Cryptogram - 23DEC2022

Time to buy Bitcoin?

23 December 2022

In this issue

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram here.

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Hello, 

What is a 2022 week in a crypto if it isn’t full of turmoil, right? There was more of it last week, and here’s a quick recap of the top 5 stories.

  1. One of the largest bitcoin miners in the industry, Core Scientific, filed for bankruptcy and received court approval for a $37.5 million loan from existing creditors to continue mining. Creditors have faith in its long-term viability. 

  2. Former FTX CEO Sam Bankman-Fried’s buddies and partners-in-crime, Caroline Ellison and Gary Wang, possibly turned on him this week after pleading guilty to fraud charges and are now reportedly cooperating with investigators in the prosecution of SBF. All eyes are now on SBF’s other (former?) friends and FTX executives Nishad Singh and Ramnik Arora, who were key to the disgraced company’s financial transactions and investor relations. Also, the US SEC has declared that they will consider FTT a security.

  3. Elon Musk’s Twitter took another step closer to the crypto ecosystem after adding BTC and ETH price indexes to its search functions – just hit search with their names or tickers, and you will get the prices. 

  4. Defunct Canadian crypto exchange QuadrigaCX’s “lost” Bitcoin reserves, 104.34 BTC worth around $1.7 million, suddenly moved out of their cold wallets this month – and no one knows who is doing it.

  5. On the TradFi meets DeFi front: Uniswap allows users to buy crypto with credit cards, and Visa has released a paper outlining a possible collaboration with Ethereum. The market may be dull, but progress is happening.

Our main piece this week is about the question many of you may have – has Bitcoin bottomed out, and is it time to start buying it?

 WEEKLY PRICE TRACKER

Price movements from last Friday

BTC Watch

 by 3% from last week with the turmoil in the markets continuing. But BTC could witness a Santa rally ahead of the holidays, and there is a much more detailed analysis for BTC in our lead piece below.

ETH Watch

 about 3% from last week, but holding the fort better because of a potential collaboration with Visa.

FTT:

 28% with huge investigations underway on FTX officials.

BNB:

 5% as FUD on Binance could still be around the corner as rumours of misrepresentation of Binance wallets is making rounds.

ADA:

 13% with crypto winter being in full swing leading to lack of dapps in the ecosystem.

 WHAT'S HOT

Coins to watch out for

cbETH (CBETH)

Coinbase Wrapped Staked ETH ("cbETH") is an ERC-20 utility token that Coinbase has created to represent Ethereum 2.0 (ETH2) on its platform. It is expected to be more valuable as each cbETH represents one cbETH plus any accrued staking value.

Neutrino USD (USDN)

Neutrino USD (USDN) is an algorithmic collateralised stablecoin pegged to the US dollar that has depegged to $0.5 providing a shorting opportunity for traders. This massive drop came after the Digital Asset Exchange Association (DAXA) issued a warning about Waves. USDN is built using WAVES blockchain.

Project to watch out for

ArbitrumWe are receiving feedback from the developer ecosystem that Arbitrum is getting more takers compared other layer 2 solutions like its competitor Optimism. Arbitrum is a layer 2 solution designed to improve the capabilities of Ethereum smart contracts, boosting their speed and scalability, while adding in additional privacy features to boot. Optimism uses single-round fraud proofs executed on layer-1, whereas Arbitrum uses multi-round fraud proofs executed off-chain, which makes Arbitrum more secure – and developers like that.

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 THE HOT TAKE

Has Bitcoin bottomed out?

So, our analysis indicates that Bitcoin may have bottomed out, or will get there in the next months, and it is a reasonable time for investors to start shoring it up with long-term capital with cost averaging. But are not asking you to jump up and down just yet… be careful.

Our viewpoint is based on the three lessons we could take away from our detailed on-chain analysis.

 

1. Mining cost-base is now less than one

When miners spend more on electricity to mine one BTC compared it is market price, its cost basis becomes less than one. We are currently in one of the four such phases (or wonderful opportunities) in the last 13 years.

2. Mining hash rate is 70% higher than September 2020

Why then are miners still mining more Bitcoin, you might ask? Naturally, some of the mining rigs are being switched off while Core Scientific filed for bankruptcy this week – but even Core has said that it plans to continue mining. 

That’s because mining remains a viable industry as these are the best times to accumulate BTC and current miners can command a fair share of the mining hash rate in future if they persist. 

Competition continues to increase in the industry with more miners fighting for same BTC reward in this miner rewards’ halving cycle. This backs the hypothesis that once another halving of miner rewards happens in 2024, BTC’s price has to go up dramatically to support the growing mining industry (market equilibrium). This process has happened three times so far.

3. BTC’s supply held by retail has increased to 17% this year

As years pass by, to become a vehicle of disruption, Bitcoin is supposed to get distributed across retail investors rather than concentrate across institutional or large holders. That is exactly what is happening. We believe that by the end of next cycle (~2026), this share will likely reach 30%.

This speaks to the long-term stability of Bitcoin, because more retail investors are adopting Bitcoin.

You can also check out

and

for more indicators of the Bitcoin bottoming-out. 

So yeah,

.

That’s all we have for this issue, see you next week! 

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

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