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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:
Cathie, Jack, and Elon have THE Talk: Cathie Wood (Ark Invest), Elon Musk (Tesla, SpaceX, Neuralink, Boring Co.), and Jack Dorsey (Twitter, Square) met for the virtual Bitcoin Conference (The B Word) on Wednesday to discuss all things Bitcoin! Having three of the world’s leading thinkers in the digital space share a virtual stage to talk about the past, present, and future of cryptocurrencies in general and Bitcoin more specifically made this a must watch! Amongst other things, Elon revealed that SpaceX holds BTC and Jack elaborated on his plans to work on hardware development in the BTC space.
U.S. crypto mining company Core Scientific will go public: Core Scientific - a North American based cryptocurrency mining company - announced on Wednesday that they will be listed on the Nasdaq through a merger with Power & Digital Infrastructure Acquisition Corp. The deal valued Core Scientific at just over $4B. Year-to-date, they have minted ~3,000 bitcoin, well ahead of other mining companies such as Marathon Digital and Riot Blockchain. This announcement reaffirms institutional buy-in on Bitcoin.
JPMorgan capitulates, will give retail clients access to Bitcoin: In 2017, JPMorgan CEO Jamie Dimon threatened to fire employees who traded cryptocurrencies. Well, like many other major players in the legacy financial system, JPMorgan has capitulated. As of July 19, the bank’s advisors can accept and execute Bitcoin trades - however the trades must be requested by the client without suggestion from the financial advisor. As with the article above, this news signals institutional buy-in on Bitcoin.
Bitcoin ATMs are coming to a Circle K near you: Through a strategic partnership with Bitcoin Depot, Circle K - a major convenience store chain in North America - will deploy BTC ATMs. Although BTC ATMs allow individuals to purchase bitcoin at local convenience stores (increasing accessibility), they often charge hefty transaction fees (decreasing accessibility). BTC ATMs also allow individuals the opportunity to exchange cash for BTC without using the traditional banking system.
With so many recent signals of governmental and institutional buy-in, it’s hard not to be optimistic about Bitcoin’s future. However, while all off-chain news keeps us bullish, on-chain data signal uncertainty. Let’s take a look...
A look on chain:
We’re continuing to get our feet wet with Glassnode on chain data!
Price update: Price continues to crawl sideways with relatively low volatility. Price has remained in the low-to-mid 30k range for just over a month, with a 30 day average of $33,170 and a standard deviation of $1,427. Earlier this week, price briefly dipped below $30k for the first time since January before rallying back to the low 30s.
Mid-to-short term volatility is decreasing: Below is the 30-day rolling standard deviation in price, which provides a general view of short-to-mid-term volatility. This metric has dropped like a brick over the last two months and is now approaching levels not seen since late 2020.
SOPR appears net neutral: 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 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; capitulation). SOPR has been net negative/neutral over the last two months, which may indicate sell off from young wallets who bought in during the frenzied runup this past Spring and are now panic selling during the dip. However, long term HODLers appear to be scooping up these cheap coins.
Divergence from S2F Model: Price is diverging downward against the popular stock-to-flow model introduced by Plan B. Slight divergence is not unprecedented, however time will tell whether price bounces back toward the model prediction or continues its divergence.
We are currently 437 days post-halving (last halving: May 11, 2020), which is nearly the average number of days to post-halving highs of the previous two cycles (exact average number of days to post-halving high: 448 days). Unfortunately, with only two previous halvings, it’s difficult to make meaningful predictions based on past pricing behavior.
Other models, like that introduced by the rational root - the smartest root vegetable on Twitter - suggest a new ATH could appear in September 2021.
BTC Meme of the Week, courtesy of Green Candle! 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)!
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.