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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
Dorsey appears all in on Bitcoin: Wow, what a week for Twitter and Square. Jack Dorsey officially stepped down as CEO of Twitter, a move further signaling that he is shifting more and more of his attention to Square. Oh, and Square will be officially renamed “Block” on December 10th. And Block wasn’t the only rename - Square Crypto, a segment of SQ dedicated to advancing Bitcoin, will be renamed Spiral. While there is a lot to unpack here, I’ll keep it simple - these moves make me bearish on Twitter and bullish on Block.
A near miss for Plan B’s November end floor model: The anonymous Twitter Bitcoin analyst Plan B had a floor model of $98k for the end of November. After the model nailed floor pricing for August, September, and October, it just narrowly missed the $98k prediction for November. Ok Ok, it was more than a narrow miss. We ended the month in the $56-58k range (shoutout 58k gang), well below the theoretical floor of $98k. Plan B gained a bit of online fame for applying a stock to flow model to Bitcoin pricing, which has a strong performance history, particularly near cycle ends. Hey, everyone misses occasionally - but let’s hope the S2F model continues its historical performance (if it does, we’ll be at $100k in no time).
The Bank of England is worried about El Salvador: While speaking at Cambridge University last week, Bank of England (BOE) - the country’s central bank - Governor Andrew Bailey raised concerns about bitcoin being used as legal tender in El Salvador. Bailey said: “It concerns me that a country would choose it as its national currency … What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.” After legalizing bitcoin in September, El Salvador has been at the forefront of BTC adoption at the nation-state level. They’re led by President Nayib Bukele, who took to Twitter to voice concerns of his own:
SEC rejects another spot ETF: After delaying decisions in both June and July, the SEC has officially rejected WisdomTree’s spot BTC ETF application. The decision came as no surprise to me, as SEC Chair Gary Gensler has indicated multiple times that futures ETFs are preferred over spot ETFs. Indeed, the SEC rejected VanEck’s proposal for a spot bitcoin ETF just a few weeks ago.
Meanwhile in Canada… : While spot BTC ETFs can’t quite make it to market in the US, our neighbors to the north aren’t shying away from them. Fidelity Canada has launched its spot bitcoin exchange-traded fund - called the Fidelity Advantage Bitcoin ETF (TSX ticker: FBTC). Fidelity is now the largest asset manager to offer a bitcoin ETF in Canada. Spot ETFs are great options for those looking to gain exposure to the BTC market in vehicles that don’t yet allow investors to hold actual bitcoin (e.g., retirement accounts in Canada - although in the US, there are now multiple platforms that allow you to hold BTC in your IRAs).
Hut 8 has a great November and continues to HODL: Here’s some more news out of Canada: Hut 8, a Canadian-based mining company announced that they mined 256 new bitcoin in November. Following the HODL strategy they introduced earlier this year, they deposited all 256 coins into custody, bringing their total coins held to 5,242. At $58k per coin (shoutout 58k gang), the USD value of their BTC reserves is $304,036,000.
NEW: Terrible Take of the Week
This week’s terrible take of the week comes from the White House Chief of Staff, Ronald Klain, who inexplicably believes that shutting down production and printing money ACKSHUALLY leads to a stronger economy. If you’re on the fence about buying more BTC, just remember who’s in charge.
This Week’s Guest Writer!
This week Linear Trav (@3DNuts) was kind enough to share his thoughts on Michael Saylor’s recent interview with Tucker Carlson and a bit on how he views bitcoin in the current inflationary fiat environment. Be sure to give Trav a follow on Twitter - he puts out killer content!
Bitcoin is a Lifeboat
Earlier this week Michael Saylor joined Tucker Carlson on his show, Tucker Carlson Today. Tucker said that he was looking for THE definitive person to explain Bitcoin to him and his audience. Saylor knocked it out of the park. I highly recommend watching it here.
He spoke for almost an hour and a half, outlining the history of money, the problem that inflation is causing all aspects of society today, and how Bitcoin is the solution to that problem. He described Bitcoin as the first engineered monetary asset, a system that respects the laws of thermodynamics.
He used a myriad of analogies to describe how the Sound Money of Bitcoin solves the ills of inflation. But the one that really blew Tucker away was him comparing inflation to sucking the oxygen out of the room and Bitcoin being the oxygen mask. He asked Tucker, “Would you grab the oxygen mask?” Tucker responded with an emphatic “YES!”
An even better simile that I and many others have said on Twitter is that Bitcoin is a lifeboat. For the first time ever, people have a way to safety from inflation with a tool that not only holds their wealth, but increases in value over time.
With Bitcoin’s permissionless nature, this lifeboat of a stable store of value is available to every single person on the planet; the only problem is that not everyone has gotten on board. This reminds me of the Christian parable of The Drowning Man:
A fellow was stuck on his rooftop in a flood. He was praying to God for help.
Soon a man in a rowboat came by and the fellow shouted to the man on the roof, “Jump in, I can save you.”
The stranded fellow shouted back, “No, it’s OK, I’m praying to God and he is going to save me.”
So the rowboat went on.
Then a motorboat came by. “The fellow in the motorboat shouted, “Jump in, I can save you.”
To this the stranded man said, “No thanks, I’m praying to God and he is going to save me. I have faith.”
So the motorboat went on.
Then a helicopter came by and the pilot shouted down, “Grab this rope and I will lift you to safety.”
To this the stranded man again replied, “No thanks, I’m praying to God and he is going to save me. I have faith.”
So the helicopter reluctantly flew away.
Soon the water rose above the rooftop and the man drowned. He went to Heaven. He finally got his chance to discuss this whole situation with God, at which point he exclaimed, “I had faith in you but you didn’t save me, you let me drown. I don’t understand why!”
To this God replied, “I sent you a rowboat and a motorboat and a helicopter, what more did you expect?”
This parable hits home for me as I have tried to bring many friends and family members onto the Bitcoin lifeboat over the years. The biggest problem is that most haven’t even noticed that it’s raining.
The FED has continued to downplay the true inflation for years with highly manipulated CPI data. Also, the media is just as complicit by blaming the inflation on everything from the Coronavirus to greedy capitalists overcharging for their products.
The continued money printing and coercion of the narrative will not last long though. Like many other previous failed fiat currencies, the economic dam is about to break. When that dam does eventually break, there will be many troubled waters ahead, but those aboard the Bitcoin lifeboat will be the only ones able to weather the storm.
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 plummeting to prices not seen since early October, we have bounced back to a steady $56-58k range. Keep panic selling on omicron news anons, I’m here for your coins. As of this writing, in the last week, BTC’s USD price is down 4.2%; in the last month, it is down 11.3%; in the last year, BTC price is up 193.2%.
S2F Model Update: Although price currently remains well below stock-to-flow model projections, the model has historically performed 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 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.
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)! Elon brought absolute fire this week, and I think his sentiment is spot on. Jack’s resignation may be the beginning of the end for Twitter:
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.