A weekly newsletter on actionable digital asset market insights and practical observations with a smidgen of green tea 🍵 insights (do not panic edition)
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📖 Book of the Month 📖
I first read this book while studying for my MBA in the early 2000s when it was in the 5th edition. I have the urge to revisit this book again and it is in it's now in the 7th edition. I have read thousands of books over the years and thankfully I have many of them saved with notes from Kindle v1.0 days. I will be adding recommended reading to my website but readers here can get what I consider to be key books to read first over the holidays and as we enter Q1 2022.
Listen to Manias, Panics, and Crashes on Audible
💭✍🏼 Food For Thought 💭 ✍🏼
Inflation at 6.8% in the US? - Answer: Only if you use the post 1981 "adjustment" to the inflation calculation. If you use the "Pre-1980" formula that your parents or grandparents would have read in their newspaper during their era inflation, is actually 14.9%. It's funny how formulas work when you cherry pick the variables.
This story matters in the narrative context of looming Congressional elections with one party seeking to use all tools to stay in power via speeding up policy tightening (in hopes of halting inflation which will not work on a short political time table abscent crashing all risk assets + jobs + the economy) to avoid losing mid term election seats. I think this story is important because it speaks to the pressure the Fed will be under the "speed" up their taper as I have spoken with some of you about. Speeding up the taper is analogous to saying we are going to drain the water from the bath tub at a faster pace. If you have children you know this means the rubber duck starts to float down faster--the same applies with markets including Digital Assets and Stocks. Pay attention to Fed speak this week. This news article gives the political context. To be clear, I am not a fan of any particular party but what they do matters for your money i.e. financial independence--hence I am flagging this.
📖 Quote of the Week 📖:
"Do not be wise in words - be wise in deeds." - Marcus Aurelius
📰 This Weeks Most Interesting Digital Asset News 📰:
1. Vitalik Beuterin the leading co founder of Ethereum has announced his endgame roadmap for the protocol - Link
2. NFTs and Cash Are The Top Choice For Holiday Gifts - Link
3. Gemini Exchange to Partner with Colombia's largest Bank To Offer Crypto in the Nation - Link
4. US Cryptocurrency CEOs to Testify at House Committee On Finance Services Hearing - Link
5. DAO Index Fund Aims to Compete with Biggest Asset Managers in the World - Link
📈 Top 10 Market Movements by Market Cap over the last 7 days 📉:
📈 Call Out Digital Asset Charts of The Week 📉:
Bitcoin: Net Transfer Volume from/to Exchanges- All Exchanges
The above chart shows the difference in volume flowing into exchanges and out of exchanges, i.e. the net flow of coins into/out of exchanges. Note that exchange metrics are based on glassnode labeled data of exchange addresses. Red means flows out of Exchanges and Green means flows into Exchanges. You can see the Bitcoin is still flowing off exchange. This matters because to sell Bitcoin you have to move it on to the Exchange. Thus, even though Bitcoin is under pressure as I noted in last weeks letter because of short term panic selling. There is no stampede for the exit.
Bitcoin: Spent Output Age Bands (SOAB) (I have focused on the view from 1 hour to 6 months)
SOAB provides a macro overview of the proportion of daily spending for various coin age categories. The chart above shows all coins spent (i.e. sold or changed hands) from 1 hour age to 6 month age as of the last week. As I noted last week you can see that the majority of selling is still clustered in short term traders into the year end.
Bitcoin: Spent Output Age Bands (SOAB) (I have focused on the view from 1 year to 10 year long holders)
As you can see above the SOAB of tokens from 1 year old to 10 years old updated to show the last week. Very little long term holder selling is taking place. How is it possible with such little long term selling we see the price moves currently? Hedge Funds, Traders and Institutions in the new futures products available in the US (I suspect but cannot prove) are what is driving the divergence between the on-chain data and market price.
Ethereum: Total Value Staked
Based on the updated snapshot of the price above the total value of ETH staked has actually increased since last week. This is due to the increased NFT and general ETH demand along with burning of ETH which continues to happen on schedule.
Ethereum Burned since the London Hard Fork (EIP 1559)
As I mentioned in the ETH Total Value Staked chart, the burning of Ethereum is supporting the price. "Burning" means the literal destruction of Ethereum supply which has the effect of decreasing the supply which supports the price in addition to general network demand.
I hope everyone enjoyed this weeks write up, I know it was long but given the market action this week I wanted to provide extra on-chain context and some general macro context.
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