June 17, 2022

🪦 Bitcoin is dead 🚀 Long live bitcoin

Bitcoin remains correlated to markets because most people don't understand sound money. One day, they will.

Dave Birnbaum
Dave Birnbaum

Director of Product

🪦 Bitcoin is dead 🚀 Long live bitcoin

Table of contents

🪦 Bitcoin is dead 🚀 Long live bitcoin

In the past week, the fundamentals of bitcoin did not change, yet it remained correlated to Fed markets. This shows that most people don't understand sound money. One day, they will.

This week, markets that were already having an ugly year got uglier.

The Dow and Nasdaq had their worst single day declines since 2020. The S&P hit its lowest level in a year. For the first time in over 50 years, stocks and bonds dropped over 10% at the same time.

And bitcoin dropped below $30,000 for the first time since July 2021.

Fed markets are shaped by printed money and political networks. Bitcoin remains decentralized, hard limited in its supply, and censorship resistant. Although the fundamentals of Fed markets and bitcoin could not be more different, their prices remain correlated.

So what gives?

The answer is so simple that it's hard to believe: Most people don't get bitcoin.

They will one day, because the music will stop. That hasn't happened yet, but that's good news for you – it is evidence that bitcoin knowledge is unevenly distributed across the market, and as a reader of this newsletter, you have more bitcoin knowledge than most. As a bitcoin insider, it's easy to forget how early we are.

News

🏋️  Regular people are accumulating more bitcoin than ever

The number of wallet addresses containing at least 0.1 bitcoin reached an all time high of 3,469,507. This is a strong sign of growing bitcoin conviction amongst regular people, even in the face of the price dip.

📉  Drowning altcoin grabs on to bitcoin to stay afloat

We avoid discussion of altcoins here at Coinbits, but sometimes we have to play ball in order to get you the news. Terra (UST) is a stablecoin whose value is pegged to the U.S. dollar. It works in concert with the network's native asset, Luna, which helps the UST maintain its 1:1 peg. This week, Luna plunged more than 60%, resulting in UST coming de-pegged from the dollar and worth about 68 cents at the time of this writing.

So how does this affect bitcoin? UST was using bitcoin to support its value. The massive failure of UST has put downward pressure on the price of bitcoin, adding to the negative effects of the downturn in the Fed markets.

This episode strengthens the argument that bitcoin is unique, and not just another crypto. Terra and others like it will come and go, but bitcoin will remain.

Bitcoin adoption continues

Bitcoin is increasingly used for real estate.

In Louisville, Kentucky,  a house was purchased with bitcoin for the first time in the city's history. The transaction took about 8 seconds to complete, and cost 70 cents in transaction fees. Meanwhile, Portugal made similar history when an apartment was sold for bitcoin for the first time. The purchase came on the heels of favorable legislation permitting real estate transactions with cryptocurrencies.

El Salvador bought the dip.

The first country to adopt bitcoin as legal tender added another 500 bitcoin to its treasury. El Salvador now holds 2,301 bitcoin.

High-ticket retailers now accept bitcoin.

Popular luxury brand Gucci is set to accept bitcoin for payments in certain U.S. retail stores. The pilot project is being rolled out in major cities this summer. Meanwhile, a well-known used car exporter in Japan, SBI Motor, is now accepting bitcoin for international payments. The company views the 2 billion people who are unbanked, and who are currently excluded from the international economy, as potential customers.

Bitcoin Roundup Live

Join us for a fun weekly Q&A where you can hang out with other bitcoiners and talk about current events. It takes place every Thursday from 8pm to 9pm Eastern Time. Register here.

How bitcoin works

Learn one key idea about bitcoin each week. This week: Bitcoin is misunderstood as a risk-on asset.

The Fed's fight against inflation is now underway. Interest rate increases have sent nearly all markets downward (excluding energy stocks).

When interest rates go up, money becomes more expensive. Another way to say this is that the dollar's value goes up.

This is by design.

The Fed is trying to slow demand in response to record high sustained inflation.

The strategy is to make dollars more valuable in the short-term by increasing their cost (interest), leading to less spending in the economy (lowering demand). They hope this will push prices down as fewer buyers are in the market for goods and services.

Investors see significant interest rate hikes and typically sell "riskier" investments like bitcoin and tech stocks first.

But rate hikes aren't the only risks in the market at the moment. Sustained supply chain issues, war in Ukraine, and news of Shanghai intensifying their lockdowns on Monday have furthered investors fears of a slowing economy headed for consistent interest rate increases.

Markets everywhere are feeling it. In a fragile economy that is shackled with debt at the individual, business and governmental levels, there appears to be no safe haven in sight.

That's why we think bitcoin is misunderstood. Over the past decade, bitcoin has outperformed every other asset class. It is only a matter of time until people catch on.

The need for an incorruptible, neutral asset outside of the legacy system grows stronger by the year.

Coin check

How many times has the bitcoin price dropped 50% or more?

  1. Seven
  2. Three
  3. Twelve
  4. One

Check your answer at the end of the page.

What to do next

➡️  Want bitcoin? Sign up for Coinbits.

➡️  Was this newsletter forwarded to you? Sign up here.

➡️  Follow us on Twitter

➡️  Need coffee? Shop Queen City Coffee Roasters and get 15% OFF your order with promo code BITCOINROUNDUP

➡️  Want to work with us? Explore careers at Coinbits.

Answer: 1. Seven

May 12, 2022

🪦 Bitcoin is dead 🚀 Long live bitcoin

Bitcoin remains correlated to markets because most people don't understand sound money. One day, they will.

Dave Birnbaum
Dave Birnbaum

Director of Product

🪦 Bitcoin is dead 🚀 Long live bitcoin

In the past week, the fundamentals of bitcoin did not change, yet it remained correlated to Fed markets. This shows that most people don't understand sound money. One day, they will.

This week, markets that were already having an ugly year got uglier.

The Dow and Nasdaq had their worst single day declines since 2020. The S&P hit its lowest level in a year. For the first time in over 50 years, stocks and bonds dropped over 10% at the same time.

And bitcoin dropped below $30,000 for the first time since July 2021.

Fed markets are shaped by printed money and political networks. Bitcoin remains decentralized, hard limited in its supply, and censorship resistant. Although the fundamentals of Fed markets and bitcoin could not be more different, their prices remain correlated.

So what gives?

The answer is so simple that it's hard to believe: Most people don't get bitcoin.

They will one day, because the music will stop. That hasn't happened yet, but that's good news for you – it is evidence that bitcoin knowledge is unevenly distributed across the market, and as a reader of this newsletter, you have more bitcoin knowledge than most. As a bitcoin insider, it's easy to forget how early we are.

News

🏋️  Regular people are accumulating more bitcoin than ever

The number of wallet addresses containing at least 0.1 bitcoin reached an all time high of 3,469,507. This is a strong sign of growing bitcoin conviction amongst regular people, even in the face of the price dip.

📉  Drowning altcoin grabs on to bitcoin to stay afloat

We avoid discussion of altcoins here at Coinbits, but sometimes we have to play ball in order to get you the news. Terra (UST) is a stablecoin whose value is pegged to the U.S. dollar. It works in concert with the network's native asset, Luna, which helps the UST maintain its 1:1 peg. This week, Luna plunged more than 60%, resulting in UST coming de-pegged from the dollar and worth about 68 cents at the time of this writing.

So how does this affect bitcoin? UST was using bitcoin to support its value. The massive failure of UST has put downward pressure on the price of bitcoin, adding to the negative effects of the downturn in the Fed markets.

This episode strengthens the argument that bitcoin is unique, and not just another crypto. Terra and others like it will come and go, but bitcoin will remain.

Bitcoin adoption continues

Bitcoin is increasingly used for real estate.

In Louisville, Kentucky,  a house was purchased with bitcoin for the first time in the city's history. The transaction took about 8 seconds to complete, and cost 70 cents in transaction fees. Meanwhile, Portugal made similar history when an apartment was sold for bitcoin for the first time. The purchase came on the heels of favorable legislation permitting real estate transactions with cryptocurrencies.

El Salvador bought the dip.

The first country to adopt bitcoin as legal tender added another 500 bitcoin to its treasury. El Salvador now holds 2,301 bitcoin.

High-ticket retailers now accept bitcoin.

Popular luxury brand Gucci is set to accept bitcoin for payments in certain U.S. retail stores. The pilot project is being rolled out in major cities this summer. Meanwhile, a well-known used car exporter in Japan, SBI Motor, is now accepting bitcoin for international payments. The company views the 2 billion people who are unbanked, and who are currently excluded from the international economy, as potential customers.

Bitcoin Roundup Live

Join us for a fun weekly Q&A where you can hang out with other bitcoiners and talk about current events. It takes place every Thursday from 8pm to 9pm Eastern Time. Register here.

How bitcoin works

Learn one key idea about bitcoin each week. This week: Bitcoin is misunderstood as a risk-on asset.

The Fed's fight against inflation is now underway. Interest rate increases have sent nearly all markets downward (excluding energy stocks).

When interest rates go up, money becomes more expensive. Another way to say this is that the dollar's value goes up.

This is by design.

The Fed is trying to slow demand in response to record high sustained inflation.

The strategy is to make dollars more valuable in the short-term by increasing their cost (interest), leading to less spending in the economy (lowering demand). They hope this will push prices down as fewer buyers are in the market for goods and services.

Investors see significant interest rate hikes and typically sell "riskier" investments like bitcoin and tech stocks first.

But rate hikes aren't the only risks in the market at the moment. Sustained supply chain issues, war in Ukraine, and news of Shanghai intensifying their lockdowns on Monday have furthered investors fears of a slowing economy headed for consistent interest rate increases.

Markets everywhere are feeling it. In a fragile economy that is shackled with debt at the individual, business and governmental levels, there appears to be no safe haven in sight.

That's why we think bitcoin is misunderstood. Over the past decade, bitcoin has outperformed every other asset class. It is only a matter of time until people catch on.

The need for an incorruptible, neutral asset outside of the legacy system grows stronger by the year.

Coin check

How many times has the bitcoin price dropped 50% or more?

  1. Seven
  2. Three
  3. Twelve
  4. One

Check your answer at the end of the page.

What to do next

➡️  Want bitcoin? Sign up for Coinbits.

➡️  Was this newsletter forwarded to you? Sign up here.

➡️  Follow us on Twitter

➡️  Need coffee? Shop Queen City Coffee Roasters and get 15% OFF your order with promo code BITCOINROUNDUP

➡️  Want to work with us? Explore careers at Coinbits.

Answer: 1. Seven