Newsletter Issue #12

May 27th, 2022

Happy Friday. This is Ponder Crypto.

Your brother unlike any other from another mother.

Now, say that five times fast.

This week's topics

😴 Coins Appear to be Hibernating

🐌 U.S. is Falling Behind

🎵 JP Morgan Changing their Tune

💰 A Billion Dollars of Support

🤪 Meme of the Week

😴 Coins Appear to be Hibernating

One of the many beautiful aspects about Bitcoin and most cryptocurrencies is you can learn a lot about the market sentiment from analyzing on-chain data in real time.

For example, you can look at:

• Balances held by any public key
• Number of transactions happening at any moment
• Average duration a wallet holds a specific crypto

Contrast that with the Stock Market where investors:

• Hear major company updates after hours and cannot trade until the market opens
• Heavily rely on quarterly earning reports to find out the financial health of a company
• Cannot see the movement of shares between entities in real time

One of the best indicators thus far for identifying when Bitcoin's price has bottomed is called Dormancy Flow.

Dormancy Flow is a lifespan indicator. It measures the average number of coin days destroyed on each transaction. High values suggest that there are a lot of coin days destroyed in each transaction, while low volumes mean the opposite.

An example of High value would be someone who held a bitcoin in their wallet for 2 years and then moved that Bitcoin to another wallet. 

That would be 2 x 365 = 730 coin days destroyed

The trigger is simply the movement of the Bitcoin. This could be because the Bitcoin were spent, sent to an exchange to be sold or moved from one cold-storage wallet to another.

The best way to think about this indicator is the more coin days destroyed, the more likely that Bitcoin is changing hands from a long term holder to a short term holder.

When long term holders start selling, this is typically the beginning of the end for that bull run.

Long term investors hold Bitcoin through the rise then sell to short term holders at the top.

Some of those short term holders become long term holders but most end up buying high and selling low unfortunately.

This is the nature of any financial market, not just crypto.

What we are seeing right now is a historically low Dormancy Flow level.

Basically, long term investors do not want to sell their Bitcoin at these prices unless they absolutely have to.

The only Bitcoin that are moving are short term traders trying to flip-trade Bitcoin and miners moving or liquidating their Bitcoin rewards.

Supply pressure is building. Not if but when a spike in demand happens, you're going to see fireworks to the upside.

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This is not financial advice. I am merely stating my own opinion on how I am perceiving the current market structure and conditions. Consult with a legal investment advisor and all the other good legal stuff that needs to be said.

🐌 U.S. is Falling Behind

SEC's Hester Peirce has been working hard to get fair, non-restrictive legislation in place to hopefully bring some clarity to the crypto space. (rhyme)

"We're not allowing innovation to develop and experimentation to happen in a healthy way" she was quoted saying at a DC Blockchain Summit even this week.

I believe there are multiple reasons the US has been dragging their feet:

1. People want to be seated at the head of the table

Gary Gensler (SEC Commissioner) has been attempting to make the case that 99% of all crypto currencies should be classified as securities based on on the antiquated "Howey Test" adopted in 1933. This would basically give the SEC full oversight over the crypto industry.

Rostin Behnam, recently confirmed head of the Commodity Futures Trading Commission just asked law makers to grant his agency the authority to regulated cryptocurrencies siting "out of hand speculative fervor". 🙄 Behram believes ALL cryptos, including Bitcoin should be classified as commodities (shocker) which would give him full oversight over the crypto markets.

2. Law makers don't know the difference between a cryptocurrency and a crypto punk

These politicians are dinosaurs!

When they wanted to learn about Yosemite National Park, They grabbed the "Y" book from their Encyclopedia collection.

Many of them remember a time when TV was only in black and white!

This isn't a knock on them necessarily. The crypto space is extremely complex and constantly evolving.

The problem is they are trying to fit crypto into this perfect little box with strict regulations when they need to acknowledge that there has been nothing like crypto currencies ever before and that regulation should not be so strict that all of the inventors and entrepreneurs pushed to other countries.

This overly regulated objective combined with the lack of understanding is causing law makers to freeze in their tracks and basically kick the can down the road in hopes someone else will deal with it which is causing the US to fall behind other forward thinking countries.

3. Politicians and the people in power have not been able to figure out a way to successfully control it.

Slowly they are realizing that Bitcoin doesn't have the same choke points as a centralized entity would.

• They can't print more Bitcoin
• They can't strong arm Bitcoin's CEO
• Crypto is a global market so over-regulation wouldn't stop anything but simply push it out to another country

The minute the powers that be find an angle they can play that will give them some "leg up", you will see a pro bitcoin and crypto stance from the law makers and politicians across the board.

🎵 JP Morgan Changing their Tune

You won't believe what JP Morgan just announced..

Digital assets have replaced real estate as JPMorgan’s “preferred alternative asset class,” the bank said in a report Wednesday.

And that's not all. In their report, they also announced that they believe the CURRENT FAIR VALUE FOR BITCOIN IS $38,000 dollars.

Let that sink in a bit.

JP Morgan..

Who once said any trader would be fired if they were caught trading crypto not four years ago..

Whose CEO called his own kid stupid publicly for owning Bitcoin..

Is now not only calling for a higher price, but also that cryptos are now their PREFERRED alternate asset class.

..Sounds like someone has figured out a way to profit off of it finally.

This is a perfect example of why you have to think for yourself.

Anyone who is actively trying to have their voice heard, be it politicians, industry leaders, media or crypto newsletter authors, has an agenda they are pushing.

Most of the time it comes down to financial gain and power.

You must build the muscle that lets you read people's motives regardless of what they're saying.

JP Morgan is out to make money. 

If they say they don't like something, it's only because the can't or haven't figured out a way to profit from it.

💰 A Billion Dollars of Support

The 2024 Election race is going to be..

Interesting?

Scary?

Entertaining?

Exhausting?

... Let's go with all the above.

I'm not one for politics but this story has some crypto implications so bear with me.

Some common threads have been popping up lately:

1. Biden's approval rating has dropped to the lowest of his presidency down to 36%
2. The increasing issues brought on by inflation are going to exacerbate the desire for political change in the White House
3. Many centrists who would have leaned left on most issues are being pushed to the right because of the increasing radicalized left-wing extremism. 

This is creating a scenario where a republican is more likely to become the next U.S. president.

And who has said they want to run again? Trump.

One person who does not want this to happen is Sam-Fried Brinkman, CEO of crypto exchange platform FTX.

Sam recently announced that he plans to donate up to 1 billion dollars to the democratic campaign should Trump run again. 

To put this into perspective, The top individual donor of the 2020 election was Adelson, Sheldon G. & Miriam O. contributing 215 million to the conservatives.

Brinkman is an interesting person.

His person thesis is make as much money as you can in your lifetime and use 99% of that money to make the world a better place.

It'll be interesting to the crypto regulatory landscape during the presidential campaign.

It is looking more and more like crypto could become a bi-partisan issue which would be great for everyone.

🤪 Meme of the Week

Image Posted by hoooodlcom

Sick move.

Pop shove it 360 board flip to margin call on your bear put spread! 🤘

Don't forget to wear a helmet and always, stay optimistic yet cautious!

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Disclosure: All content shared in the Ponder Crypto website, newsletters, video channels or any other medium are for entertainment purposes only and should not be received as legal or financial advice. We are not legal experts or financial planners so please, exercise proper due diligence and do your own research.