State of the Market #77



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Market Summary

Top Stories

The Week On-chain (Week 23, 2021)


The Bitcoin market has seen a relatively quiet week, both in price action, and in demand for on-chain transactions and value settlement. Prices have traded within a narrow range between a high of $39,242, and down to a weekly low of $34,942.

Meanwhile, on-chain activity in active users, settled volume and transaction fees, across both the Bitcoin and Ethereum protocols, have fallen back to levels observed in 2020 and early 2021. Mempool congestion has largely cleared as the market remains uncertain around the bullish or bearish bias of the current market structure.

A characteristic of bull markets is a strengthening demand for on-chain transactions, value settlement, and urgency for inclusion in an upcoming block. This week in particular, the growth in on-chain demand has slowed markedly, with a number of on-chain metrics showing significant pull-backs. Since January 2021, the number of active Bitcoin addresses has sustained a level around 1.15M addresses per day, coincident with the 2017 peak. It should be noted that in 2017, this level was reached for only a few days, before collapsing over 33% during the first sell-off. The present cycle sustained this high on-chain activity for 5-months.

During the recent sell-off, the Bitcoin network experienced a reduction in active addresses, down 18% from the recent highs to around 0.94M. This fall is around half the reduction seen in 2017, indicating that whilst activity has slowed, more demand exists than after previous cycle macro tops (or perhaps there is further to go...).

Ecoinometrics - Comparing corrections


Before I begin, I would recommend that if you want great insights to check out Ecoinometrics newsletter. They have free high-quality analysis of topics that deserve to be analyzed.

In the analysis that I will be summarizing, they take on the topic of Bitcoin’s volatility and whether it is normal compared to other assets such as gold and the most popular stocks in the United States(Apple, Amazon, Taiwan Semiconductor, Microsoft, JPMorgan, Google, Tesla, Alibaba, Facebook, and Berkshire-Hathaway) . The first thing they look at is the number of drawdowns of each asset and they conclude that Bitcoin is not an outlier which is shown in the graph below.

The next thing they look at is the largest corrections compared to their total returns.

Bitcoin is once not an outlier and is comparable to Apple or Amazon. The final metric is the duration of the downturns which is important to look at because this is where Bitcoin stands out.

The author points out how Gold made an all-time high in the early 80s before the US managed to control inflation. You then had to wait 27 years to see a new ATH. What is true about this graph is how Bitcoin’s length compared to the size of the downturn is much lower on the spectrum. This could explain why Bitcoin is seen as a much more volatile asset compared to others even though the amount of downturns is the same

Bitcoin: El Salvador plans to make cryptocurrency legal tender


El Salvador's president says he will make the Bitcoin cryptocurrency legal tender in the country. If his plan is backed by congress, the Central American country would be the first in the world to formally adopt the digital currency. This isn’t final but the legislation will be sent to Congress next week. Should it pass, the move would open up financial services to the 70% of Salvadorans who do not have bank accounts, the president said. El Salvador's economy relies heavily on remittances, or money sent home from abroad, which make up around 20% of the country's gross domestic product (GDP).

More than two million Salvadorans live outside the country, but they continue to keep close ties to their place of birth, sending back more than $4bn (£2.9bn) each year.

This would be a major upgrade as current services can charge fees for such transfers, which can take days to arrive and sometimes need to be picked up in person, according to the announcement

Elon Musk Supposedly Endorses Cumrocket Coin, Price Skyrockets 350%


Elon Musk, tech billionaire and crypto menace, has gone on Twitter and pumped another meme coin. Cummies, the cryptocurrency powering an adult entertainment ecosystem, has gone up 350% in the last week. It was floating around 10 cents when I wrote this but don’t sell it short. Of all the Binance smart chain shit coins that have popped up recently, this actually has promise. The adult entertainment industry is a 97 billion dollar industry and accounts for 35% of internet usage. Cumrocket is the first crypto to offer non-fungible tokens for adult entertainment which gives it a competitive advantage over other sites. Not only that but they have solid tokenecomics for a POS(proof of shit) token. According to their white paper, they have a capped supply of ten billion tokens of which 80% was burned at launch. They have a current supply of around 1,410,659,380 but no need to fear. The token is designed to incentive holding by burning 2.5% and redistributing another 2.5% of each transaction. The trajectory of Cummies is clear but it begs the question. Will you be on the rocket to your Uranus?

Continued Reading

ECB Says Lack of Official Digital Currency Risks Loss of Control

Biden Targets Crypto Tax Evaders in Global Data-Sharing Pitch

Cryptocurrencies show inflows after record outflows in previous 2 weeks -CoinShares

Chart of the Week

11.5% of Bitcoin supply hasn’t been moved for over 10 years, potentially lost or dead in network terms.

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The tweet that will start the Cumrocket revolution

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Texas Blockchain’s ‘State of the Market’ is a student-led editorial. None of the views expressed by the authors should be taken as the view of the University of Texas at Austin or the Texas Blockchain organization. Furthermore, none of the views expressed should be taken as financial advice in any circumstance.