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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 momentum of 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:
Twitter developers working on BTC integration: Twitter is apparently rolling out a “Tip Jar” that allows users to pay creators for content. Rumors circulating this week claim that the Tip Jar will include payments via BTC and transactions will occur over the Lightning Network. The Twitter BTC community seems somewhat split over the rumors - while some are excited to see a major social network integrate Bitcoin, others worry about Twitter’s history of online censorship.
US government pushing for more regulation: The Biden administration is reportedly pushing to include global crypto data sharing rules in the $3.5 trillion budget package. According to an administrator in the U.S. Treasury, these measures are in part to “combat the potential for crypto assets to be used for tax evasion, third party information reporting is critical to help identify taxpayers and bolster voluntary tax compliance.” Of course it’s to increase tax revenues, how else will the government pass bloated bills? Also, taxes are not “voluntary.”
Blockchain.com considering an IPO: One of Bitcoin’s oldest wallets may go public soon. Earlier this week, Blockchain.com CFO Macrina Kgil discussed the company’s massive accomplishment of surpassing $1 trillion in cryptocurrency transactions and stated that the company may go public in 2023. The cryptocurrency firm is one of the oldest in the industry (created in 2011) and, since its founding, 76 million Blockchain.com wallets have been created!
Feature of the Week
Every week, we reach out to members of the Bitcoin community to see where they stand on BTC and to provide some of their recent thoughts and contributions to the space. This week we’re happy to share a quick word from @DenizSaaat, writer for @coinbeastmedia:
“With every parabolic rise that Bitcoin’s price experiences, Bitcoiners are able to spend more time on endeavors they find more fulfilling. Participants in the network religiously encourage everyone to improve their skills in self custody, mining, and software development.
Resources like Twitter, YouTube, and Anchor provide ample content for everyone to run a solo journey down the Bitcoin rabbit hole. Other platforms like Twitter spaces and ClubHouse have recently risen to the challenge of addressing more personal questions from newcomers. With all of these platforms, a noob has the ability to go from a nocoiner to a hardcore Bitcoin maximalist within a few months if they stay diligent with their education. However, if someone wants to expedite their knowledge in Bitcoin’s mining or software sector for example, Coinbeast Connect provides direct access to many seasoned professionals within the community.
Hit the ground running with CoinBeast!”
Now, let’s take a look on chain:
Price update: USD price continues to hover around $47k - $49k with the occasional $50k breakthrough (which is always accompanied by much fanfare). We are currently 479 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).
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). As we discussed last week and the week before, SOPR reset at 1 following a positive spike several weeks ago when price jumped from ~$30k to ~$40k (likely short term holders getting out with profit). SOPR has since hovered above 1 consistently, which is a strong bullish signal. We’d like to see SOPR continue to hover just above 1.
Difficulty ribbon compression: Compression and inversion of difficulty ribbons have historically indicated upward price movements. Ribbon compression remains extremely bullish but is trending back toward “normal.” Similar ribbon compression scenarios played out in late 2018/early 2019 (preceding a 3-4x increase in price) and late 2020.
S2F Model Update: Price continues to track back toward S2F model predictions, but we currently remain well below the model. In fact, the model has price on September 3rd (today) at $109,365 USD. 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. To learn more about the S2F model, check out this article by PlanB.
Hash Rate returning: Hash rate continues to recover nicely following the most recent mining crackdown by the communist party of China. To restate last week’s newsletter: this demonstrates the resiliency of the BTC network and should help dispel the “too much mining power in China” FUD commonly pushed by BTC critics.
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)! This week, we’re featuring a meme from @HodlSouth - give them a follow for more fire memes!
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.