Bitcoin has swung wildly through 2021, falling along with the second-largest cryptocurrency ethereum after huge runs and dashing hopes that growing adoption among retail investors and institutions would bring stability to roller coaster crypto markets.
The bitcoin price is down around 50% from an April peak that saw it more than double in the first three months of the year (subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and beat the market). Ethereum has fallen even further from its May high of well over $4,000 per ether token, today dropping a further 5% and dipping under $2,000 amid a cryptocurrency sell-off that’s wiped around $100 billion from the combined crypto market in less than a week.
Now, Wall Street giant JPMorgan, after correctly calling May’s cryptocurrency crash, has warned over El Salvador’s controversial plan to adopt bitcoin as legal currency—pointing to bitcoin’s low trading volume outside of major exchanges and its extreme price volatility as possibly “a significant limitation on its potential as a medium of exchange.”
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“Daily payment activity in El Salvador would represent [around] 4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between wallets in the past year,” JPMorgan analysts wrote in a report out last week and seen by Bloomberg, adding a “significant and rising fraction [of bitcoin is] held by wallets with light turnover.”
The report pointed to bitcoin trading volumes that commonly exceed $50 billion per day but mostly happen on major crypto exchanges, with a large portion of bitcoin now thought to be locked up in illiquid entities and 90% of bitcoin not moving in over a year.
El Salvador president Nayib Bukele announced his plan to make bitcoin legal tender in the country alongside the U.S. dollar in early June at the Bitcoin 2021 conference in Miami. The plan was recieved with great fanfare but it remains light on detail even after it was rushed through the country’s Congress, passing into law just days later with little scrutiny.
Bitcoin proponents, led by Bukele, claim El Salvador’s formal adoption of bitcoin in early September will cut the cost of remittances and boost financial inclusion among the country’s unbanked.
However, JPMorgan researchers see bitcoin’s high volatility as a major challenge alongside the country’s official dollarization and warn a high demand for bitcoin to U.S. dollar conversions on the government’s bitcoin spending platform could “cannibalize onshore dollar liquidity.”
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Meanwhile, bitcoin rival ethereum is also grappling with eye-watering volatility as a sell-off that began in May drags on.
While ethereum has see a flood of adoption and attention this year thanks to the twin decentralized finance (DeFi) and non-fungible token (NFTs) craze—both overwhelmingly built on ethereum’s blockchain—the ethereum price has swung even more wildly than bitcoin.
But despite its heavy losses over the last few weeks, those who have invested and work with the technology remain confident it can succeed.
“With ethereum, you are betting on the adoption of a protocol in the realm of decentralized finance and smart controls,” J.P. Theriot, the chief executive of New York-based digital money platform Uphold, said in emailed comments. “The genie is out of the bottle, and it isn’t going back in.”
A $2.2 trillion asset manager has bought a stake in MicroStrategy, a cloud software company with huge Bitcoin holdings.
Capital International Investors, a division of Los Angeles-based Capital Group, bought a 12.2% stake in MicroStrategy last month,accordingto an SEC filing today. The 953,242 shares are worth $561 million at today’s prices.
This means that Capital Group, one of the biggest investment organizations in the world, has indirect exposure to Bitcoin as MicroStrategy keeps a majority of its treasury in BTC. The Michael Saylor-led firm has hoovered up 105,085 of the cryptocurrency—worth $3.4 billion at today’s prices.
Capital Group, which counts mutual fund manager American Funds as one of its companies, declined to comment toDecrypton the investment.
MicroStrategy’s Bitcoin-buying obsession is one of thekey reasonsfor the cryptocurrency’s phenomenal bull run, which started last year. The Virginia-based company started buying up the asset last year,investing$250 million in August.
The company has since purchased loads more of BTC and CEO Michael Saylor regularlypreachesthe currency’s value just about everywhere—including frequently on Twitter. MicroStrategy has evensold debtto buy more Bitcoin. Right now, it owns more of the cryptocurrency than any other publicly traded company.
But someone owns it. And right now, only BlackRock, the world’s largest sovereign wealth fund, has more MicroStrategy shares than Capital, with a 14.56% stake.
Bitcoin embodies Schumpeterian creative destruction. Bitcoin also behaves like a physical natural resource, with unique differences that make it a driving force for effecting fundamental change, much like gold, oil or electricity has done.
Bitcoin goes through periodic cycles of varying lengths that inspire a creative rejuvenation of its ecosystem with new ideas and innovations at various timescales and magnitudes. Here we will apply the idea of a Schumpeterian business cycle to Bitcoin and construct a Schumpeterian Bitcoin cycle based on three componential waves: a multi-decade Bitcoin Kondratieff cycle; a Bitcoin Juglar cycle that is shorter than a decade; and a Bitcoin Kitchin cycle that corresponds with the halvings.
Associated with these sub-cycles are three ratios that capture their logic: stock-to-flow (S2F), installed capacity-to-capital investment (IC2CI) and inventories-to-sale (I2S).
1. Creative Destruction
Joseph Schumpeter would have loved Bitcoin. He would have seen in Bitcoin a living representation of his theory of capitalism, so often quoted but rarely understood. Creative destruction is the process by which capitalism continually rejuvenates itself. It is what drives markets forward and allows them to be constantly refreshed with new ideas that destroy extant structures and erect better ones in their stead.
There are countless elements in Bitcoin that structurally instill the process of Schumpeterian creative destruction in its ecosystem, making it an excellent model for the cycles of capitalistic rejuvenation that formed the basis for Schumpeter’s theory of economic growth. For instance, consider the process of the halving of block rewards. Every 210,000 blocks, Bitcoin forces a creative destruction of itself, urging its participants to either reimagine their competitive edge, seek hidden efficiencies and eradicate waste or risk being left by the wayside. Bitcoin’s worth is rooted in the intrinsic value of capitalism, liberated one cycle of creative destruction at a time.
If there is creative destruction inherent in Bitcoin, then where are all those new products that eventuate when extant markets are destroyed by new ideas? Wasn’t that Schumpeter’s point after all?
The answer is simple. Bitcoin evolves into a new product — a new version of itself — with each cycle of creative destruction. Since we are so used to thinking of a bitcoin as immutable, we tend to look past this essential characteristic feature it possesses to reinvent itself.
Bitcoin started off as electronic cash native to the Internet, but has since become many things besides. It has become the most sound platform for the definitive settlement of contracts; it has become a savings account for individuals and corporations; it has become a useful tool for international remittances; it has inspired an ecosystem of financial instruments, cryptocurrencies and much else. None of these were imagined as core features for Bitcoin in 2008. Yet, with each cycle of creative destruction, Bitcoin was reimagined.
2. A Natural Resource With A Difference
Bitcoin can usefully be examined as just another exhaustible natural resource that has held the power to alter the course of human civilization, such as gold or, even more aptly, crude oil. Crude oil underwent several cycles of creative destruction since its discovery in antiquity. In its long history, crude oil has at various times been used predominantly for heating and cooking, asphalt paving, lighting, lubricating and powering machines, transportation, plastics, aviation and so on.
Of course, there are key differences between Bitcoin and natural resources, but the similarities are just as interesting.
Bitcoin can be imagined as a physical field of exploration where prospectors dig for coins. The field has the following characteristics.
First, the total yield from the field is fixed at 21 million coins, and no matter how hard the prospectors may dig, the field simply won’t yield any more coins. All prospectors know this to be true in advance, which puts a very definite terminal point in time to their activities.
Second, prospectors know with certainty that it will get increasingly harder to find more coins as they dig. That’s because they also know that this field cannot be gated and thus prospecting cannot be regulated. So prospecting for coins will take the form of a “gold rush”; extraction of the in situ, unmined coins will be an extremely competitive activity.
Well, it will almost certainly keep getting harder. The only way in which it will ever get easier for any given prospector is if, for some reason, his rivals decide to reduce their efforts. If that happens, then for a short time the prospector gets just a bit more of the field to himself to mine for coins using his current digging equipment. Before long, though, his rivals observe his obvious fortune and come rushing back in. This squeezes him back to a smaller area on the field. Now he simply must invest in better equipment if he wishes to outcompete his rivals.
Third, the fiercer the competition, the less space each prospector will have in the field. To extract coins he will need to try even harder than before. It gets exponentially harder for him to dig deeper, and he has to bring in more and more sophisticated digging equipment to extract coins. He started off with a spoon, upgraded to a spade, then an excavator, then a vertical drill and so forth.
We paint this picture merely to underscore the point that Bitcoin is a rare and non-perishable natural resource like platinum, gold, iridium or even rhodium. It is a singular kind of natural resource even among that illustrious group, but it is one all the same. And yet, two things about Bitcoin make it a rather exceptional natural resource.
First, since available market supply is known to be fixed and the extraction rate asymptotically approaches zero, future demand is met increasingly with already obtained inventories and decreasingly through new production; until roughly 2140, after which all demand must be sufficed by a globally fixed inventory alone.
Thus, hoarding Bitcoin in inventories is rational even before all its possible uses have been discovered. Imagine if the costs of storing in inventory were similar for gold and oil to what they are for bitcoin. Now consider how we would have behaved if it were known with 100% certainty that, in the year 1850 BC, gold, or for that matter, in the year 1850 AD, crude oil had universally fixed and fully extractible supplies and that almost 90% would be extracted from all their in situ locations within just 15 years of their discovery. Hoarding would have been so frenetic and all-consuming that history books the world over would have to be rewritten.
Second, being digital, bitcoin is divisible and additive at virtually any scale and at a fraction of the cost of any physical natural resource. This makes bitcoin more “malleable” than any other natural resource, which permits its use to span markets — from micro to macro. The immutable finality of its settlement layer permits Bitcoin to function as essential macro infrastructure; the concomitant mutability that its higher layers enable permits it to function in specialized markets where contractual elasticity is required.
With this premise of bitcoin as a non-perishable natural resource, we now wish to argue that bitcoin’s market price is governed by a set of nested cycles that have been well-known to natural resource economists since at least the 1920s and were used by Schumpeter in his theory of business cycles. Their use fell out of favor in mainstream economics because of reasons that do not apply particularly well to bitcoin and, consequently, there is much that we can learn by using this framework to examine the bitcoin cycle.
3. The Three Sub-Cycles
Schumpeter identified three cycles of different lengths as the basis for his theory of business cycles. Each cycle had distinct drivers and horizons, but they tended to have confluent peaks and troughs as they formed an overarching narrative for capitalistic growth; together the three cycles became the components of an overarching Schumpeterian Cycle. The sub-cycle with the shortest length in his overall three-part cycle was the Kitchin cycle, which he estimated at about 40 months, though empirically it has been measured to be as long as 60 months. The Juglar cycle was much longer, with a period of roughly 10 years (and between 7–11 years in the literature). The longest was the Kondratieff cycle (or K-wave) with a length of approximately 50 years.
What broadly drives a Schumpeterian cycle together is entrepreneurial activity and innovations interacting with one another in a grand cycle. As a suite of innovations are exploited by entrepreneurs an economy improves from a state of depression toward a state of improvement. Once the extant technology’s benefits have been leveraged at the peak of prosperity, the state of the economy turns towards recession and finally back into a state of depression.
Let’s take a closer look at each of these cycles, and explore their connection to Bitcoin.
A. The Bitcoin Kitchin Cycle
The Kitchin cycle stems from firms with fixed capital constraints that must contend with lags in information on market conditions. During the upward swing in the business cycle, firms ramp up production and enjoy super-normal profits as the market swings into prosperity. Firms bring their fixed capital use to full-employment levels and eventually overwhelm the market with excess supply. This depresses prices, tipping the market over into a state of recession. Firms respond by building up their inventories. Production gets scaled back and, once the market is back into equilibrium, the cycle is complete.
The process that drives a Kitchin cycle has been noticed in the context of agricultural commodities (in fact, it is often called the hog cycle), and led to the development of the Cobweb model to explain oscillating prices. One of us has discussed this model in the context of Bitcoin before. It is also observed in markets for hard commodities, including metals.
You might note the Achilles’ heel in the argument, if you are even casually abreast of neoclassical economics. Besides the obvious criticism of undue determinism in the length of the cycle, it minimizes the role of adaptive expectations. Firms ought to learn from the markets more effectively and not get suckered into an endless cycle of chasing demand with overproduction. Determinism is, however, built directly into Bitcoin. An average time target for blocks at 10 minutes/block over 2016 blocks is a predetermined environment variable for Bitcoin and, while miners have thus far outstripped this rate marginally, the date for the next halving can be approximated. While network difficulty and hashrates vary over the course of the cycle, and the latter is affected by market conditions on costs of production and prices, duration of the halving cycle length is known.
A Bitcoin Kitchin Cycle roughly equal to the halving cycle (44-48 months) makes sense. The supply side — miners and, to a degree, even exchanges and hodlers — is incentivized to supply more to the market as prices rise by increasing their hashrates and/or drawing down their inventories. When prices fall, miners scale back their hashrates and add to their inventories if they can or, if they cannot cover their fixed costs, they scale back or even exit.
Thus, the ratio of inventory to sales is crucial to a Bitcoin Kitchin Cycle. An inventory is a stock of a given product that the producer has access to and sales are the flows out of inventories. As selling pressure diminishes and inventories are increased, an increase in the I2S ratio marks the end of the recession phase and the beginning of the improvement phase for the following Bitcoin Kitchin cycle. The ratio falls as the cycle turns from the height of the phase of prosperity and towards the depression phase.
B. The Bitcoin Juglar Cycle
The role of innovation and investment is far more crucial in the longer duration of the Juglar cycle, where demand overwhelms the available supply during the upward phases of the business cycle so thoroughly that merely the full employment of existing physical capital is insufficient.
The pace of research and innovation increases to effect a change in the nature of new investments made by firms. Entrepreneurial effort in identifying key innovations and deploying them for such new investments takes a longer time than is permitted by the Kitchin cycle; similarly, during the downward phases of the business cycle, declining demand affects production with a greater lag than in the Kitchin cycle because new investments, once made, cannot be undone within a shorter time frame.
A period somewhat shorter than two halvings, roughly 7–8 years, seems the most natural length for a Bitcoin Juglar cycle. The first Bitcoin Juglar cycle began in 2009 and completed at the end of 2015, taking Bitcoin mining through an entire innovation and reinvestment phase from CPUs to the first broadly available ASICs. Thus, we are now approaching the end of the second Juglar cycle, perhaps sometime in 2024, and the story of this cycle, we can only hypothesize, will likely be a locational reinvestment of plants in search of energy cost efficiencies from a range of sustainable energy alternatives.
Bitcoin-friendly energy companies are already building bitcoin mining facilities next to underutilized wind energy fields producing more energy than can otherwise be consumed, as well as stranded natural gas wells that would otherwise be flared or vented. In the former case, the offtake of excess energy allows otherwise unviable wind installations to remain competitive. In the latter, greenhouse gas production from flaring and venting is reduced by bitcoin mining.
The critical ratio of interest for a Bitcoin Juglar cycle is that of installed capacity/capital investment, since it is at the peak of the cycle that the IC2CI ratio is at its highest and begins declining only as installed capacity of a specific type is overwhelmed by demand and makes the need for newer forms of capital investment more clear. Hence, the impetus for the next Bitcoin Juglar cycle comes from new capacity coming online through investments in newer technologies, production methods and materials.
C. The Bitcoin Kondratieff Cycle
The Kondratieff cycle, or K-wave, is the cycle of the longest duration, at between 40 and 60 years.
The cycle emanates from a fundamental and transformative change in technology that brings about broad socioeconomic consequences, far beyond those captured by cycles of shorter lengths. The more recent K-waves identified in the literature include the age of steel and heavy engineering (1875), the age of oil, electricity, the automobile and mass production (1908) and the age of information and telecommunications (1971).
Schumpeter, much in accordance with Kondratieff’s own vision, saw the impetus for progression between K-waves to be the clustering of several key supporting innovations. The innovative entrepreneurial insight for a transformation to begin the stage of prosperity simply could not arise unless all of the requisite ideas had first been discovered.
In the context of Bitcoin, the K-waves of concern pertain to the source of “hardness” in money. Loosely, the waves appear to be the age of gold specie money (1873–1914), the age of the gold standard (1925–1973), the age of fiat money (1973–2009) and, finally, the of age of Bitcoin (2009 onwards). If the K-wave length of roughly 40 years is prescriptive, it suggests to us that there are likely going to be interesting transformations in store for Bitcoin well before the final bitcoin is mined.
At the end of the first Bitcoin K-wave, roughly in the year 2047, 10 halving cycles would have been completed and 99.90234386% of all bitcoins would have been mined, leaving just shy of 20,508 bitcoins left to be mined. The economic value of block space will naturally rise exponentially throughout this wave and, perhaps, this metric will even prove pivotal in effecting the end of the first wave. The second Bitcoin K-wave will rely on a suite of associated technologies that are either extremely nascent at this stage or even yet unimagined in order to bring about the next transformation.
Marc Andreessen’s observation, made around the time of the beginning of the first Bitcoin K-Wave, that “software is eating the world”, is relevant to Bitcoin during this cycle since “Bitcoin is eating monetary systems”. In the second Bitcoin K-Wave, however, a much larger gamut of technologies will permit us to say that “Bitcoin is eating digital economies” en masse.
The most useful ratio for the Bitcoin Kondratieff cycle would seem to be the stock-to-flow ratio that Saifedean Ammous discussed in his book and is now well-known to Bitcoin observers thanks to PlanB’s empirical work. However, in terms of annual production and net stock, of course, the S2F ratio increases as a step-function asymptotically as we approach the year 2140. There can be no variations to accommodate cyclicality.
We concede that it may well be that bitcoin will break all expectations, as it so frequently does, and give us an age of Bitcoin that has a far longer K-wave length.
However, if indeed past proves precedent and between now and when the final coin is fully mined Bitcoin experiences at least three full Kondratieff cycles of roughly 40 years in length each, we can still use a modified version of the S2F ratio to examine the phases of each cycle; to avoid confusion, we might call it S2F*.
Within each cycle, the S2F* ratio can fall below the algorithmic equilibrium expectation if we define the “flow” as bitcoin’s market velocity in addition to its production rate per unit of time alone. A possible measure for this velocity could simply be Bitcoin Days Destroyed (BDD).
Thus, the ratio for the Bitcoin K-wave becomes:
S2F* = (extracted bitcoins held in inventory)/(annual production + BDD)
S2F* becomes identical to S2F when the majority of bitcoin inventories are dormant, which is our expectation as we move from one Bitcoin K-wave to the next. In the longer run, settlements on the base layer ought to become rarer events and indicate exceptionally significant outcomes. After all, once the land grab is behind you and the citadels have been built upon it, the emphasis shifts to the bustling activity within those structures.
In Figure 1, we summarize this section and present the three sub-cycles of the overall Schumpeterian Bitcoin cycle, their associated metrics and their approximate lengths.
4. And, Finally, A Look Ahead
Figure 2 below illustrates the Schumpeterian Bitcoin cycle. The Bitcoin K-wave is shown in dark gray; the Bitcoin Juglar cycles are depicted in purple; and the Bitcoin Kitchin cycles, which correspond closely with the halving cycles, appear in blue.
Naturally, a dollar price as the unit of measure for the y-axis can only be taken as a very loose proxy for the various drivers of the components of the Schumpeterian Bitcoin cycle, especially considering the length of time a Bitcoin K-wave covers. However, it is worth examining a few aspects.
Towards the end of the first Bitcoin K-wave, all the cycles should converge. The idea is simply that all manner of flows out of all kinds of stocks begin to dwindle as the fundamental drivers of innovation for the next Bitcoin K-wave begin to coalesce: anew suite of technologies have arrived for Bitcoin that will become the impetus for the second Bitcoin K-wave.
Bitcoin is retained in inventories alone, and sales become rare, bringing I2S to all time highs. Capital investments dry up since the installed capacity represents increasingly untenable market propositions, driving the IC2CI ratio to all time highs. Flows of bitcoin, through mining (for obvious reasons) and from inventories peter out to extremely low levels, resulting in a stratospheric S2F* ratio. All ratios will remain relevant in the second Bitcoin K-wave, albeit at an entirely different order of magnitude.
What lies ahead is anyone’s guess…
Just like the Kondratieff waves since the industrial revolution, we should expect truly transformational innovations affecting economies and societies globally in each of the Bitcoin Kondratieff waves. Perhaps, bitcoin as the undisputed global reserve currency at the close of the first K-wave; then Bitcoin as the basis for a global digital infrastructure in the second K-wave; and, it’s hardly beyond the realm of possibility that bitcoin emerges as the basis for interplanetary transactions in the third!
This is a guest post by Prateek Goorha and Andrew Enstrom. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
Shiba Inu, a famed meme coin, has recently unveiled its DEX ShibaSwap. This comes on the heels of the growing popularity of SHIB as holders continue to show faith in the coin.
The coin which was started as a joke has seen a lot of growth and seems to be taking a more serious tone as time goes by. The developers are bent on showing the market that Shiba Inu has moved on from meme coin territory into serious coin territory.
Related Reading | Coinbase Pro To List Shiba Inu, The “Dogecoin Killer” Price Soars
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One of the ways the project has shown this newfound seriousness is in the release of its very own DEX named ShibaSwap. ShibaSwap works like any other DEX, the likes of Pancakeswap, SushiSwap, and Uniswap. With the launch of ShibaSwap has come a lot of possibilities for the holders of Shiba Inu tokens.
So far, the total value locked (TVL) of coins on ShibaSwap has exceeded $1.5 billion. Getting over $1 billion TVL in just two days after the launch.
What ShibaSwap Offers
On the website are various ways that Shiba Inu holders can get rewards for staking their SHIB coins on the platform. On the back of this has been the release of two new tokens; LEASH and BONE.
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These tokens were not made available to buy until the ShibaSwap DEX was launched. Holders can “dig” on the platform to earn BONE tokens. The term “dig” in this context just refers to SHIB holders providing liquidity on the platform.
Holders can also “fetch” on ShibaSwap. This is done by migrating UNI V2-LP or SLP tokens and holders get BONE coins in return for fetching.
Continuing on this path, holders of Shiba Inu tokens can also “bury” tokens. “Bury” refers to staking SHIB tokens in order to get rewards on your staked coins. Holders can alternatively bury their SHIB tokens, LEASH, or BONE tokens using this feature. Burying is not yet live on ShibaSwap and is slated to be coming soon to the DEX.
Price of SHIB down 2% in the last 24 hours | Source: SHIBUSD on TradingView.com
The ShibaSwap DEX also provides swapping features for holders. Here, holders can swap their coins for any token listed on the platform. The tokens that can be swapped on ShibaSwap are not just limited to SHIB tokens. Users can swap a wide variety of tokens for other tokens. Eth being one of the most prominent that can be swapped on the DEX.
“Woof” is a feature that enables holders to get returns when they stake their SSLP tokens. It allows holders to farm for coins with their staked tokens.
The Bonefolio featured which has not yet launched will allow holders to track their token activities across the DEX, referred to as dogalytics on the SHIB website.
Three New Token Pairs
A recent announcement revealed that Shiba Inu would be adding three new pairs on their DEX ShibaSwap. This comes a week after the decentralized exchange had launched to much anticipation from the token holders.
The official Twitter account of Shiba Inu announced the three new token pairs and these included an ETH-USDT pair (300 AP), a LEASH-BONE pair ( 900AP), and a SHIB-BONE pair (600 AP).
The price of SHIB saw a small uptick in response to the announcement but this did not last long as the price of the coin took a nosedive shortly after the uptick.
Related Reading | Dog Eat Dog: Elon Musk Leaving Doge Behind For New Dog Coin?
Regardless of the price reaction to the news, the new pair additions have been strongly encouraged, with the official SHIB account stating that they believe the additional pairs with help to build the momentum behind ShibaSwap. They hope to achieve this by “incentivizing our ecosystem, widening their reach to external users, and providing more USDT liquidity, (which will help #ShibaSwap run smoothly with more and more rewards).”
SHIB is currently trading at $0.00000770, and BONE and LEASH are listed on SHIB’s website at $5.38 and $2587.2 at the time of this writing.
Featured image from Currency.com, chart from TradingView.com
A popular analyst and trader says he is closely watching a crypto index that he believes will signal the start of the next altcoin season.
The pseudonymous trader, known in the industry as Credible Crypto, tells his 223,100 Twitter followers that the Bitcoin Dominance Index (BTC DOM) is poised for a relief rally, which might offer good opportunities for altcoin traders.
“During our last bull run, there were multiple instances where BTC Dom spiked for some relief on its way down.
I still fully expect new [all-time lows] on BTC Dom before this bull run is over. Eyes on alts if/when BTC Dom hits 50-55%. That will probs be the BEST time to load up on alts.”
Traders rely on the Bitcoin Dominance Index to get a sense of Bitcoin’s value relative to the value of the broader cryptocurrency market. A rising BTC DOM is an easy way to see when Bitcoin’s value is growing faster than the rest of the crypto markets, and vice versa.
Credible Crypto says that the BTC DOM relief rally could mark the bottom for altcoins and the start of a new altcoin season, as he expects the index to continue its downtrend.
In line with his prediction, the crypto trader adds that he expects altcoins to rally in the midterm before pulling off one final surge in the next six months. Between the two rallies, Credible Crypto says that he sees altcoins trading within a wide range.
“Probs a sideways consolidation. But since these are alts, that could be a decent 20-40% range from the highs even.”
As for Bitcoin, the crypto strategist believes that the largest cryptocurrency is gearing up for the next phase of its bull market.
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Dogecoin creator Billy Markus has added a new token to his weekly series of NFTs, titled “Crappy Dogecoin Doodles.”
The series has been published since early June; Markus has also created several other more serious NFT items.
The NFTs are minted on the Ethereum blockchain, as Dogecoin itself does not have any NFT capabilities.
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Dogecoin creator Billy Markus has updated his “Crappy Dogecoin Doodles” by adding a new non-fungible token (NFT) to the collection.
Crappy Dogecoin Doodles #5
Today, Markus announced the fifth token in the series, one that features a hastily drawn Shiba Inu dog lying in a field. “For this week, I attempted to draw the Doge with her paws crossed from memory. This was the result,” Markus noted on Rarible.
Unclaimed Crappy Dogecoin Doodles #4 are all burned, and Crappy Dogecoin Doodles #5 is available! I attempted to draw the doge from memory… This was the result.
Will take requests for future doodles in comments! If I pick your idea I’ll send you one ~ https://t.co/EAKGMfp10f
— Shibetoshi Nakamoto (@BillyM2k) July 12, 2021
The NFT is currently being auctioned for 0.069 ETH ($140). Only 10% of that amount will go to Markus himself.
420 copies of the token will be up for auction until the sale ends next week. Markus has noted that unclaimed doodles in the “Crappy Dogecoin Doodle” series are burned before each new drop to create scarcity. Presumably, this will make it easier for original buyers to resell the NFTs that they originally bought from Markus.
Markus’ Doodle Have Become a Hit
Markus began to publish “Crappy Dogecoin Doodles” in June. Though the doodle was meant to be a test-run for more serious NFTs such as Capped Dogecoin, demand was higher than expected, and the token sold for 1500 times Markus’s asking price.
To date, Markus has created a total of 39 Dogecoin-themed NFTs—some with more refined digital artwork than others.
Dogecoin does not have any capability to handle NFT tokens. As such, Markus’ tokens are minted on the Ethereum blockchain and sold through Rarible, a popular NFT token marketplace.
Markus has also commented on complaints against NFTs. Recently, critics argued that NFTs harm the environment. Markus countered that NFTs “simply piggyback” on existing blockchains and that there is “barely any additional waste” from NFT transactions.
Markus says that he will continue to create Doge-themed NFTs as long as there is demand for them within the community.
Disclaimer: At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins and did not hold Dogecoin.
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In this episode of Bitcoin Magazine’s “Meet The Taco Plebs,” I was lucky enough to sit down with one of my favorite contributors here at the magazine, Nelson Chen. I have worked with Chen to publish six parts of his twelve-part series about Jordan Peterson’s book, “Beyond Order.”
In his series, Chen discusses a variety of topics. Many of these topics relate back to the idea of stories told across generations — allegories and discussions that help to explain the world we live in. Chen believes that these stories are what we can use to help navigate the future, and that they are also very much related to Bitcoin and the issues we will face as we continue towards hyperbitcoinization.
Below is a written version of our interview, and be sure to check out the audio and video version of the podcast!
What’s your Bitcoin rabbit hole story?
My background: I’m a Silicon Valley techie. I have a degree in accounting, I learned how to code (have built a few full stack applications), and spent most of my career in tech sales. Lastly, I’ve always been an investor, primarily in tech stocks.
I first heard of BTC in 2015. I wrote it off because reinventing money sounded impossible, too far-fetched.
Two years later, in the summer of 2017, I’m at a pool party in L.A., a very good friend of mine asked me to take a look at ETH because I am the guy in my network with a track record of picking good investments over the past 10 years. So, like so many of us, I fell down the ETH rabbit hole first: ultra super advanced version of Bitcoin. Sounded like a no-brainer investment with potential to make a great return on investment. I didn’t understand everything but it certainly seemed worthy of an initial investment.
I bought a bunch of tokens in the bull run. Got rekt in the 2018 crash. I bought ETH purely to make money as a stock. Explosive gains. But as I continued to do my due diligence I got hung up on what differentiates ETH from BTC, and if ETH is so amazing, how come all of the smartest people in the room are focused solely on BTC? That observation from crypto Twitter was watching this war of words between these two communities made me more curious to have a deeper look at Bitcoin. Because prior to that I had pigeonholed Bitcoin as the slower, older, less nimble, less scalable network.
Bitcoin counterintuitively began to make more and more sense while ETH continued to develop into a Rube Goldberg machine rife with failures, and broken promises.
I read “The Internet Of Money,” then “The Bitcoin Standard.” Those two books clicked hard. “The Internet Of Money” simplifies Bitcoin by relating it to large historical technology arcs. “The Bitcoin Standard” provides context to what exactly sound and unsound money look like.
That’s when I realized that Bitcoin is the future of money that will maintain longevity because of its architecture and its simplicity. It’s not a complex machine, it is something you can figure out.
How has Bitcoin changed your life?
After researching it and coming to my conclusions. I dropped everything in my life to pursue this one thing. If that’s not life changing, what is?
I am a contributor at Bitcoin Magazine and that exposure helped land me a full-time job at Swan as a rabbit hole expert.
It’s changed my state of mind. Time/money paradox: You can have one at the expense of the other. Everyone knows the saying “time is money.” But I was battling this misalignment between how I envisioned spending my time and the un-winnable pursuit of enough money.
Bitcoin offered a solution to my money/time paradox: because in fiat systems time is working against you, whereas in a Bitcoin-based system time is working with you. This instantly dissolved this massive conundrum that I could not solve but fortunately Satoshi did.
It also changed my human network, my community. I discovered a worldwide network of low time preference people that share the same values and vision of the future being a better place than what we have today. Which is incredibly rare in our world which leans toward an increasingly glass-half-empty mindset. YOLO, live for today because tomorrow is not promised.
Our social contract has been broken. It’s no longer about leaving the world as a better place. It has become about squeezing every last drop out of the lemon because it’s the present that is everything and the future is not my problem. And Bitcoin restores this social contract so future generations can grow up knowing their forefathers want a better life for them and it’s shown through behavior, not empty lip service. And that attitude makes a grim present into a brighter future. Because prior to falling down the Bitcoin rabbit hole, the world is a very bleak place when you think about the future. There are a lot of problems and nearly no solutions designed for long-term success for individuals, societies and humanity as a species.
Finding a group of people who place a high premium on critical thinking, morals and values, the value of high quality, the importance of trust and truth. “Show me who your friends are, and I’ll show you who you will become.”
TLDR; bitcoin changed my life trajectory and, P.S., dollar price is the least relevant fact of it all to me. It’s about good people with strong values.
What inspired you to write your series on Jordan Peterson for the magazine?
The reason Jordan Peterson was such a mind bender for me was because I grew up in the heart of Silicon Valley. The focus is entirely on technology and how it’s reshaping our futures and the entire world.
The reason Jordan Peterson’s work grabbed my attention is because he focuses on the human aspect of life. In tech, we have a tendency to believe that big technology at scale will solve all of our problems. And we have a tendency to put more trust in data than in our own experiences/ eyes. Humans are fallible, technology is not.
Jordan reframed my approach to technology as thinking of individual humans first and technology second. And he reframed my thoughts around stories vs numbers. And the reality and the importance of stories preceding numbers.
And this where Bitcoin and technology and Jordan Peterson collide and overlap. Bitcoin on the surface looks 100% like a purely technological advancement. And it is for sure the most incredible piece of software ever written, it’s not even close. But the genius in Bitcoin is its code contains an Easter egg: Bitcoin allows people to rise. And that is an unforgettable story. And the moral of the story, the Easter egg contained within it, is a formula for restoring human standards for personal responsibility, quality, morality and truth.
Bitcoin sets the bar for money and human beings rise to the level of our monetary standard.
And it is not a coincidence that these very qualities (morality, truth, quality, responsibility) are the very things we lack the most at all levels of society.
And that’s ultimately the same thing Jordan Peterson writes about. He’s offering sound ideas on how to better navigate this life by providing a foundation built upon thousands of years of ancestral wisdom. That’s a pretty solid way to structure your life.
Just like Bitcoin flows in the same direction as time, Jordan is saying there are massive patterns far greater than any individual or society that we can lean on that have been blueprints for our survival and success. So instead of reinventing everything from scratch and failing miserably at everything, use templates what we know works and modernize it.
The reason Jordan Peterson’s works are so controversial and widely consumed (just like Bitcoin) is because we live in times where nothing makes sense. Where insanity is normalized. And Bitcoin and Jordan Peterson are lighthouses that put a spotlight on timeless dependable blueprints made new again.
Both Satoshi and Jordan Peterson open up conversations that people living soft comfortable lives don’t want to have. A lot of the findings are not what people want to hear. The distortion of money has distorted everything including people’s perception of reality itself. And his emphasis on individual human beings taking our noble burden in life to be responsible, to be honest, to tell the truth, to accept the consequences of our actions. These are wildly unpopular opinions.
The ideas themselves are so old that they are new again. None of these statements were radical 100 years ago. 100 years ago these were expectations. Now, fiat currency has created a societal rot within people. So much so that these very fundamental ideas for how to build a strong society have become unpopular.
Money touches every aspect of life. It is as essential as air and water. And when money is bad and getting worse by the day, it cannot be a coincidence that everything it touches suffers Both Bitcoin and Jordan Peterson are offering solutions aimed at the root level by offering something profound that has been distilled.
One of my favorite quotes is “ the world is made of language.” Human beings terraformed the entirety of Manhattan to suit the needs of 10 million people. We did that through the use of language. That’s how powerful language is. Satoshi and Jordan Peterson deploy language, one as code, the other as a book. So, I felt deeply compelled to write this series because it might just carry the power to transform someone’s life and change their trajectory.
Going off of that, what do you believe is the most important “lesson” we have touched on in the series so far?
“Chapter 2: Imagine What You Could Be, Then Aim Single-Mindedly At That.”
Looking back and leveraging history. People as actors on a grand stage. And stories before numbers.
Imagination is human beings’ greatest asset. Great imagination: always shared in the format of stories.
“We are all infinitely complex beings. Each of us so full of potential it transcends our understanding. So, how do we figure out what we could be?”
We don’t have to reinvent the wheel. We can stumble through life and figure it out as we go. Or we can utilize a millennia of wisdom told in the form of stories. Because our problems are ultimately human based, will never go away and the prototypical problems our ancestors faced are the same problems we face today in a new format.
In other words, we like to think of ourselves as so advanced and our ancient forefathers as a notch above cavemen. But we stand on their shoulders and they gave us the blueprint to bring about order from chaos. And the very human existential crisis we face they faced all the same.
Timeless stories are works of imagination. They are told and retold, refined and passed on through the generations. It’s easy to write off these stories as simply serving as entertainment, but beneath the fold they are unforgettable because they contain timeless lessons we are bound to repeat. And it took an untold number of years for our forefathers to figure out deep existential human problems. And they wrapped those problems in the form of imaginative stories so that we may avoid stepping on these booby traps while highlighting what it means to be successful. These stories are blueprints.
And to connect what’s old with what’s new, these stories are so vital to our existence they actually form the basis for modern societies today. The Ten Commandments is a pretty damn good way to create a protocol for human-to-human respect. That’s what it means when we say “standing on the shoulders of giants.” We are literally still using their wisdom today whether we respect and acknowledge it or not. There is no divorcing the past from the present. So, the question becomes, are you using our full collective human imagination to help you aim at what is best for yourself?
What are you most looking forward to in the Bitcoin space?
Humanity first: Our sense of community is unraveling. From the beginning of time where religion and beliefs kept communities tight, I’m looking forward to Bitcoin securing that same tightness within our communities.
I think of the Bitcoin mind virus as playing out like tag, but the specific version of it — sardines. And Bitcoin is the world’s biggest game of sardines. Bitcoin is an IQ test. It’s the world’s biggest secret in plain sight. And the last who find their way to it will be the biggest losers.
Technology second: Applications based around trust and value built on the Lighting Network. Strike and Sphinx chat are amazing products in their own respective rights. But the truth is that these apps are just scratching the surface of the Lightning Network’s potential.
Capital International’s strategic investment in one of the most talked-about companies of the year shouldn’t raise any eyebrows. However, when that company is pursuing a never-before-seen strategy using a highly experimental digital asset, the world watches. It’s safe to say that Capital International believes in MicroStrategy as a company and in its CEO Michael Saylor. However, it’s also obvious that they’re buying exposure to Bitcoin.
Related Reading | Indian Investments In Crypto Grow Rapidly As $40 Billion Milestone Is Reached
Let’s quote Cointelegraph for an overview:
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In MicroStrategy’s filings to the U.S. Securities and Exchange Commission, or SEC, for the second quarter of 2021, the firmdisclosedCapital International Investors has purchased 953,242 shares of its stock. Following the release of the SEC filing, MicroStrategy’s stock price rose by more than 1.5% to reach $628.44 at the time of publication
That initial excitement didn’t last. Three days later, the stock trades at $589.52. And Bitcoin didn’t even react, “Despite the news of a major investment into a company with massive crypto holdings, the price of BTC was seemingly unaffected. Bitcoin has risen 2% in the last 24 hours to reach $33,438.” However, Capital International should be unfazed. Day-to-day movements are practically irrelevant when you’re investing in the future.
NewsBTC passes the mic to James Wo, CEO of the Digital Finance Group:
I believe that funds with a long investment horizon are de facto betting on Bitcoin’s growth in the long term. Many of them are either already exposed to bitcoin or very close to entering the market one way or another.
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MSTR price chart on Nasdaq | Source: TradingView.com
Why Invest In MicroStrategy And Not Just Buy Bitcoin
Actually, Michael Saylor himself answered this question while explaininghis company’s Bitcoin strategy:
According to Saylor, his company offers two advantages. One, Microstrategy has the ability to sweep its software cash flow into Bitcoin. Two, they have the ability to raise debt financing. They can borrow a billion Dollars with zero percent interest. Your ETF will not be able to do that.
And yes, he compared MicroStrategy stocks to an ETF because that’s his competition, not Bitcoin. Some investors want exposition to Bitcoin through a regulated market. And, despite the high demand and fillings by several high-profile financial institutions, theUS SEC hasn’t approvedan ETF.
So, MicroStrategy is Capital International’s best option at the moment. Plus, they might be fans of Michael Saylor’s unapologetic approach to Bitcoin accumulation.
Why Capital International’s Investment Matters To Bitcoin
Institutional interest is there. And every day there are more options for that money to reach its destination. Not everyone is going to do everything they can to acquire more Bitcoin like MicroStrategy. All companies aren’t able to start developing Bitcoin tools and services like Square. Not everyone will develop ramps to accept Bitcoin for their product and then suspend the program for bogus reasons like Tesla.
Related Reading | Binance Burns Record $600 Million BNB In Its 15th Quarter
Different options for different folks. However, there are risks involved. NewsBTCquotes Second Foundation Partners’ Ben Hunt:
He describes the strategy as a way to accommodate and swallow Bitcoin, which is what they’ve done with every other financial innovation. Adding it’s preferable to stifle its censorship resistance and turn it into another Wall Street gaming table. The upshot to this is a future where people are encouraged to buy Bitcoin.
“Because the artistic Bitcoin identity I admire and value has been subverted by the neutering machine of Wall Street and the regulatory panopticon of the US Treasury Dept.
Did that already happen? Or can an open network like Bitcoin overcome this hurdle with ease? Members of the community do say that “Bitcoin doesn’t care” about mundane actions. In any case, institutional investment interest is there, and the chips will fall where they may. To close this, James Wo continues with the idea that funds are “betting on Bitcoin’s growth in the long term”:
A certain amount of this upward momentum has already been factored into the price we have at the moment. However, scarcity is an essential factor that is yet to show the real impact in the long term.
The game is just beginning, but the cards are already on the table. Things are looking good for Capital International and Bitcoin in the long term. Plus, the decentralized network even has scarcity as an ace up its sleeve.
Featured Image by Mathieu Stern on Unsplash - Charts by TradingView
Bitcoin could retest the lows of its current range as its price trends to the downside. At the time of writing, BTC’s trades at $32,277 with a 2.3% loss in the daily chart. Investors and traders wonder if these levels will hold as bulls seem to lack conviction in lower timeframes.
Trader Josh Rager highlighted that Bitcoin has been moving sideways lately. The cryptocurrency has experienced less volatility than previous months with continual compression, at least, in the daily and weekly charts.
Rager set $36,000 as a critical price mark for the market to regain confidence. At the same time, other traders expect $31,000 to be a critical area of support that could prevent further downside.
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Analyst Allen Au has noted a pattern in Bitcoin’s bull phases for 2013, 2017, and the current price action. The analyst believes that after a 60-day period, BTC’s price volatility has reduced from V1 to V2, as seen in the chart below.
Au expects this phenomenon has repeated in this bull phase. Thus, as in the past, the analyst expects BTC’s price to increase. In 2013 and 2017, this upwards movement led Bitcoin to its previous highs and marked the end of those years’ bull cycles.
As pseudonyms trader Income Sharks said, current market conditions benefit the bears. In order to resume the bull-run, these two market components must change, the trader added:
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Second time getting a 4h Supertrend rejection. With volume this low and lower volatility it tends to favor more downside. Higher volume and volatility favors upside.
Bitcoin, Calm Before The Storm?
Many experts believe Bitcoin is setting the stage for a big move either up to previous highs or down below its yearly open. Analyst Checkmate from Glassnode Insights has recorded an increase in activity in the spot and derivatives market and on-chain metrics.
Combined with a change in the number of BTC deposited into exchange platforms, the first cryptocurrency by market cap might come out of its current range. In May, exchanges saw a rise in their BTC reserves, as selling pressure increase.
According to Glassnode’s Net Transfer Volume from Exchanges for the past two weeks, this trend could be reversing. During this period, there have been more “positive” exchange outflows with around 2,000 BTC leaving these platforms every day.
Moreover, Bitcoin-based derivates have stayed relatively quiet after May’s “Great leverage flush back”, Checkmate noted. He claimed the following:
Since the sell-off in May, futures open interest has remained bound between $10.7B and $13.0B with only a handful of notable builds or declines within that range. Open interest remains 57% below the ATH set in April as Coinbase went public.
In addition, volume in the derivates sector has been on a decline. Thus, Bitcoin could have more room to recover, as there is less leverage at play to impact the market. Experts are yet divided on future price actions, but they agreed that a big move is forming.