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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).
Let’s take a look at the State of the Coin
A look off chain:
Morgan Stanley does their research (finally): Global investment bank Morgan Stanley announced that they are launching a research team fully dedicated to crypto, stating “The launch of dedicated crypto research is in recognition of the growing significance of cryptocurrencies and other digital assets in global markets.” Earlier this year, the firm began offering clients access to bitcoin funds and have since added BTC to 12 mutual fund options.
Futures and derivatives may be coming to Coinbase: The publicly traded crypto exchange Coinbase announced via tweet that they have filed an application with the National Futures Association (NFA) to register as a Futures Commission Merchant (FCM). If approved, they will join several other major exchanges in offering futures/derivatives, including Binance, Okex, FTX, CME Group, and Kraken.
Microstrategy continues to buy and HODL: In a move that should come as no surprise to anyone in the BTC community, Microstrategy purchased an additional 5,050 full coins on Monday. The total cost of the transaction was ~$243 million and brings the firm’s total BTC holdings to 114,042 coins. According to CEO Michael Saylor, the average cost for all coins is ~$27,713 per bitcoin.
Buy your movie tickets with BTC: On Wednesday, AMC, the largest movie exhibition company in the world, announced its plan to accept cryptocurrencies by the end of the year. As of March 31, AMC owned or operated approximately 950 theaters and 10,500 screens globally. CEO Adam Aron says the company plans to accept bitcoin, ether, litecoin, and bitcoin cash. AMC gained traction as a “meme” stock this year, making us somewhat skeptical of the announcement - are they doing it because they believe in the crypto movement, or are they simply doing it for publicity? Time will tell.
Feature of the Week
Every week, we reach out to members of the Bitcoin community to see where they stand on BTC and to ask what they’ve been up to lately. This week we’re happy to share a quick word from @JShugs76 of the Stache It or Pass it Podcast: New Episode Every Friday!
Former NFL players and lifelong friends Jeff Shugarts and Mike Adams interview crypto, cannabis, and cultural insiders and thought leaders to give you the scoop on what to "Stache" and what to "Pass." We are a weekly news report on crypto, cannabis, and culture. We believe that all three of these “sectors” will reshape the world economy and provide the means for the largest wealth transfer in history. Not Financial Advice.
Crypto = The Weather Report: Because crypto, like the weather, is 24/7/365 – We check in with our weather man, IG: @buylowstayhigh, on a weekly / bi-weekly basis to keep us up-to-date and answer any looming questions. We have a goal to educate and push adoption through integration. We do this through crypto/bitcoin product education, reviews, bitcoin security, DeFi, NFT’s, and will continue to bring on incredible guests and thought leaders who are blazing a trail in the space, so stay tuned.
Cannabis = The Traffic Report: We check in weekly with our 15-year cannabis market veteran. He educates us on what is happening in the financial markets, keeps us up-to-date on federal & state legislation, continuous education, and the “Strains of The Week.” We also provide education and advocate for all plant medicines and judicial reform. We follow unique stories and provide product reviews during our “Doob’s n Don’ts w/ Dr. B”!
Culture = The Anything Goes Report: We have a lot of fun on The Culture Report! We always start the day off with a “Mindful Minute” sharing life lessons we learned playing college & NFL football. Then buckle up because you never know what could happen next! You can expect some HUGE guest appearances pulling from all of the relationships that we have built along the way, with a goal to inspire all who listen to be better today, tomorrow, and the next day.
Don’t miss a minute! Sign up for our weekly newsletter HERE! And be sure to follow us on YouTube: Stache It or Pass It Podcast, IG: @stacheitorpassit, and Twitter: @jshugs76
We’re always looking for guest writers! If you or someone you know would like to be featured on State of the Coin as a contributor, let us know! You can email us at greencandleit@gmail.com or DM us on Twitter (@Greencandleit)!
A look on chain:
Let’s take a look at on-chain data from Glassnode!
Price update: Last week price “crashed” to ~$46k after hovering around and above $50k for ~3 days. Since then, price has remained steadily between $46-48k and we seem to be building some support in this range. We are now 493 days post halving with the halving high (and all time high) having occurred at 337 days. In halving cycles 1 and 2, highs occurred at 371 and 525 days, respectively (shown as vertical dashed lines on the chart below).
S2F Model Update: We currently remain well below the stock-to-flow model. In fact, the model has price on September 18th at $104,162 USD, leaving us roughly $56k away from predicted price. Downward deviation from the model could mean that the model is incorrect. However, it could also indicate that BTC is currently undervalued. In the previous two cycles, the model tended to accurately predict cycle-end price points. If this is the case in the current cycle, be prepared to see 6-digit pricing. 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) divided 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 had been hovering above 1 consistently for several weeks, but dipped slightly under 1 following Tuesday’s price drop. We’d like to see SOPR bounce back and hover just above 1. We got the initial bounce back, but time will tell whether we remain above 1.
Hash Rate: Hash rate continues to recover nicely following the most recent mining crackdown by the communist party of China, demonstrating the resiliency of the BTC network. Below, we’ve plotted a shaded area to represent the mean +/- 1 standard deviation in hash rate from the 3 months prior to the ban. Current hash rates have re-entered this range, signaling a return to pre-ban rates.
Inflationary hedge performance: This week, the U.S. Federal Reserve released economic data for the month of August and the story is unsurprisingly similar to the previous month: the money printer is turned on and inflation is running hot. Consumer Price Index (CPI), a common metric used to measure inflation, is up 5.2% year-over-year, well ahead of the Fed’s goal inflation rate of 2%. Hedges against inflation should share a positive relationship with CPI - as CPI increases (inflation worsens) the value of your hedge asset should also increase. Over the last 20 months, BTC has shared a strong positive relationship with CPI (correlation coefficient = 0.79).
BTC 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)! Making the rounds this week was a news article from 1921 about Henry Ford’s proposal to create a currency backed by energy. The proof-of-work backing to the Bitcoin protocol makes it an energy-based currency.
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!
Brandon and Dan
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 and Brandon Keys, and 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. Brandon and Daniel are not financial advisors. We encourage all readers to do further research and do your own due diligence before making any investments.