Bitcoin is a calm in the rough seas

1} The world around is in turmoil as wars and debt burdens get bigger, Bitcoin is a calm in the rough seas

Information sharing started in 90s with the advent of Internet, then came internet browsers and online companies driving the massive adoption

But value was still transferred the usual way, physically through Cash. It started changing with the likes of PayPal allowing users to transfer money online and now with Fintechs entering the space but that money has always been controlled. Banks can put brakes on your account anytime, nothing seems sovereign about this

2} The crash of 2007-08 woke the world up to the demerits of controlled money

The crash shook the world leading it into a recession, where central banks has to step in. Governments printed money bailing out too important to fail banks who got drunk on real estate and mortgages. Eventually people suffered, they paid through lost jobs and sources of income, years of progress and planning gone to nothing

So, a guy named Satoshi came up with currency that could work without the need for a trusted third party, no governments no central banks to govern policy

Bitcoin is the leading digital money. As information began coalescing online, eventually value did too, but it took longer

Bitcoin is just 15 years old, and it keeps growing in adoption. Bitcoin and its layers connect the world in terms of exchange, even as tribalism tries to tear us apart

It's simple math and rationalism in a world of emotion and chaos. It pierces borders with opportunity. And it grows stronger over time

3} I found a golden metric to analyze Bitcoin price wrt market- The MVRV Ratio

It is a bitcoin chart that uses blockchain analysis to identify periods where Bitcoin is extremely over or undervalued relative to its 'fair value'.

It uses three metrics:

1. Market Value (blue line):

The current price of Bitcoin multiplied by the number of coins in circulation. This is like finding the market cap in traditional markets

2. Realized Value (orange line):

Instead of taking the current price of Bitcoin, Realized Value takes the price of each Bitcoin when it was last moved during a transaction i.e. the last time it was sent from one wallet to another wallet.

It then weighted average of price (across different volumes of BTC exchanged) and then multiplies that average price by the total number of coins in circulation

Why is it important?

Because, it strips out the short term market sentiment that we have within the Market Value metric

It can therefore be seen as a more 'true' long term measure of Bitcoin value which Market Value moves above and below depending on the market sentiment at the time

3. Z-score (red line):

A standard deviation test that pulls out the extremes in the data between market value and realized value

A Z-Score in the pink box signifies higher valuations for Bitcoin while the line in green zone indicates oversold conditions

The best part:

Historically it has picked major Bitcoin price highs to within 2 weeks

Interesting chart to constantly look into if you looking to ape into Bitcoin

The global cryptocurrency market cap today: $1.31 Trillion

Daily change: 0.37% | Yearly change: 23.76% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $669 Billion.

Weekly change: 12.20% | YTD change: 105.21%

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: 52.96% | Last year (Oct 2022): 38.43%

The market sentiment has gone back to greed levels with Bitcoin touching $35k this week

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

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW.

The significance of the chart - understand how the supply of Ethereum is decreasing post the merge, which means “deflationary economics” for the Blockchain

Supply change since merge POS -253,267 ETH

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

Bitcoin's 14% Weekly Gain Signals 'End of an Era' as Big Tech Dumps, Analyst Says Bitcoin's advance this week coupled with gains across all digital asset sectors, highlighting the breadth of the crypto rally.

VanEck predicts a 10,600% Solana price rally by 2030 The report also delves into a potential scenario where Solana becomes the first blockchain to accommodate applications with over 100 million users.

And now the funny part,

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