Many people have been asking me if it is still possible for Bitcoin to reach 100k this year. It’s a reasonable question to ask, especially thanks to one of the most popular Bitcoin pricing models of all time.
I am of course talking about the Stock-to-Flow model. The model that has been touted as one of the most accurate predictors of a long term “fundamental” Bitcoin price.
However, recently the price has begun to diverge from the model. So much so that this is the most inaccurate that it has been in years (even more so than in 2019). This has many wondering whether the model was really that accurate from the beginning. Was its perceived accuracy a mere coincidence?
Well, in my video today I explore just that. I dive right into the model and explain exactly what it is, how it works and what assumptions it is based on. I then analyse whether these are reasonable and whether the model is statistically sound.
I then give some of my own thoughts on the Bitcoin market and whether we really ever could see a return to 100k.
You can watch that right over here.
📊 Portfolio Update 📊
Few small tweaks to the portfolio this week. I sold out of some LINK, RUNE & AVAX. Proceeds went into buying more Bitcoin. In these current market conditions, I would prefer to be top heavy in Bitcoin & Ethereum. We are more likely to see a recovery of these assets before any sort of sustained alt rally.
Projects that are still on my radar are DOT & INJ. I am also keeping a close eye on some of these tokenized gaming projects including ENJ & AXS. I will actually be doing a video on Axie Infinity in the coming week so you may want to keep a lookout for that.
No other changes for now. Don’t forget to jump into my telegram for the daily updates you are not getting here. The link to the official channel is here.
ETH 31.57% | BTC 29.34% | USDC 12.34% | ADA 7.74% | SOL 4.78% | DOT 3.13% | YFI 2.99% | INJ 2.61% | LINK 1.84% | ATOM 1.64% | RUNE 0.90% | REN 0.57% | LIT 0.54%
🔭 Trends I have Noticed 🔭
✅ It’s Worse Than Inflation
For regular viewers of the channel, you will have seen me talk about the risks of inflation on numerous occasions. In the video that I made a month ago, I covered the topic in depth. I also explained why I thought it was being severely undercounted and why it was only likely to continue rising.
Well, this week got the latest June CPI data and they are once again breaking new highs. The June inflation print was at its highest level in 13 years coming in at 5.4%. This was also much higher than most economists were expecting.
It gets even worse than that. If we were to strip out food and energy to get to a “core” CPI, we see that it has increased by 4.5% which is the largest increase since 1993. For the past 6 months, the Fed has been trying to make the argument that this inflation is “transitory” and nothing to worry about. However, no one is really drinking that Kool-Aid anymore.
For example, the CEO of Black Rock has said that it’s anything but transitory and that it worries him. For those that don’t know, these guys are the largest Asset Management company in the world. If inflation is on his mind, then it should be on our minds too.
This increasing inflation has spooked many market participants as it has reignited tapering fears and the implications this could have on the financial markets. When the Fed starts tapering its bond buying programs, this slows down the excess liquidity in the market which reduces demand for “risk on” assets from stocks to crypto.
Of course, the Fed is concerned about tapering. And that is because there are signs that are beginning to appear that the economic recovery may be stalling. Not only that, but there are now numerous fears that the Delta variant of covid could throw a massivespanner in the works.
So, what you have is a situation of increasing inflation with slowing economic growth. This deadly cocktail of unfavourable macroeconomic conditions is called “stagflation”. People don’t only have unstable incomes but their cost of living is also increasing at a rapid clip.
The Fed is between a rock and a hard place and the market knows this. There has been a fall in “risk on” assets such as equities. Even Bitcoin, which is technically an inflation hedge, has fallen over the past week.
However, if people are moving their funds out of these more risky assets, where are they investing?
Well, they are moving back into the relative “stability” of US government securities. The 10 year US treasury yield has been continuing it’s three month slide which means that demand for bonds is increasing. Currently, the 10 year T bill yield is below 1.3% which is the lowest that it has been since February.
The only problem with this is that investors are losing over 4% yield in real terms (after accounting for that inflation). We have arrived at a level of financial market uncertainty where investors are paying for the security of government debt.
I, for one, don’t think that this is sustainable. Eventually, investors will have to consider potential investments in a more stagflationary world. Equities won’t be an option as slower growth will weigh on earnings. Gold has shown over the past year that it’s inflation hedge status is not watertight.
So, where to invest?
Well, it’s a topic that I will be covering in an upcoming video – so keep your eyes peeled for that.
✅ DAO’s Incoming! But not Without Risks
The issue of Decentralised community governance is one of the hottest topics in crypto. Projects have been looking for ways to outsource important decisions to the broader community.
This can be seen as a win-win for both the community members and the project team themselves.
For the community it means that they can have a direct hand in the decisions that are being made at the project. They can also help to shape the value of the network by these important decisions (and hence increase the long term value of their gov tokens).
When it comes to the project teams, by handing over control to the users, they are taking all regulatory heat off of themselves. They are no longer a centralised point control that governmental agencies can put pressure on.
There have already been a number of projects in the crypto space that have begun their move to fully decentralised autonomous organisations. However, one of the most recent is Shapeshift.
This is perhaps one of the oldest non-custodial crypto exchanges founded by a Bitcoin OG called Erik Voorhees. They will be open sourcing the code, winding down the corporate structure and handing over control to the community who holds the governance FOX tokens.
This is an interesting development for the exchange. That is because Erik has always bemoaned the fact that he was being pressured to conduct KYC on his users. This was one of the reasons that Shapeshift removed it and went the Defi route. The most logical next step to take after that was to fully decentralise the governance of the exchange itself.
Looking at another DAO; about a month ago you had the news of BitDAO raising $230 million from a number of investors in the APAC region. One of the biggest contributors to this fund was Bybit, a leveraged trading exchange. This could also be an opportunity for Bybit to diversify away from their reliance on their centralised exchange – one that is most likely to come under the same scrutiny we have seen at other large exchanges.
BitDAO will be an investment DAO where the token holders will get to decide where funds are allocated among projects. Apart from Bybit, there are some really important backers in the pool including the likes of Alan Howard & Peter Thiel.
So, there seems to be an increasing shift to these methods of project governance. However, as with any new technology, they are not full proof.
For example, this week we also had the Uniswap governance debacle.
Long story short, some UNI holders approved a governance initiative that saw $20m in UNI tokens being granted to a “DeFi Lobby Group”. Tokens that were meant to be sold over a period of 5 years. Except, it was discovered that they were dumped on the market in a single OTC trade.
The main issue here was the manner in which the proposal initially passed and whether VC firms used their token voting rights to serve their own interests over that of the broader community. Of course, when one party controls a large proportion of the tokens, you will always face risks of voting in self interest
It will be interesting to see how these newer DAOs will navigate these governance challenges. I am incredibly optimistic about decentralised governance but am aware of the challenges they could face.
🔝 Top Newbie Tip 🔝
For those of you who follow my Twitter account, you will have seen my response to the scathing tweets that the Dogecoin founder sent out.
Like I said, I don’t agree with 95% of what he says. But I will admit that the crypto space can sometimes not be that welcoming to newcomers.
If people ask simple questions, they are often hounded or made fun of. If they ask more insightful questions, they are told to merely “DYOR”. If they fall victim to a scam or a hack, they are told that it’s their own fault for falling for it.
This is not the way that we are able to build a stronger and more inclusive crypto community. That is why I was particularly pleased to see that this user was able to save half of his funds thanks to a white hat hacker.
Despite committing one of the biggest crypto mistakes there is (handing over private keys), there were some in the community willing to help (along with those more than willing to admonish).
So, what’s the newbie tip here?
Well, it’s better to ask the question and be a fool for a minute, rather than a fool for a lifetime. So, never be afraid to ask questions. Never be ashamed to ask for help.
Sure, there will be people who attempt to shame you for making silly mistakes or asking basic questions. However, there will always be people within the community who will happily help you out.
This is also why I try to regularly run bi-weekly AMAs on my instagram. I usually get inundated with questions, but I try to answer them despite how elementary they may sound.
The only way that we are able to counter Jackson’s narrative is by being the exact opposite of the community he is talking about.
🔥 Deals of The Week 🔥
We all know that crypto markets can be volatile. However, in spite of those ups and downs there is no excuse not to have a great deal and get the best value possible for your crypto dabbling.
So, what crypto platforms should you be looking at? Let me enlighten you…
📈 Kucoin: Naturally, anyone building a crypto portfolio needs a top notch exchange. However, Kucoin offers way more than just being the home of exotic altcoins.
They also offer a completely free crypto trading bot. I talked all about that one in my recent crypto trading bot video here! So, if you are interested in automating those trading strategies for FREE then you probably want to check that out!
In other good news, I’ve been able to secure you guys a special deal on Kucoin too. Create a new Kucoin account using my link and you’ll get up to 44% trading fee discount! You won’t find that deal anywhere else. So, you probably want to grab that whilst you can.
Also, with the deposit problems happening at Binance currently, it might not be a bad idea to grab yourself a backup crypto exchange account either.
👉 Sign Up To Kucoin & Get Up To 44% Fee Discount!
💸 Celsius: Maybe you are like me and your portfolio is currently top heavy in BTC and ETH, with a bit of stablecoin on the side? Sure you could keep all that on a Trezor and only have exposure to the price action. However, did you know that you could keep that price exposure to the crypto markets and earn interest on those assets whilst you wait for that price to explode?
All that is possible by lending your crypto on a platform like Celsius. All you need to do is to open an account, deposit some of that crypto and you’ll start earning interest on those coins – it is that simple.
But are those interest rates worth it? Well, you can get over 11% on stablecoins, 4.4% of BTC, 6.35% on ETH and even up to 17% on other altcoins. So yep, that’s pretty amazing when you consider the types of interest rates that you can get from your friendly local banker.
Even better, if you create a Celsius account and deposit $400 or more, then you’ll get $50 FREE! Certainly a deal worth taking advantage of.
👉 Create A Celsius Account & Start Earning Crypto Interest. Use the code: COINBUREAU to get $50 FREE when you deposit more than $400!
🗞️ Crypto News Focus 🗞️
– Billionaire Michael Saylor on BTC – “I’ll never sell Bitcoin. The only asset that is going to appreciate by a factor of 100 or 1000 is by definition an asset that 99% of the population doesn’t appreciate or understand”
– Dormant BTC address awakens – Over $21 million worth of BTC is on the move from a dormant wallet containing BTC mined back in 2011 and 2012.
– Logan Paul Misstep – The popular influencer is called out for promoting alleged crypto scam Dink Doink.
🔮 Video Pipeline 🔮
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Kusama (KSM) Review: A Polkadot Experiment
✅ How does the Wyckoff Method apply to Cryptocurrency Markets?
✅ Uniswap Review: Decentralised Trading Protocol
That’s all for this week’s newsletter guys. As always, thanks for supporting the work of Team CoinBureau and making the channel possible.
Regardless of markets going to the moon, dropping like a stone or moving sideways, I’ll keep doing my best to remain level-headed and bring you the best crypto content I can.
Thank you again, for supporting the Bureau and I hope you find my latest video interesting!
Guy your crypto guy
Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.