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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:
BlackRock invests in crypto mining: Welcome to the party BlackRock. The world’s largest asset manager ($9 trillion in assets) staked 6.7% in Marathon Digital Holdings and 6.6% in Riot Blockchain, two major Bitcoin mining companies. Between both companies, BlackRock’s commitment totals $382,962,003! BlackRock joins other major asset managers in the Bitcoin mining industry, including Vanguard and Fidelity.
Chase Bank freezes Compass Mining accounts: Chase bank apparently froze Compass Mining - another major player in the Bitcoin mining industry - accounts without notice earlier this week. Compass CEO Whit Gibbs took to Twitter on the matter and later told CoinDesk that Compass would be moving their business to a more crypto-friendly bank.
U.S. mortgage lender to accept Bitcoin payments: Major news out of the mortgage industry: United Wholesale Mortgage, the second largest mortgage lender in the U.S., confirmed to CNBC that they will allow customers to pay for their mortgage with cryptocurrencies. They plan to roll out a Bitcoin option in Q3 and are also exploring the feasibility of allowing other cryptocurrencies in the future. On the company’s Q2 earnings call, CEO Mat Ishbia said “we’ve evaluated the feasibility, and we’re looking forward to being the first mortgage company in America to accept cryptocurrency to satisfy mortgage payments.”
Feature of the Week
This week we’re happy to share a quick word from Brian Harrington at Choice! Learn more about Choice here, and be sure to follow Brian (@BrainHarrington) and Choice (@choicebyKT) on Twitter! Also check out this recent article in Bitcoin Magazine on the benefits of stacking sats in a self-directed and tax-efficient retirement account!
PSA: You Can Buy Bitcoin in Your Retirement Account
That's right, Choice enables you to buy tax-efficient bitcoin (and thousands of other assets) in your retirement account. More than 20,000 bitcoiners, myself included, have already signed up to start investing. Say goodbye to your cookie-cutter fund and take control over your retirement savings.
Choice is on a mission to expand access to Bitcoin and is opening up access to the 60% of Americans who don’t have investable assets outside of their retirement account.
Learn more at http://choiceapp.io
-Brian Harrington
A look on chain:
Now, let’s take a look at on-chain data from Glassnode!
Price update: Price continues to hover around $45-46k. We are currently 465 days post third halving, with the halving high (and all time high) having occurred at 337 days post halving. In the previous two halvings, highs were reached at 371 (halving 1) and 525 (halving 2) days post halving.
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 (likely short term holders getting out with profit) and has 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. 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 is recovering 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.
BTC vs Gold as an inflation hedge: Despite continued inflation in the US, gold has failed to serve as an adequate store of value. Not only is gold priced per ounce down ~10% in the last 12 months, but popular gold mining company Barrick Gold Corp is down ~36% over the same time period. Amazingly, the average monthly price of gold shares an inverse relationship with the Fed’s consumer price index (CPI) - that’s right, as CPI increases (inflation worsens), gold’s price drops. Conversely, BTC is up nearly 300% in the last year and, as mentioned above, BTC miners continue to receive institutional support from the largest asset managers in the world. And, as expected from an adequate hedge against inflation, BTC shares a positive relationship with CPI - as inflation worsens, BTC increases in value. Gold 2.0 has arrived, and it's called Bitcoin.
Wrap Up: In general, off-chain news couldn’t be better: the largest asset manager in the WORLD has purchased a substantial stake in Bitcoin mining and the second largest mortgage lender in the U.S. will soon allow customers to pay in Bitcoin. The institutional buy-in on BTC is at an all time high. On-chain data are also bullish and comparisons to gold suggest that BTC is well on its way to becoming the new store of value in times of inflation.
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)!
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.