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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 news from 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 this week’s State of the Coin
A look off chain:
Bitcoin City and the BTC Bond: El Salvador’s president, Nayib Bukele, announced Saturday that the country will begin construction on “Bitcoin City” in 2022. The city will be funded initially by bitcoin-backed bonds and would be powered via volcano-based geothermal energy. Bukele announced that they will be issuing a $1B bond via Blockstream’s Liquid Network. The bond will be split into two $500M tranches - one that will be used to buy and HODL BTC and one that will be used to help build Bitcoin city. Earlier this fall, El Salvador became the first country in the world to officially accept bitcoin as legal tender and they remain at the forefront of BTC adoption.
OBJ to take his salary in BTC (and he CashApped the boys a few sats): Last week’s newsletter included a number of headlines related to athletes (and entire athletic organizations) opting for bitcoin payments. This week brings yet another headline - Odell Beckham Jr. (NFL, LA Rams) has signed a contract to receive his salary in bitcoin. In addition to getting paid in BTC, OBJ also paid out $1M in BTC to fans via CashApp. Both members of Green Candle received ~20$ in bitcoin - thanks OBJ! Bitcoin continues to seep into pop culture.
Lancium enters the bitcoin mining game: Lancium, a Houston-based company that develops software and other technologies to improve bitcoin mining uptime and cost effectiveness, has raised $150 million for expansion across Texas. Lancium is particularly focused on increasing the reliability of mining rigs powered by renewable energy sources. According to Bitcoin magazine, “a common issue with renewable energy farms, demand and supply imbalances provoke price volatility and inconsistent uptimes.” Lancium’s sites aim to ramp up mining activity when supply on the renewable grid is higher than demand and ramp down mining activity as demand rises.
Mining migration: The Chinese government banned bitcoin mining earlier this summer, leading to a massive migration of hash rate. Data gathered by the Financial Times shows that some of the world’s largest mining companies evacuated more than 2 million mining rigs out of China following the ban. But where did the rigs go? According to the Financial Times report, the majority of these rigs were moved to North America, Russia, and Kazakhstan. The countries that provide regulatory clarity, easy access to energy sources, and tax advantages will inevitably become world leaders in hash rate over the next several years.
Jerome Powell reappointed as Fed Chair: In an unsurprising move, the Biden administration has reappointed Jerome Powell as the chair of the Federal Reserve. Powell has overseen unprecedented money printing and continues to push back rate hikes. it looks like he’s here for the long haul...act accordingly.
NEW: Terrible Take of the Week: This week’s terrible take of the week comes from Senator Elizabeth Warren, who is apparently under the impression that prices are rising because corporations are greedy...yeah, shut-down related supply chain issues and printing trillions over the last 18 months have nothing to do with it.
We’re always looking for guest writers! If you or someone you know would like to be featured on State of the Coin as a contributor, let us know! You can email us at greencandleit@gmail.com or DM us on Twitter (@Greencandleit)!
A look on chain:
Let’s take a look at on-chain data from Glassnode!
Price update: After spending most of the week around $56-57k, we got a little Thanksgiving Day pump - no doubt because HODLers went home and convinced their relatives that their gas and grocery bills were the result of a collapsing US dollar. As of this writing, in the last week, BTC’s USD price is up 3.4%; in the last month, it is down 3.2%; in the last year, BTC price is up 212.2%.
S2F Model Update: Price currently remains well below the stock-to-flow model. Although we remain below model predictions, the model tends to perform well immediately prior to halving events (see red circles below). The model has a predicted USD value of $121k in March of 2024, when the next halving event is expected to occur. Remember, BTC is a long term investment, not a “get rich quick” vehicle. To learn more about the S2F model, check out this article by PlanB.
200 Week Moving Average: I’ve decided to include a quick view of price vs the 200 week moving average. Some use this moving average as a (very) rough floor model.
SOPR: The Spent Output Profit Ratio (SOPR) is computed by dividing the realized value (in USD) 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). SOPR dipped slightly negative last week and appears to have bounced off zero back into positive. Last week I mentioned that our time over 60k had been too short lived for SOPR to dip too far negative if price stayed in the high 50k range - this continues to be the case as we appear to have solid support in the low-to-mid 50s but resistance at 60k.
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 using our own Thanksgiving meme - remember, the Federal Reserve wants you and your family to eat soy for Thanksgiving. Be a bull, don’t eat soy.
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!
Dan and Brandon
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, Brandon Keys, and occasionally a guest writer; 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. None of the authors of this article are financial advisors. We encourage all readers to do further research and do your own due diligence before making any investments.