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Happy FRIDAY! This is Bitcoin Culture, and we are sending you into the weekend with the most recent updates about Bitcoin & financial markets. Here's what's going on:
Crypto bounces back (kinda)
Grayscale report
Tesla sells BTC
CRYPTO MARKET SETTLES
Things finally seem to be settling down as crypto prices (and my sanity) recovered well this week:
BTC: 13%
ETH: 33%
After a crazy last few months, here's what we saw:
Terra (LUNA / UST)
Terra's (not so) stablecoin, UST, lost its peg to the dollar and 96% of its value
LUNA went from $116 per coin to $0 in one month
Terra destroyed a $60 billion market cap
Three Arrows Capital (3AC)
Multi-billion dollar hedge fund filed for bankruptcy
Invested $560M in LUNA, which is now worthless
Invested at the peak of ETH (>$4.2k)
Celsius Exchange
$1B+ crypto exchange offered irresponsibly high yields (>15-20%)
Halted customer withdrawals
Filed for bankruptcy
These centralized, multi-billion dollar projects were overleveraged (taking on too much debt) and lost nearly all of their capital over a few days, which kickstarted the volatility seen across crypto. There is crypto, and then there is Bitcoin. They are not the same. Bitcoin eliminates the need for financial intermediaries, while most of the negative headlines in crypto originate from them. While it is difficult to know if the liquidations are over, crypto did reclaim the $1 trillion market. For some BTC hopium after a green week, check out DegenSpartan's tweet. BTCulture's Favorite Trendline: The 200-Week Moving Average (200WMVA) of Bitcoin's price.
Over 13 years, Bitcoin's price has only dropped below the 200-week moving average a handful of times (<2%) and those periods have historically been associated with bear market bottoms. The 200WMA sits around ~$22.9k, which BTC has already taken back earlier this week.
GRAYSCALE BEAR MARKET REPORT
The world's largest digital asset manager, Grayscale Investments, dropped an 18 page report earlier this week evaluating the ongoing Bitcoin and crypto bear market. Two main topics were discussed: 1) Crypto Market Cycles Grayscale defines Bitcoin market cycles based on BTC's Realized Price (average cost basis), which we dropped below on June 13th, 2022 - signaling a bear market. They also said this current crypto winter (best opportunities to buy) could last another ~250 days. But did they jump the gun? Since Grayscale published this report, BTC has risen above both the Realized Price and 200WMA Trendlines, which are typically seen as bullish. If BTC can hold these prices into Sunday weekly close, we may have turned a corner. 2) On-Chain Analysis The Bitcoin network is operating just as designed. And that is by transferring value anywhere on the globe, without a trusted intermediary, with a guarantee of final settlement, and zero counterfeit risk ---- all in a matter of minutes. Grayscale reports that Bitcoin is on pace to do $18 Trillion in value transferred in 2022.
BTCulture Summary:
The market corrected HARD over the last 7-months due to excess leverage and forced liquidations.
The macroeconomic backdrop + geopolitical turmoil is not something to take lightly.
Bitcoin still operating as usual. Transferring value anywhere in the world.
Past market cycles and on-chain signals show we're in a generational buying zone
How long will this "buying zone" last? Now that's the golden question.
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TESLA SELLS (MOST OF) THEIR BITCOIN
Tesla announced on their Q2 earnings report that they sold 75% of their Bitcoin ($936M). Deep breath. Don't press the panic button yet. Although many Bitcoiners are flooding Elon's inbox with "lettuce hands" memes right now... I am not overly surprised by this news. Elon said the reason this happened was because of the lockdowns in China. Others pulled out the receipts (Tesla's Q2 financial statements) and claim that Tesla would have reported a negative cashflow this quarter, if they had not sold their Bitcoin. This made me think back to Elon's tweet from last year:
The BTCulture take:
We are in/entering a recession and Tesla is a tough business model.
Building up cash reserves is a popular strategy in these markets.
Elon will do whatever it takes to keep his business afloat.
Signs of hope:
Tesla still holds 10,000+ BTC on their balance sheet (why not sell all of it?)
Elon said "they are certainly open to increasing Tesla's BTC holdings in the future."
As Satoshi once said: "Bitcoin was designed to be protected from the influence of charismatic leaders."
APPETIZERS
Paraguay's Senate approves bill regulating crypto mining and trading. Read more here.
G20 countries agree need plan to release crypto regulation in October 2022. Read more here.
Coinbase secures regulatory approval in Italy. Read more here.
Central Bank of Singapore is making regulation plans to turn the country into a hub for digital assets. Read more here.
BTC mining efficiency surged 46% YoY, and sustainable power mix increased to 59.5%. Read more here.
French banking giant, BNP Paribas, to offer BTC and crypto custody services. They are the second largest bank in Europe and have over $12 Trillion in assets under custody. Read more here.
Upcoming Events
July 28th – Next FOMC interest rate decision July 29th – CME bitcoin futures and options expiry August 10th – Release of July CPI data
Enjoy the Friday - see you next week! Scott Bruner, BTCulture
DISCLAIMER: Nothing in this email is intended to serve as financial advice. I am not a financial advisor. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets. Please be careful and do your own research.