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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:
Amazon BTC speculation: Speculation that Amazon would soon be accepting payments in Bitcoin arose earlier this week, partly due to the company’s recent job post calling for a digital currency and blockchain product lead. Amazon ultimately denied the claim, but noted that they were “focused on exploring what this could look like for customers shopping on Amazon.” The jump in price prior to Amazon’s dismissal indicates that investors see promise in BTC’s application as a transactional currency and not solely as a store of value (as is the case with gold).
U.S. politicians continue to show their ignorance: At a hearing earlier this week, Ohio Senator Sherrod Brown said “there’s nothing ‘democratic’ or ‘transparent’ about a shady, diffuse network of online funny money.” Massachusetts Senator Elizabeth Warren claimed that cryptocurrencies were run by “shadowy super-coders.” Here is our challenge to both Senators: show us real time data tracking of USD. Show us how many dollars were added to the Fed’s balance sheet in the last ten minutes. Show us how many transactions occurred today. Hell, explain to us why we don’t get to vote on members of the Federal Reserve. They can’t. You can track on-chain BTC data in real time and the code that runs the network is completely open source - anyone with ~$200 and an internet connection can run their own node and become part of the network. The Federal Reserve is run by unelected officials who cannot be publicly audited. Which of those two systems is more democratic and transparent?
Genesis Digital Assets raises $125M for expansion: Genesis, one of the world’s leading Bitcoin mining firms, has raised $125M to fund its expansion into the U.S. and the Nordic region. This cap raise represents the recent exodus of hash rate out of China and into the West. The firm currently accounts for nearly 3% of the global hash rate and expects to increase its capacity by a further 5.5 exahashes by the end of 2023. Genesis estimates that they’ve minted >$1B in BTC since their launch in 2013.
Mine BTC directly into a tax efficient IRA: Choice by Kingdom Trust announced yesterday (Thursday, July 29) that they are partnering with the Bitcoin mining firm Compass to offer clients the ability to hold a BTC mining rig in tax advantaged retirement accounts. With a Roth IRA, you could mine sats directly into cold storage and avoid costly capital gains taxes! That’s pretty damn cool!
A look on chain:
We’re continuing to get our feet wet with Glassnode on chain data!
Price update: This week we saw some serious vertical price movement, jumping from a stagnant 29-32k to a 38-40k range. We are currently 444 days post-halving (last halving: May 11, 2020), which is nearly the exact average number of days to post-halving highs of the previous two cycles (exact average number of days to post-halving high: 448 days, which we will hit on August 2nd). Based on current price, it seems unlikely that we will hit a new all time high on August 2nd.
Cycle-specific volatility: Last week we explored cycle-specific rolling variability using a 30-day moving coefficient of variation. This measures 30-day variability (standard deviation) expressed relative to the mean of those 30 days - expressing variability relative to the mean is important when comparing variability across periods with different magnitudes of mean values (in this case, comparing variability in price across the three halving cycles). Following the first two halvings, peak 30-day volatility was reached just prior to cycle price peaks. In the current cycle, peak 30-day volatility has not reached levels of the first two cycles and occurred further in front of the cycle price peak.
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 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). This week, SOPR went positive to levels not seen since early- to mid-April, when price was consistently >$50k.
Difficulty ribbon compression: Compression and inversion of difficulty ribbons have historically indicated upward price movements. Current levels of ribbon compression are extremely bullish.
S2F Model Update: Following both previous halving events, BTC price reached higher than predicted peaks, which has not yet happened in the current cycle. Although price had been diverging downward and away from S2F estimates for several weeks, the jump in price this week is promising for the model.
In general, things seem bullish both off- and on-chain.
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. This week, we made our own. 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)!
Learn more about BTC:
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.