Dacxi Crypto Wealth | Bitcoin is back, baby!



Mar 31, 2022


Weekly Market Overview

It’s been a positive week in the cryptoverse. At the time of writing Bitcoin is $47,468 and Ethereum is almost $3,400. At one point Bitcoin was over $48,000. It’s nice to see some life back in the crypto markets. It’s too early to get excited, but we are seeing some positive price action. Bitcoin is up 12% up from where we were seven days ago, and almost 25% up from 60 days ago. If we consider the Fear and Greed Index, for the first time this year we might be back in the green, which just goes to show how fast and how quickly the sentiment can shift. I mentioned last week that the top of the range was in the mid $40,000s, and the bottom was mid $30,000s. It looks like we're broken out of that range to the upside, and for now it looks like the bulls are back in charge. 

Bulls vs bears. There are advantages on both sides


Bitcoin bear markets can be long, painful and drawn out, but with the ultimate result of reshuffling ownership away from weaker towards stronger hands. Bitcoin saw a heavy accumulation between $35 and $42,000 suggesting that it is a good value for Bitcoin long term. So we are consolidating. But still we've been in a bear market, although it's not the intense bear market that we might have seen in the past, because the Bitcoin market is getting bigger, more mature, and more liquid. So perhaps Bitcoin bull markets aren't as intense either. We might be coming through the bear market, but we're not necessarily out of it yet. But that’s not such a bad thing. One of the reasons why I'm not necessarily in a hurry to see Bitcoin get to $100k too soon is I don't have as much Bitcoin as I'd like to have. So the longer we can stay here, or even under $50,000, the longer you get to slowly chip away accumulating Bitcoin, Ethereum, and whatever else you're into before price starts to go exponential again, which I'm sure they will eventually.

Hodlers are dominating the market

Another interesting point is that almost 64% of the bitcoin supply has not left their wallets for over a year. It shows the immense conviction that Bitcoin investors have -  they're just not interested in selling at the moment. Commentator Mr. Pump says we are watching a demand shock play out at the same time that Bitcoin’s supply is as liquid as it has ever been. And that means that the price has to move to accommodate any of those buyers. It is very difficult to predict when that will happen, but with the benefit of hindsight, this can become easier. 

A great example is the Bitcoin move from $10,000 to $64,000 from September 2020 to March 2021. Part of the reason is that on May 2020 we had the last Bitcoin halving, which brought the daily incoming supply of Bitcoin down to 900 and set the stage for an epic run. The halving created a supply shock. Can the conditions that are gathering steam now allow the same thing to happen? 

Currently, we are seeing hodlers limiting supply on exchanges, and there is a significant increase in demand happening at the same time. Most notably, the Terra ecosystem is purchasing 10 billion of dollars of Bitcoin to put in the reserves of the USD stable coin called Luna (now available to buy on the Dacxi Wealth Platform). That buying spree has triggered the little mini-run that Bitcoin has been on over the last week or so. At the moment it has over 27,000 Bitcoin worth 1.3 billion. Of course, there are other people involved. I bought $50K of Bitcoin myself this week so I'm certainly contributing to Bitcoin’s current price appreciation too.

Changing official US attitude to crypto


Janet Yellen, the US Secretary of Treasury has traditionally been skeptical of crypto. But she's starting to soften, which is very interesting. Here’s what she has to say.

“Crypto is obviously grown by leaps and bounds. And it now plays a significant role, not really so much in transactions, but in investment decisions of lots of Americans. And the President issued a couple of weeks ago, an executive order, tasking us in other agencies with thinking about the regulation of crypto.

I have a little bit of skepticism because I think there are valid concerns around it. Some have to do with financial stability, consumer investor protection, use for illicit transactions and other things. On the other hand, there have been benefits from crypto, and we recognize that innovation in the payment system can be a healthy thing. We would like to come out eventually with recommendations that will create a regulatory environment in which is healthy.”

So you can see a pronounced softening in tone from Secretary Yellen. It's important for the US that they adopt a correct regulatory framework to allow innovation to flourish. Most lawmakers, politicians in the US on both sides are starting to recognize and acknowledge that too. 

Goldman Sachs clients support crypto

Goldman Sachs did a survey earlier this month, which found that 60% of its clients expect to increase their digital asset holdings in the next one to two years. And of those expressing enthusiasm about crypto, 32% said they expected to significantly grow their crypto holdings. Goldman is just one of the big banks starting to fall over themselves to get involved and make it possible for their clients to get involved in crypto. 

Exxon Mobil is now mining Bitcoin


Exxon Mobil Mobil, one of the world’s biggest oil companies, has a pilot programme that harnesses natural gas flaring to power Bitcoin mining rigs. It utilises what would otherwise be waste gas to generate another income stream for the company.

Australia - the land of crypto pioneers

Australia's making increasingly bullish moves towards what they call the crypto revolution. The Federal government is considering new legislation to help the country play a part in the emergence of Web 3. Web3 is the new form of the internet that underpins cryptocurrencies and digital assets. The Australian Treasury regards Web3 as a source of new jobs and tax revenue for the economy. The pioneer spirit of Australia is very relevant here. The crypto industry, its applications and defi is a new frontier. If you're a country with its eyes on the future, why wouldn’t you get involved? 

Bullish on Bitcoin in cattle country


The civic leaders at Austin in Texas are very supportive of Bitcoin. They already host huge Bitcoin mining operations and now they’re starting to investigate whether they can accept Bitcoin and other cryptocurrencies for tax payments. Florida is another important US state that’s welcomed the crypto industry. If you add this to what’s happening in Australia and other countries you can see that the crypto snowball is really building momentum.

A greener Bitcoin?

Chris Larson, one of the cofounders of Ripple or XRP is starting a campaign to change Bitcoin’s consensus algorithm from proof of work, which is quite energy-intensive to something else, in an effort to reduce Bitcoin’s environmental footprint. If this campaign gets traction we'll talk about it more the weeks and months ahead. But I think it's a flawed plan, and I don't see it succeeding. But the point I'm making is this is going to be a narrative for the foreseeable future. As Bitcoin becomes increasingly important on the geopolitical front, more people are going to be involved and invested. And at the same time, you have certain interests in attacking Bitcoin for various reasons. One of the big attack vectors is proof of work and its high energy use, so it’s just something to look out for. 

Bitcoin 2022 conference - on next week


The civic leaders at Austin in Texas are very supportive of Bitcoin. They already host huge Bitcoin mining operations and now they’re starting to investigate whether they can accept Bitcoin and other cryptocurrencies for tax payments. Florida is another important US state that’s welcomed the crypto industry. If you add this to what’s happening in Australia and other countries you can see that the crypto snowball is really building momentum.

This year's big Bitcoin event is in Miami, Florida, and it has some really incredible speakers. We've got the likes of Peter Thiel, a controversial character, but one of the big hedge fund guys in the world, who was a co-founder of PayPal and Palantir. Safidean Ammous, the author of the Bitcoin Standard, a very influential Bitcoin book. Nick Zabo, was one of the original cypherpunks and cryptographers and very influential in the early days of Bitcoin. Michael Saylor, of course. It's not a Bitcoin Conference if he’s not involved. Psychologist Jordan Peterson, another controversial character, and Cathy Wood head of Ark Investments. And the list just goes on. It will be an amazing event that we can tune into online. Don’t miss it!

Keep your long-term perspective

So in summary, it is good to see Bitcoin back at almost $48,000. But, you know, it's early days, we're still a long way away from the all-time high of $69,000. And to be honest, I don't mind if we don't get there too soon. Because, you know,  slow and steady is the name of the game here - it’s that vital long-term wealth-building mindset. As I always say, here in the Crypto Wealth Cafe, long-term is five years, probably really 10 years in actual fact. As much as I'm excited to see Bitcoin breakthrough 50k again, in 5 to10 years' time, I think it will be a lot higher than that. I'm just going to keep chipping away and buy some Bitcoin and Ethereum most weeks, and we'll see where we are in five or 10 years' time. But in the meantime, we'll be here every step of the way, digesting all of this as it happens in real-time every week on the Crypto Wealth Cafe. Bye for now.


Andy Pickering