Crypto Beans - Feb 05, 2023

Read time - 5 mins

Hey there everyone! 👋 This is Shivam

I bring to you the 6th weekly edition of Crypto Beans for the year 2023. We are into the second month into the year and I have received amazing feedback on the newsletter🚀, I feel super stoked for what lies ahead.

In this edition, apart from market update, important metrics, I also talk about "The S-Curve of Bitcoin Adoption".

Loading.....

What is in it for you?

For all my friends who are getting this for the first time, this is an effort through which I try to share my thoughts on the crypto space and help you stay updated on the basics of the industry.

This is your 0 to 1 guide in crypto if you are looking to learn more about crypto and what it stands for. Okay done selling it 😛

Let's take off on this journey together 🚀 🚀

State of Crypto affairs? A quick look at the market

The global crypto market currently stands at $1.13 Trillion. It is still ~60% down(👎) from its all time high of $3 Trillion which it hit in November 2021.

New year new highs: The market has been going up since the beginning of the year.

The global cryptocurrency market cap today: $1.13 Trillion

Weekly change: 4.19% | Yearly change: -41.81% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $452 Billion.

Weekly change: 1.91% | YTD change: 40.90%

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: 41.73% | Last year (Jan 2022): 41.82%

Top crypto projects/protocols by different metrics

The Interesting thing to note here is that although Tether (USDT) has just $68B market cap, it is traded the highest with volume close to $32B given its use as a stablecoin for the exchange of assets. Meanwhile, Stablecoin market cap is at $138 Billion and has a 12.23% share of the total crypto market cap. 

Greed and fear index

The market has been roaring in 2023 in Jan and now in Feb as well, with renewed hopes of Bitcoin leading a rally to the moooooonnnnnn........

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. (Super Bullish)

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

Supply change since merge POS -9,063 ETH

(Eth has officially less supply post merge, here is a look at the 2 year supply projections)

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

The Bitcoin Adoption Curve! Where are we?

The adoption of disruptive technologies is never a linear process – it has always followed an exponential S-Curve pattern. Something that I learned in my MBA classes at IIM Lucknow

Bitcoin is a disruptive peer to peer network that is quantifiably still in its early stages of adoption. To understand this, let’s start with talking about adoption curves. Adoption curves describe the life cycle of a particular technology or concept. While the technology at hand may differ, the natural human behavior and sociological dynamics repeat.

A good indicator of the progress of crypto and Bitcoin towards mainstream adoption is the so-called “crypto adoption curve.” The curve shows the different user segments, ranging from early adopters (Bitcoin developers) to the laggards, represented by large, established institutions, such as Mutual and Pension funds.

How does the Adoption curve work?

In all technology disruptions the pace of adoption appears slow at first because a new product has minimal market penetration until it hits an inflection point and accelerates through an exponential growth phase.

Why is that?

In the early days, a small niche group of individuals or entities have the specialized knowledge to grasp the value of the new technology. The specialization of knowledge and therefore conviction of this concentrated group of innovators provides the bedrock foundation of adoption. This group brings the technology from zero to one 1. However, in this stage the technology is often still in its infancy and societal penetration is so low that few are even aware it exists yet.

After the Innovators the next group is the Early Adopters.

Oftentimes these are highly open-minded individuals who have direct or indirect connections with the innovators. Early adopters often face intense scrutiny and pushback from outsiders. Currently, the data suggests that Bitcoin adoption is in the latter half of the Early Adopters “phase.”

After the early adoption phase the technology hits the fastest acceleration of adoption; the exponential point of the “S” curve of adoption.

This is where the technology begins to get widespread attention and known by most technologists around the world. Slowly, then suddenly. The late majority stage is when the technology becomes mainstream, and everyday households and individuals are aware of the concept.

With this stage the technology starts to reach saturation; with the only group left to adopt being the very slow-moving laggards. Laggards tend to either be entities who are too stubborn to adopt the technology or have external restrictions (such as regulation) not allowing them to do so.

Bitcoin vs. The Internet: Is Bitcoin Adoption Everything It Seems To Be?

Let's look at the comparison. From the picture below we can see that it took the Internet seven and a half years to go from 130 million users to 1 billion, and it’s estimated that it will only take four years for Bitcoin to reach the same accomplishment.

Right now there are approximately 100-130 million Bitcoin and crypto users, so by 2025 that number will reach 1 billion (according to current annual adoption rates of 80%).

Why is it different for Bitcoin?

Bitcoin is unique from past technology due to the direct monetary incentive of being an early consumer. Of course, for entrepreneurs there were direct and indirect monetary incentives to adopting new technologies.

From a consumer perspective, past technologies had convenience/efficiency related incentives to adopt them: adopting automobiles allowed you to zoom past the horse and buggy, adopting the cell phone allowed you to make calls without being tied to a landline, adopting the internet allowed you to expand the reach of your business far beyond what any analog marketing was capable of etc.

However, it is difficult to measure the direct monetary value gained by being an early consumer of some of these technologies. With Bitcoin direct financially incentivized adoption creates a game theory in which everyone’s best response is to adopt Bitcoin.

Adoption of the internet and adoption of other technologies before the internet occurred on analog rails. The internet, which exponentially increases the speed of the spread of information, is the main tool in which the word about Bitcoin is spread. After all it is an asset native to the digital domain. Anybody with internet access has a countless quantity of free resources with which to educate themselves on Bitcoin. Bitcoin spreading on the internet is analogous to it traveling on a superhighway versus internet adoption spreading on a dirt path

Another graph we can look at is increasing adoption of Bitcoin along with its increasingly deflationary money supply. In my eyes, this is arguably the simplest visual representing the bullish case for Bitcoin.

Increasing adoption vs Bitcoin supply issuance (which means the supply is fixed even though the adoption would increase exponentially in future)

The biggest brands in the world are accepting crypto payments

The number of brands that have entered the space have exploded, thus adding to the increase in consumer adoption.

What lies ahead?

The crypto adoption rate worldwide is increasing, and in particular, the popularity of Bitcoin is growing immensely. Most importantly, crypto adoption is not happening in any one country, region, or socioeconomic group.

This is proven through the increased engagement and growth in emerging markets’ attitudes towards cryptocurrencies and Bitcoin. For e.g. India currently ranks 4th in Global Crypto Adoption index behind

Nonetheless, greater cryptocurrency and Bitcoin adoption will not be without headwinds, as regulatory oversight and aggressive lawmakers seek to reign the industry in by creating CBDCs and attaching identities to crypto investors.

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

The world must take a ‘collective action’ approach to regulations — India’s finance minister: In a recent television interview, India’s Finance Minister, Nirmala Sitharaman, suggested that regulation “cannot be done” by a single country; it requires an international effort.

Binance-WazirX Dispute Rages as the Indian Crypto Exchange Is Told to Move Funds Out of Binance: Binance has invited Zanmai Labs, the entity operating Indian crypto exchange WazirX, to work out arrangements to withdraw any remaining assets held in Binance wallets, according to a blog post on Friday.

Bitcoin NFT Mints Are Rising—But So Are Transaction Fees: Ordinals, a controversial new project that lets users put NFT-like media assets on the Bitcoin blockchain, is seeing surging activity this week. On Thursday, Ordinals recorded its largest number of single-day mints—but network fees are apparently growing as a result.

Whats meme-ing?

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.