments, preventing them from moving against at-home mining or retroactively using zoning laws to shut down active operations.
Sabre56, a company that consults miners on the development and operations of facilities, has raised $35 million to build its own hosting sites, aiming to have 150 megawatts (MW) of energy capacity ready by the end of the year.

The first four sites will total 115 MW and be located in Wyoming and Texas, where construction has already begun, according to a press release. The capacity will be built in 7MW-15 MW of monthly increments, with the first batch coming online in mid-March, company CEO Phil Harvey said. The $35 million investment is coming primarily from private individuals, he added.

Hosting space for mining rigs has been in short supply over the past few months as few new sites were coming online and capital for development ran dry. The bankruptcies of major hosting firms like Compute North and Core Scientific (CORZ) heightened the supply issue.

Difficulty and Hash Rate

Hash rate has come back down after a huge difficulty adjustment of 9.95% this weekend. Still quite strong.

bitcoin hash rate vs price


Another week of mempool data show we are returning to normal. The network is not stressed very much at all at this point. Inscriptions/ordinals have faded, perhaps only leaving a slightly elevated mempool.

bitcoin mempool chart

Lightning Network


In Valkyrie's daily briefing from February 6, 2023, shows the huge growth in the Lightning Network capacity in the last few years.

It continues to grow, surpassing 5400 recently. The exciting thing is when the bitcoin price doubles or triples, so does the liquidity in the Lightning Network. As this liquidity increases, more and more companies are going to either build explicitly for LN apps or integrate LN into their existing services.

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That's it for this week. See you again next Monday!!!


February 27, 2023  |  Issue #231  |  Block 778,555  |  Disclaimer

* Price change since last week's report

** According to