A weekly newsletter on actionable digital asset market insights and practical observations with a smidgen of greentea 🍵 insights
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📖 Book of the Month 📖
This month (or maybe two), I am reading Debt: The First 5,000 Years. If you follow me on Twitter or my prior books you will notice that the Debt topic is top of mind. This is because I think we are nearing some sort of major reset and I want to gain as much knowledge as possible on the history around this topic becuase no humans alive today have lived through what I think is coming which is a major global debt reset and/or hyperinflation to reduce debt levels. If you are reading along or listening drop me a note on Twitter or email!
Listen to Debt: The First 5,000 Years For Free with Audible. Link
💭✍🏼 Food For Thought 💭 ✍🏼
Got Bitcoin? The WSJ article below is a must read - Link
💸 Companies and Deals I am Watching Closely 💸
1. Zignaly, a crypto investment platform, raised $50 million from GEM Global Yield.- Link
2. Lido Finance, a staking project, raised $70 million from A16Z. - Link
📖 Quote of the Week 📖:
“There are decades where nothing happens; and there are weeks where decades happen.” ― Vladimir Ilyich Lenin
📰 This Weeks Most Interesting Digital Asset News 📰:
- FBI Seeks Software To Trace Top 95% Of Total Crypto Market Cap - Link
2. Cryptocurrency Is a Potential New Tool for Billionaires to Avoid Sanctions - Link
3. SEC Scrutinizes NFT Market Over Illegal Crypto Token Offerings - Link
4. Schwab files with SEC to create Crypto Economy ETF - Link
📈 Top 10 Market Movements by Market Cap over the last 7 days 📉:
Bitcoin: Total Miner Revenue - All Miners
I have updated this chart from last week and you can see that miner revenue is holding its general trend downward but on a week over week basis is basically flat from last week. Make sure to take a look at the new book for this month. I am also reading a few other books (I actually read multiple books at the same time) also about the end of major debt cycles. Thus, far my analysis and reading is showing that in this part of the movie the risk becomes higher that financial assets (stocks, bonds, etc.) may not perform / under perform real assets (gold, land, BTC?). On the Bitcoin point I am still gathering my thoughts on how I think it will perform if this war and increased global inflation / hyperinflation (i.e. not end of days inflation just inflation rising very fast month over month)--in truth no one can know. I will also be looking at other crypto not just Bitcoin--stay tuned.
Bitcoin Mean Hash Rate:
Updated from last week, you can see the hash rate is remaining relatively stable to flat from last week to this week.
This metric shows the the average estimated number of hashes per second produced by the miners in the network. Recall the "hashrate" is a measure of how fast miners can process the Bitcoin Proof of Work algorithm. With hash rates going up it means there was more miners on the network. More miners on the network means more competition and this means that it becomes harder for miners to profitability mine Bitcoin. This is metric feeds into the total miner revenue chart above because as Bitcoin's price moves higher the the block reward component of miner revenue also increases. To recap miner revenue = miner fees + block reward (i.e. the value of Bitcoin mined).
Thus, as the price of Bitcoin's goes down that component of miner total revenue drops as well. Coupled with the fact that there is more hash power on the network as a result of miners build out and some going public and /or raising money to buy more asics you have profitability slowing, prices falling and miner's under pressure to sell their Bitcoin to raise cash to fund operations versus taking on debt to fund operations at this point in the business cycle.
Bitcoin: Price OHLC
As you can see Bitcoin is still chopping around and from last week it has done almost a complete round trip (see the red cancel from last week which was in the 37k range. If you have read my newsletter since December 2021 when I turned generally bearish (go back and read those editions on the website) because of all the broader macro related factors. I suspect we have more months ahead of range bound activity until some of the major macro economic factors turn and governments generally pivot back to QE = money printing = currency debasement = Bitcoin price "should" move up in a hurry. I am increasingly looking at this especially given war developments and note the upcoming Fed meeting on March 18th--I expect that lead up week to be "exciting" for all markets generally.
Ethereum: Net Transfer Volume from/to Exchanges - All Exchanges
I have updated the chart for this week. The main call out on this chart is that ETH is also
stuck in the same bearish cycle as Bitcoin. Not the end of the world of course if you have an investment time horizon versus a "speculation" time horizon. The time will come when the data shifts but until then I will keep observing and waiting.
Total Value Locked (USD) in DeFI
DeFI TVL has bounced a bit this week up from $68 Billion last week.
As a reminder TVL means "Total Value Locked". This refers to people taking ETH based tokens or other tokens and "locking" them in DeFI protocols to lend, generate yields and otherwise earn excess returns.
The elephant in the room remains the specter of the US Fed hiking rates in dramatic fashion (see prior weeks letters on this topic as I have been saying since late last year). The more I am reading on the policy dynamics that central banks face the more I am convinced they are likely to break something on their road to "fixing" the situation. I say this because the have to play a perfect game (pick your sport) and still get lucky for this to be a benign policy tightening and that is not the highest probability outcome by a Ukrainian kilometer. When things begin to really shift--I think we will see the shift in TVL pick up first given that this represents the most risky and cutting edge area of DeFI protocol development.
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Disclaimer:
This Newsletter does not provide, and no portion of this content purports to be, individualized or specific investment advice and I do not provide investment advice. All information provided herein is general in nature and is made without regard to individual levels of sophistication or investment experience, investment preferences, objectives or risk parameters and without regard to the suitability of the content for individuals or entities who may access it.
No information provided herein, should be construed as an offer to sell, or a solicitation of an offer to buy any security or investment vehicle, nor should it be construed as tailored or specific to you, or any reader or consumer thereof. You understand and agree that the content does not constitute specific recommendations of any particular investment, security, portfolio, transaction or strategy, nor does it recommend any specific course of action is suitable for any specific person or entity or group of persons or entities.
The content herein is based upon information from sources believed to be reliable and I am not responsible for errors, inaccuracies or omissions of information; nor is it responsible for the accuracy or authenticity of the information upon which I rely. For informational purposes only. Do your own research.
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