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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 the State of the Coin
A look off chain:
Pay me in Bitcoin: Aaron Rodgers made headlines this week when he announced he would be taking part of his salary in Bitcoin. Rodgers wasn’t the only celebrity to announce a BTC payment - Joe Rogan, arguably the world’s most popular podcast host, apparently accepted $100,000 in BTC. Rogan was previously skeptical of Bitcoin, but is somewhat notorious for his open mindedness and willingness to change his stance on topics. Following the Aaron Rodgers news, Miami Mayor Francis Suarez announced that he would take his next paycheck in BTC, which might mark the first time a public employee gets paid in Bitcoin.
India’s Paytm considering BTC: India's largest mobile payment platform Paytm is considering offering its customers and merchants BTC options. Unfortunately, BTC remains in regulatory uncertainty in India. In fact India fully banned BTC in 2018 but lifted the ban in May of 2020. Paytm CFO Madhur Deora told Bloomberg: "Bitcoin is still in a regulatory grey area if not a regulatory ban in India. At the moment Paytm does not do Bitcoin. If it was ever to become fully legal in the country then clearly there could be offerings we could launch." Paytm currently serves more than 300 million customers and 20 million merchants.
Bitcoin is dead, according to Kenya: RIP to Bitcoin. It’s officially been declared worthless by Mwotia Ciugu, a Kenyan communications strategist who recently wrote an op-ed warning African investors to steer clear of BTC. In his op-ed, he claims that high levels of volatility and lack of “scalability” limit the use of BTC. Although BTC is highly volatile in the short-term, it’s long-term growth is undeniable - in the last 5 years, BTC is up 8,697%. In terms of scalability - BTC and layer two technologies have proven stable over time, even major geopolitical changes occur (e.g., China’s mining ban - see below to see how quickly hash rate (and price) recovered following the ban). We previously wrote more extensively about BTC’s volatility here.
Federal Reserve to begin tapering: The Federal Reserve in U.S. announced on Wednesday that it would begin tapering its bond purchases later this month. This comes in the face of consistent inflationary trends over the last several months. Time will tell whether completely halting the economy and printing trillions of dollars has an adverse effect on the economy…
Feature of the Week
Every week, we reach out to members of the Bitcoin community to see where they stand on BTC and to ask what they’ve been up to lately. This week we’re happy to share a quick word from @glennhodl:
A couple of weeks ago when I agreed to write this piece I ran a Twitter poll with a few different options regarding subject matter. Based on the wisdom of the crowd I will now dispense some unabated bullishness on the future of bitcoin, with a slight pep-talk thrown in for good measure.
In case you were in any doubt, bitcoin wins. We’re far beyond the point where it could be stopped (if in fact such a moment ever existed), or even meaningfully held back. Bitcoin (the network) is a life-form, it feeds on human behaviour and the laws of physics. Bitcoin (the currency) is the only provably scarce asset in our universe, with the possible exception of land, but unlike land, it is fungible and can be moved, in any amount, to any other person on the planet at almost no cost.
Bitcoin feeds on human behaviour because, if something is scarce (and useful), human beings will naturally wish to acquire it. The beauty of bitcoin is that as more people wish to acquire it in greater amounts, it becomes less attainable and a feed-back loop ensures its survival.
As an aside, it is my view that this feedback loop is what Plan B has quantified in his various S2F models.
Everybody on earth will one day own bitcoin, or rather, everyone will own some sats. If you’re reading this, the chances are you already have some. What you may not realise is quite how precious what you have is, or where, if you can just hold onto it long enough, it will place you in a world under a bitcoin standard.
We all hear about whales with 10k bitcoin, or OGs with 100, or anyone who listened to American Hodl and busted their ass in the bear market to get their hands on 6.15. But when it’s mathematically impossible for everyone in the world to own more than 300k sats at the same time, and (as I tweeted last month) repeating current wealth-distribution would leave the bottom 55% of world population with just 6348 sats each, if you measure your bitcoin holdings today in the millions of sats you will be incredibly wealthy in the future.
But don’t take your foot off the gas now, get to that next million marker, next 10 million or whole coin. Do it by earning, selling, whatever it takes. But, seriously, DO IT.
There is still a once in a millennium opportunity here, bitcoin is going to take over the world. Don’t screw it up.
Give this HODLer a follow on Twitter @glennhodl!
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 reaching a new ATH two weeks ago, price has held steadily over 60k with occasional jumps over 63k. This hopefully represents a nice layer of support in the low-to-mid 60s. As of this writing, in the last week, BTC’s USD price is down 0.3%; in the last month, it is up 24.4%; in the last year, BTC price is up 335.2%.
S2F Model Update: Price currently remains well below the stock-to-flow model. In fact, the model has price on November 4th at $106,859 USD, leaving us roughly $45k away from predicted price (note that we keep tracking closer to model predictions week after week). 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.
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 remains positive but relatively low (that is, it is not spiking in ways similar to previous low-to-mid 60k price points in August). This suggests that HODLers are doing what they do best, even when price jumps.
Hash rate: Hash rate continues to climb back from its dramatic drop following China’s BTC mining ban this past summer. In fact, hash rate is now well-within the mean + error range of the three month period leading up to the Chinese mining ban.
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 featuring a meme from the Twitter team at Choice by Kingdom Trust!
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, 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.