Bitcoin Fundamentals Report #283

Argentina regulates bitcoin, Tether buys 8,888 btc again, SWIFT CBDC, Gold spikes, bitcoin price analysis, mining industry gets ready for halving!

Bitcoin Fundamentals Report #283

April 1, 2024 | Block 837,290

Snapshot of Bitcoin

General Bitcoin Headlines
Weekly trend Cool off
Media sentiment Neutral
Network traffic Moderate
Mining industry Stable
Days until Halving 17
Price Section
Weekly price* $69,419   (-$1,512, -2.1%)
Market cap $1.366 trillion
Satoshis/$1 USD 1441
1 finney (1/10,000 btc) $6.94
Mining Sector
Previous difficulty adjustment -0.9779%
Next estimated adjustment +1% in ~9 days
Mempool 180 MB
Fees for next block (sats/byte) $0.97 (10 s/vb)
Low Priority fee $0.97
Lightning Network**
Capacity 4586.89 btc (+1.6%, +72)
Channels 52,868 (-1%, -521)

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Headlines

There has been some uproar about this, because people think it will stimmie adoption. I think it will likely do just the opposite.

We are entering the era of institutional adoption, adoption by large pools of capital. That kind of adoption must happen first. We aren't going to get to hyperbitcoinization by pure bottom up adoption. The large asset allocators need to adopt.

The bitcoin ETFs are sending shockwaves around the world. It's only matter of time until executives and monetary authorities realize they need to own some.

Stablecoin issuer Tether has significantly expanded its Bitcoin holdings, acquiring 8,888 BTC worth around $600 million. This latest purchase was revealed through on-chain data rather than an official announcement.

Tether has not publicly disclosed its Bitcoin addresses. However, transactions tracked on the blockchain show 8,888 BTC were recently sent from the crypto exchange Bitfinex to an undisclosed Tether wallet.
  • Ethereum is not looking the best

This is a sign that the typical altcoin parasites are not coming along for this ride. This time it will be the equity-alts.

Macro

  • Mixed Signals Might Mean a Turn into Recession is Coming, Despite Looking the Opposite

I was asked on the Telegram about my position on recession this year. I have written about it extensively on the Bitcoin Protons for Premium Members, but I will have to update it considering we are now in Q2.

I pride myself on not flip-flopping regularly like other Macro analysts out there. On the surface, markets are looking pretty good here, even with my method of analysis. I try to listen to what the markets are saying, and not force my perceived outcome on it. I look at, not only what markets are currently doing, but where they came from, and what that means within my macro framework.

The no-landing is only surface deep. It reminds me of when trend changes are about to happen. The market has been in the trend for so long, even those opposing the move give in, right before the trend does change. Many indicators are still signaling recession, so it would take a preponderance of new evidence to get to a no-landing outcome.

All that to say, I will be addressing that on my upcoming Bitcoin Proton.

Lot's a static out there over the new proposed SWIFT CBDC network.

Illustration shows Swift logo
Source: Reuters
Global bank messaging network SWIFT is planning a new platform in the next one to two years to connect the wave of central bank digital currencies now in development to the existing finance system, it has told Reuters.

There are CBDCs in development, but they are not likely to be launched in a "wave" in the coming year. In fact, in the wake of the Nigerian disaster of the eNiara, the next country to actual launch a CBDC will have to be very brave.

Around 90% of the world's central banks are now exploring digital versions of their currencies. Most don't want to be left behind by bitcoin and other cryptocurrencies, but are grappling with technological complexities.

Big admission here. They are trying to keep up with bitcoin for sure. Also, their currencies are already digital. What they are exploring is a NEW FORM of money. It is a digital form of pure fiat from the central bank, versus what they have today of digital money in the form of bank credit. There is an ocean of difference. That ocean of difference is exactly what the Federal Reserve and Powell know that makes them require a whole new mandate from Congress.

It focused on ensuring different countries' CBDCs can all be used together even if built on different underlying technologies, or "protocols", thereby reducing payment system fragmentation risks.

They are optimist progressives. Altcoiners have been saying this for years, 'if we just put our minds to it, we can recreate a bitcoin-like thing but make it better.' Totally oblivious to the trade-offs and limitations. Same thing here. At least they are acknowledging the risks. Imagine betting everything with these risks.

Important to note that this is not a specific money, they are creating a CBDC platform to trade other tokens. The same possibility is present here as with the BRICS version, you can put bitcoin on it, or bitcoin derivatives. It is not a strict competitor to bitcoin, it is a competitor to a payment system or a Layer 2 of bitcoin.

  • Gold spikes

Throughout this pre-recession period, I've been bullish on bitcoin, stocks and bonds, but I've also been bullish on gold for the same reasons. Gold is not subject to counterparty risk the same way as assets created and maintained inside the credit-based system. Finally, gold is following bitcoin. It should benefit from the economic environment, but not nearly as much as bitcoin.

Interestingly, silver has not followed suit. This is another example of the near complete demonetization of silver.

Gold's rally also speaks to the state of the system as a whole. People are looking for a safe haven.

  • JPY and CNY Signaling Economic Weakness from Asia

Japan recently raised their overnight rate for the first time in 17 years. There is concern over the struggling economy and they are stuck because their currency is so weak. They are raising rates in an attempt to stop of the currency's decline. That won't help.

If Japan or China's economies were doing well, it would stimulate demand for their currencies and they'd strengthen relative to the US. The fact that they are both weakening means their recessions are getting worse. The CNY should catch up to the JPY soon. That implies a sharp weakening. The dollar wrecking ball might come back over the next couple of months, right as people are fear mongering over a reacceleration of inflation in the US. Won't happen.

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Price Analysis

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Bitcoin Charts

Two weeks ago:

Most likely we continue a consolidation for at least the next week, and it could stretch into the halving.

Last week:

A 44% move over 3 weeks until the halving is possible, though I still think unlikely. [...] It would be healthy to revisit those lows again before continuing higher, but it is so hard to move down against the ETFs.

Price is stuck, which is fascinating. There are massive inflows from the ETFs, Microstrategy, Tether and mysterious buyers (Mr. 100), yet price is trapped around the $70k mark.

Below, you can see we are testing the important level formed from the close on 4 March and the 20-day MA. Support for any dip is strong, with mass incoming demand and the 50-day MA, to name a couple. There is also the old ATH of $69,000 that is the whole reason behind stopping here in the first place.

A few Reports ago, I showed that there has never been a time that bitcoin simply ran through the ATH right away. There has always been strong structural resistance as long-term holders finally get out in profit.

The Short-term Holder's (STH) Realized Price is the weak-hand level, that if triggered could lead to much more selling, is at $57,500. I don't think that level is in danger of being broken, but it's something to watch if we get a black swan.

Source: LookIntoBitcoin

I've been talking about cooling off and consolidation for, pretty much, the whole month of March. Despite going sideways, there is not a lot of progress on cooling off the weekly. This leads me to believe that we will not have a significant pre-halving pump. But it also means we won't have a significant post-halving dump either.

In fact, this could a huge catalyst for a great post-halving pump. I price does dip right now, into the 50-day MA, the ETFs will suck up all the liquidated coins. It will take, at least, a week to recover from that taking us right up to the halving, fully cooled off, ready to launch.

Shkreli Says Bitcoin Likely to Hit $1M by EOY

Martin is an extremely bright guy. He also said this was not an April Fools joke, he just wanted to document his prediction.

This sounds outrageous at this point, but anything is possible. I think $100k will see significant selling, but it will also be met by even higher Veblen demand. Demand goes up with price.

MUCH MORE detailed price analysis, including short, medium and long-term forecasts on Market Protons!



Bitcoin Mining

Headlines

While some industry players are expected to struggle, other firms have made it clear they intend to take advantage of buying opportunities and set themselves up for future growth.

While some miners have already started acquiring properties, others have focused on buying new and more efficient machines. Cutting costs and diversifying revenue sources has been another strategy used by various companies.

Mining companies are actively acquiring sites and upgrading equipment in anticipation of Bitcoin's halving. Marathon Digital and CleanSpark have recently purchased mining facilities, with Marathon aiming to expand further. Significant investments in mining machines have been made, like Riot Platforms and Bitfarms buying tens of thousands of units for enhanced efficiency. While expansion is a priority, companies like Hut 8 are also focusing on cost-cutting and diversification, such as moving into high-performance computing (HPC) and exploring new geographical markets to mitigate risks and improve margins.

CleanSpark said it mined 806 bitcoin in March, up 24% from February. The company’s total bitcoin holdings have now grown to 5,021 as of March 31.

This production announcement comes days after they made public their intentions to offer $800M more in equity.

“With the capital on hand we have now fully funded the remaining payments of all 160,000 S21s that we announced in January. We are prepared to thrive post-halving. We are now looking beyond halving and expect to be highly active over the coming months given that we have the balance sheet and capital tools to make us one of the most aggressive acquirers in the industry,” said Zach Bradford, CEO of CleanSpark.

Hash rate and Difficulty

Difficulty adjusted down slightly last Thursday by -0.9779%. You can see that on the chart below as the little down step in the pink line. The next estimated adjustment is in 9 days and will be around +1% at current rates.

mempool.space

The faint line is the hash rate current estimated network hash rate. The bright orange line is a moving average of the hash rate.

Mempool

The mempool has been flat over the last week. No spikes indicating likely price action, and no clearing indicating declining interest.

6-month chart of mempool, mempool.space

Inscriptions

I am using inscriptions as a measure of speculative interest in the bitcoin market. Much of the altcoin shitcoinery will be happening with inscriptions this time. However, it should be more tame, because fees impose a real economic cost.

The numbers have started to spike again after a nearly 2 month decline. This could be a sign that a speculative cycle is starting back up. We would expect this spike to also show up in the mempool above, but we don't have that confirmation yet.

Source for all inscription charts

There is an ever so slight increase in fees paid by inscriptions.

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

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Disclaimer: The content of Bitcoin & Markets shall not be construed as tax, legal or financial advice. Do you own research.

* Price change since last report

** According to mempool.space or 1ml.com