Crypto Beans #15 Bitcoin is designed to increase in value, its in the mechanics

Hey there everyone! 👋 This is Shivam. I bring to you the 15th weekly edition of Crypto Beans. This is an effort through which I try to share my thoughts on the crypto space and help you stay updated. Your 0 to 1 guide in crypto.

Read time - 3 mins

In this edition, the article I explore is titled "Bitcoin is designed to increase in value, its in the mechanics" Hope you enjoy it.

State of Crypto affairs - A quick look at the market 

The global cryptocurrency market cap today: $1.23 Trillion

Weekly change: 1.93% | Yearly change: -45.25% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $550 Billion.

Weekly change: 2.52% | YTD change: 70.77%

 Another important metric is Bitcoin dominance which can be used as a rough indicator of the relative strength of Bitcoin versus other cryptocurrencies. A high Bitcoin dominance means that Bitcoin has a large market share and is potentially more influential in the overall cryptocurrency market and vice-versa.

Bitcoin dominance: Current Year: 46.42% | Last year (March 2022): 41.02%

Greed and fear index 

The market sentiment has been turning, now the market seems to be getting more cautious with the news around layoffs and looming recession. 

Note: The data used is based on metrics like Volatility, Surveys, Bitcoin Dominance, Social and Google Trends. Source: Coinstats

Is ETH ultrasound money? 

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW, as there is a shift in the narrative for Ethereum to become a store of value due to the expected reduction in ETH emissions.

Supply change since merge POS  -74,834 ETH

The graph highlights POS vs POW issuance since the merge. Impressive numbers, look super bullish for ETH long term given the supply of ETH is not growing as before

Spill the beans (Explain to me like a 5 year old) 

Bitcoin: This Is The Moment You've Been Waiting For

In my opinion, right now is the best time to accumulate Bitcoin that you will likely ever see again. This sentiment isn’t arbitrary. This is based on Bitcoin’s supply/demand mechanics. Those mechanics create a golden opportunity – a window in time, every four years.

A chance for people to lean in to Bitcoin as a part of their portfolio, to trust their instincts that Bitcoin is something they don’t want to miss out on… again. And this is that window.

Here’s why…

1} Bitcoin’s supply issuance schedule.

Well, the day that Bitcoin launched in January 2009… there were 0 Bitcoin in existence. Eventually, there will be an absolute maximum of 21M Bitcoin in existence.

So, how do you go from having 0 Bitcoins to 21 million?

Well, the person who made Bitcoin came up with a clever plan. They made it so that people who help keep the Bitcoin network safe (called "miners") get rewarded with new Bitcoins.

But here's the cool part. Every four years, the amount of new Bitcoins that miners get is cut in half. This creates an incredible attribute of increasing scarcity.

The result is : Bitcoin gets valuable

2} Bitcoin Halving Cycle

In the Bitcoin world, this decrease in release of new Bitcoins is called a "halving". (See the chart below)

What’s incredible about this event is that sudden reduction in new supply creates a supply shock that disrupts the existing supply and demand equilibrium, resulting in a shortage of available Bitcoin.

Suddenly there is not as much new supply going out into the market to meet demand. This supply shortage accumulates, day after day, and naturally buyers starts to raise their bids in order to find willing sellers.

As a result, the price of Bitcoin begins to rise, leading to a period of price discovery as the market adjusts to the new supply and demand dynamics.

3} Bitcoin’s performance after past halvings

Well, Bitcoin has had three halvings in its 14-year lifetime – in 2012, 2016, and 2020.  And in the 12-18 months that followed each of those events… Bitcoin has seen its major bull markets.  (You likely first heard about Bitcoin during its crazy 2013 rally, then were surprised to see it happen again in 2017, and again in 2021.) 

Here is what those rallies looked like (note: the y-axis here is logarithmic, meaning that the visual space between $1 and $10 is the same as $1,000 and $10,000):

That’s the pattern. It’s that simple. The halvings are written into stone in Bitcoin’s code. As long as Bitcoin remains alive, the next Bitcoin halving will absolutely happen in Spring 2024 (when the 840,000th block in Bitcoin’s blockchain is added, currently projected to happen on April 27, 2024).

This isn’t chance – this is mechanics.

And yet, 99% of people have never even heard about Bitcoin’s halvings. The fact that you are reading this means that you are now in that 1%. That’s called information asymmetry – you have an edge on the rest of the world.

What's brewing today? Bringing fresh beans to you: 

Editorial: It Sure Looks Like the U.S. Is Trying to Kill Crypto: The federal government’s recent actions against crypto are – rightly or wrongly – widely perceived as a coordinated attempt to maim digital assets. This risks sending a vital industry overseas without actually protecting investors.

Twitter Killing Legacy Blue Checks Is a 'Wake-Up Call to the Dangers of Centralized Social Media': The controversy around Twitter's verification shake-up has Web3 builders advocating for a decentralized way forward.

How Doodles Plans to Scale From Genesis Box to Millions of NFT Avatars: Doodles CEO Julian Holguin details today’s reveal of new avatar wearables and how Doodles 2 can eventually go wide.

Whats meme-ing? Better make sure this is fun

And now the funny part,

What did you think of today's edition?  

Reach out to me on Twitter or Linkedin for any feedback :)

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.