State of Bitcoin: The Great Rebranding
Week ending: 2022-01-28; Block Height at time of writing: 720633
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In our Friday articles, we take a deep dive into the current state of Bitcoin. We previously published a series debunking the FUD surrounding Bitcoin - you can find those links at the bottom of this article. Every Friday we will continue to publish brief State of the Coin newsletters to keep subscribers up to date on BTC with both on-chain analytics and off-chain news from the Bitcoin industry. For full disclosure, Brandon and Daniel are strong believers in Bitcoin and both have allocated portions of their portfolios to BTC (HODL baby).
Video Version!
New name, same great content
You may notice a slight change in the name of our Friday newsletter. After nearly 5 minutes of deliberation, we have decided to change the name to “State of Bitcoin.” We want our readers to know that we care about one coin and one coin only: Bitcoin.
A look off chain
Valkyrie files for a Bitcoin Mining ETF: Asset manager Valkyrie filed an application with the U.S. Securities and Exchange Commission (SEC) to list its bitcoin mining ETF (proposed ticker: WGMI). The proposed fund will invest at least 80% of its net assets in securities of firms that derive a minimum of 50% of their profit from bitcoin mining. Valkyrie was one of the first asset managers to receive SEC approval for a bitcoin-futures ETF last Fall.
Another Spot ETF rejected by SEC: To absolutely no one’s surprise, the SEC has rejected Fidelity’s Wise Origin Bitcoin Trust spot ETF application. The Fidelity fund is just the latest in a string of rejected spot ETFs. VanEck, WisdomTree, and SkyBridge have all had spot ETF proposals rejected by the SEC in recent months. The SEC has been much more receptive to futures-based ETFs, approving several late last year.
Core Scientific goes public: Core Scientific, a leader in high-performance, net carbon neutral blockchain infrastructure and software solutions, announced this week that it has completed its business combination with Power & Digital Infrastructure Acquisition Corp. (ticker XPDI). The resulting company is named Core Scientific, Inc. and will be listed on the NASDAQ under the ticker CORZ. Core Scientific is now one of the largest publicly-traded, net carbon-neutral blockchain infrastructure providers and miners of digital assets in North America.
Putin tells the Russian Central Bank to pump their brakes: Russian president Vladimir Putin fired back at the Russian Central Bank this week, asking government officials to consider the potential benefits of using and mining cryptocurrencies. Last week the Russian Central Bank proposed a blanket ban on the use and mining of cryptocurrencies on Russian territory. Russia’s rich natural resources, cheap electricity, and cold temperatures make it an ideal location for miners.
Kazakhstan goes dark, again: Miners in Kazakhstan have been cut-off from the power grid until the end of January. Several weeks ago rolling internet blackouts kicked miners off the network amid political turbulence and unrest. According to data released from the University of Cambridge Center of Alternative Finance, Kazakhstan accounted for 18.1% of global hashrate in July 2021. If access to electricity remains unstable, miners in Kazakhstan may look to move - as noted above, Russia looks to be taking a positive stance on cryptocurrencies and has the resources needed to foster a strong mining industry. The other thing Russia has: a 7,644-kilometer border with Kazakhstan. As our friend @JoeyTweeets would say, “wew lad.”
IMF tells El Salvador to drop BTC as legal tender: The Executive Board of the International Monetary Fund (IMF) concluded their consultation with El Salvador this week. In their final report, they urged El Salvador to drop bitcoin as legal tender, stating that there are “large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities. They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status.” As expected, El Salvadorian president Nayib Bukele responded by smash buying the dip. Since declaring bitcoin legal tender, the country has purchased over 1,500 bitcoins.
Rumors of an executive order are floating around: Rumors are swirling that the Biden administration is preparing to release an executive order detailing a comprehensive government strategy on cryptocurrencies. The order will apparently task multiple federal agencies - including the Treasury Department, Commerce Department, National Science Foundation, and varios national security agencies - with studying department-specific pros and cons of cryptocurrency adoption. The overarching goal of the order will be to create a more organized and cooperative approach to regulating the growing cryptocurrency industry.
Quick word about stacking tax-advantaged sats!
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A look on chain
Let’s take a look at on-chain data from Glassnode!
Price update: As of this writing, the current price of BTC is $36,844. In the last week, BTC’s USD price is down 7.4%; in the last month, it is down 23.1%; in the last year, BTC price is up 11.2%.
S2F Model Update: Although price currently remains below stock-to-flow model projections, the model has historically performed well immediately prior to halving events. The model has a predicted USD value of $121k in March of 2024, when the next halving event is expected to occur. Remember, BTC is a long term investment, not a “get rich quick” vehicle. To learn more about the S2F model, check out this article by PlanB.
SOPR: The Spent Output Profit Ratio (SOPR) is computed by dividing the realized value (in USD) by the value at creation (USD) of a spent output. Or more simply: price sold / price paid. Values greater than 1 indicate that coins are being sold for profit (typically bullish) and values less than 1 indicate coins are being sold at a loss (typically bearish). SOPR continues to hover close to 1 - in my opinion, this is bullish given the volatility over the last few weeks. Even when we see dramatic drops in price, we don’t see large downward spikes in SOPR - people are not selling at a loss when price drops suddenly.
Meme of the Week
What would the BTC community do without memes? Every week on State of the Coin, we feature our favorite meme of the previous week. If you create or see a meme that you like and want us to consider featuring it, tag us on Twitter or instagram (both @Greencandleit)! This week, we’re featuring our own meme, and the decision was completely unbiased:
New to Bitcoin and looking to learn more?
Check out our introductory series, where we walk through common misconceptions about the world’s leading cryptocurrency!
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Happy Friday everyone - get after it this weekend!
Dan and Brandon
Disclosure: The authors of this writing hold positions in cryptocurrency mentioned in this article. That cryptocurrency is Bitcoin. The article was written by Daniel Kuhman, Brandon Keys, and occasionally a guest writer; it expresses the author's own opinions. They are not receiving compensation for it. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock or cryptocurrency. None of the authors of this article are financial advisors. We encourage all readers to do further research and do your own due diligence before making any investments.