Stay up to date on Green Candle by subscribing to our newsletter and following us on Twitter, Instagram, and YouTube!
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:
Citigroup files for a BTC ETF: Banking giant Citigroup is waiting for approval to begin trading in Bitcoin futures. According to an anonymous source within the bank, the demand for Bitcoin exposure among Citigroup clients is rising. In an email to Coindesk, a Citigroup spokesperson said: “Our clients are increasingly interested in this space, and we are monitoring these developments. Given the many questions around regulatory frameworks, supervisory expectations, and other factors, we are being very thoughtful about our approach.” This isn’t the first major bank to apply for a BTC ETF - both Wells Fargo and JPMorgan have also submitted requests.
AdvisorShare files for a BTC ETF: On a similar note: AdvisorShares became the latest issuer to file for a BTC ETF, joining other major issuers like Galaxy Digital, VanEck, Valkyrie, Invesco, and ProShares. AdvisorShare’s requested ticker for the ETF is CRYP and, per their filing, they claim that the fund “seeks to achieve its investment objective by investing all or substantially all of its assets in exchange-traded futures contracts on bitcoin and short duration fixed income securities and cash or cash equivalent investments.”
Semiconductor shortage may hit BTC miners: Semiconductor chips power a myriad of electronic devices, including cars, phones, and computers. The global shortage of chips explains, at least in part, the record low number of new vehicles being produced in the U.S. (and the spike in used car sales and prices in response to the shortage of new vehicles). Taiwan Semiconductor Manufacturing Company (ticker: TSMC) - a major chip manufacturer - recently reported that the costs of their chips may rise by upwards of 20%. Unfortunately, computers used by BTC miners are powered by these chips and shortages and/or increased costs could make mining more difficult/costly. Fortunately for the BTC network, miners have proven their resilience over the last several months following the most recent China ban.
Welcome to Tennessee, Bitcoin: U.S. politicians continue to come around on BTC. The mayor of Jackson, Tennessee recently came out in support of Bitcoin, claiming that it is “definitely the future monetary system” and that “as the Feds continue to print more USD, this chart will continue to rise [referencing BTC price].” Not all politicians are bullish on the coin, however, with some continuing to push climate and criminality FUD. We look forward to watching states and cities in the U.S. compete to attract the best developers and entrepreneurs in the space. Those who make it difficult to operate crypto-based companies may very well fall behind those who create environments that make it easier for such companies to thrive.
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 on the space. This week we’re happy to share a quick word from @JoeyTweeets, the cohost of The Canadian Bitcoiners Podcast:
What’s Up In Bitcoin?
Bitcoin, in my view, just underwent the most difficult 4-6 month period in the “brand’s” history. From the peak price near $65,000 USD nearly 5 months ago, to the current rebound from $30K to nearly $50K, Bitcoin has never received this much direct, purposed and intentional negative attention from the traditional media and investment world (not to mention the infamous “head and shoulders” bear pattern talk a month ago, but I digress).
Not since 1969’s Woodstock has so much hash been relocated. Bitcoin experienced a more than 50% drop in network hashrate between May and July 2021, due in principle to the China mining ban, among other legislative actions against Bitcoin in the country. While price was negative over this time period as well, hashrate has recovered more than 50% from the lows as miners continue to relocate, acquire and deploy additional capital, and come back online to secure the network.
Greta Thunberg hasn’t slept in months, maybe longer. Bitcoin’s energy use has been a favourite for nay-sayers and the environmentally obsessed (read: people who didn’t buy any) for some time. The community has responded in-kind, delivering podcast appearances, energy use reports, and more to not only hush the concerns, but ruin the credibility of those claiming the network is not far superior in terms of renewables/”green” consumption than any traditional market or fiat monetary system.
Gensler looks like the Grim Reaper to the alt-coin market. New SEC chair Gary Gensler has made several public statements regarding the likelihood that many alt-coins are, in fact, securities and need to be regulated and processed as such. XRP is already under this microscope, and in the midst of a serial delisting across a dozen or so exchanges around the world, but the big fish in this pond is probably Ethereum. Food for thought – VanEck and ProShares both recently pulled back their requests for an Eth based futures ETF. Where there is smoke, as they say.
Joey is the co-host of The Canadian Bitcoiners Podcast, which can be found anywhere you listen to podcasts. You can follow him on Twitter @JoeyTweeets.
A look on chain:
Let’s take a look at on-chain data from Glassnode!
Price update: Price action continues to hover around $47k - $49k. We are currently 473 days post halving number 3 with the halving high (and all time high) having occurred at 337 days post halving. In halving cycles 1 and 2, highs occurred at 371 and 525 days, respectively.
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, 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.
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.” A similar ribbon compression scenario played out in late 2018/early 2019 and preceded a 3-4x increase in price.
S2F Model Update: Price continues to track back toward S2F model predictions, but we currently remain well below the model. In fact, the model would has price at ~$109k. We’re still relatively early in this cycle and historical data (at least as little as we have) tends to show larger price-model deviations earlier in each cycle (see below: the model tends to fit orange/red tighter). 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. 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. The ban will ultimately lead to a larger global distribution of hashing power, strengthening decentralization.
TLDR: In general, off-chain news continue to show institutional buy-in, even from major players deeply embedded in the fiat system (big banks and investment firms). On-chain data are also bullish, showing continued positive SOPR and rapid recovery in hash rate. The latter observation highlights the strength of the BTC network.
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 @RD_btc - 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!
Stay up to date on Green Candle news by subscribing to our newsletter and following us on Twitter, Instagram, and YouTube!
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.