State of the Coin: New Year, Same Price
State of the Coin: Week ending 2022-01-07
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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).
Video Version
Check out the video version of State of the Coin here!
A look off chain
Human Rights Foundation grants 4.25 BTC to developers: The HRF recently announced its latest round of grants. They will be giving 425 million satoshis to 10 different developers, each working on a different aspect of the Bitcoin network, including Lightning, Bitcoin Core, education, translation, and wallet development. One developer will receive 1 BTC while other recipients will receive either 0.5 or 0.25 BTC grants. For this round of awards, a special focus was being given to people leveraging Bitcoin in authoritarian countries to help spread information on how the technology works and can empower those in need of financial freedom.
Marathon Digital mined over 3,000 BTC in 2021: Bitcoin mining company Marathon Digital Holdings had a massive 2021, mining 3,197 bitcoin, up from 338 BTC in the previous year (that’s 846% increase year-over-year). Marathon now holds a total of 8,133 BTC, worth ~$370 million at the time of writing. Marathon said it deployed 30,391 bitcoin mining machines last year and increased their hash rate by 1,790%. The company said its mining fleet currently consists of 32,350 active machines and, in December, announced the purchase of an additional 78,000 bitcoin mining rigs from Bitmain for nearly $850M.
Trouble in Kazakhstan: Political unrest in Kazakhstan led authorities to restrict internet access, affecting miners in the country and leading to a relatively large drop in the Bitcoin network hash rate. The civil unrest is apparently being driven by rising fuel prices and a crumbling economy. Following the Chinese mining ban last summer, Kazakhstan became an attractive location for mining companies due to its capped electricity rates and generally positive attitude towards the industry. In fact, according to data released last August, Kazakhstan was the second largest producer of hash rate globally (only the US had a larger share of global hash rate). While it’s unclear how long miners will be offline, the political unrest and authoritarian response seems unlikely to end anytime soon. As of this writing, internet blackouts continue and Russia has sent “peacekeeping” troops in the country.
El Salvador building legal framework around BTC Bonds: Since declaring BTC legal tender last September, El Salvador has continued to push the envelope in BTC adoption. In November President Nayib Bukele announced his plan to issue bitcoin bonds worth $1 billion in order to finance the construction of Bitcoin City. El Salvador’s finance minister, Alejandro Zelaya, said this week that his government will send about 20 bills to Congress concerning those bonds. The bills will cover financial markets and investment in securities to provide a legal foundation for issuing bitcoin bonds, he explained. Both the issuance of the bitcoin bonds and construction of Bitcoin City are expected to commence this year.
Robinhood announces launch of crypto wallet: Popular trading platform Robinhood announced this week that the beta version of their crypto wallet will launch in mid-January. According to the company, 1.6 million users have signed up for the waitlist since their original announcement in September. This is great news for those who hold large amounts of crypto on Robinhood - until their wallet is functional, the only option for moving tokens is to sell and rebuy elsewhere.
Guest Writer: Isaac Quest (@isaacquest_)
My name is Isaac, and I am 26 years old; I have a BA in Education and am currently working towards my Masters in Education. I went into the rabbit hole of bitcoin around 2020 when BTC was sitting at around 35k.
Bitcoin and tech stocks are currently related right now. Bitcoin is the most excellent store of value in the history of humanity. In 2021 the S&P 500 had a gain of 26%, which is pretty good. Despite all the volatility, Bitcoin performed better than the S&P 500. I would argue that growing adoption and fundamentals are more vital than ever for Bitcoin.
We need to continue to hold and buy the dip. Currently, the 3rd most enormous whale in bitcoin is continuing to buy, and that whale is a valid holder just like Micheal Saylor. I remain bullish on bitcoin because of its adoption and fundamentals.
I predict that we are in a mass consolidation, and I believe bitcoin will not drop below 37K. If bitcoin can go back to 48K, we will have some good momentum. However, I also think Bitcoin will retest its All-Time High around March/April.
Shout out to Green Candle investments! You guys are fantastic!!
Thank you,
Isaac
P.S. Thank you, Satoshi!!!
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)!
Quick word about stacking tax-advantaged sats!
Do you want to HODL BTC in a tax-advantaged retirement account? Check out Choice by Kingdom Trust! Click this LINK to find out more!
A look on chain
Let’s take a look at on-chain data from Glassnode!
Price update: Looks like we’re starting 2022 the same way we started 2021 - with Bitcoin priced at $40k! As of this writing, the current price of BTC is $43,220. In the last week, BTC’s USD price is down 9.2%; in the last month, it is down 14.5%; in the last year, BTC price is up 26.6%.
S2F Model Update: Although price currently remains below stock-to-flow model projections, the model has historically performed well immediately prior to halving events. 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.
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 continues to hover close to 1 - in my opinion, this is bullish given the volatility over the last few weeks. Even when we see dramatic drops in price, we don’t see large downward spikes in SOPR - people are not selling at a loss when price drops suddenly.
Hash Rate: As we noted in our off-chain news section above, recent political turmoil in Kazakhstan has led to authority-enforced internet blackouts. These blackouts have forced miners in the country offline, resulting in a drop in network hash rate. In August, the University of Cambridge reported that Kazakhstan was responsible for 18.1% of the global hash rate, second only to the U.S.
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 @bitcoinjeanne:
More resources
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.