BitcoinActuary is an actuary based in the U.K. exploring Bitcoin.

This is an article for your nocoiner friends, seeking to view bitcoin from a slightly different angle.

Bitcoin is still around $30,000 and you have no idea why. All you can still see is a melee of "crypto" Ponzi schemes that will crash to zero any day now. Bitcoin is just another one of them, if anything, superseded by other cryptocurrencies with more utility and newer tech.

Hence you might well ask, "How on Earth is bitcoin still some 50% higher than its previous all-time high prior to late 2020?! Let's dive into one slightly different angle by which to look at it.

Lets start by considering the worlds currencies. How might we compare them in terms of size? To measure this, it would make sense to look at the value of the monetary base the most irreducible form of each.

Porkopolis Economics has a table illustrating the stats and Id recommend the TFTC: A Bitcoin Podcast episode #310 (and others previously) with Marty Bent and Matthew Meinskis for some discussion on this.

It might surprise you that, on this basis, one of the largest 10 monies in the world (in terms of base money value in circulation) does not belong to a country, but it is internet native and has some very different properties from all of the others lets take a look at how.

(Spoiler alert, its bitcoin.)

It offers zero risk-free yield, so isn't worth holding on that basis compared to fiat currencies. All else equal, fiat currencies will strengthen when their base rate of interest goes up, as one can now realize a higher interest rate when holding them. (Russia is an example earlier in 2022, using interest rate rises as a defensive mechanism when the ruble was falling.)

On the flip side and this is key the total amount of its supply that will ever be issued is known, unlike any fiat currency. As fiat currencies inevitably debase faster than bitcoin, demand for bitcoin is likely to persist. Please note, this is not strictly a claim for bitcoin to be a direct inflation hedge, i.e., for the consumer price index (this has been a lazy recent criticism). It is rather that the inflation of the bitcoin supply is already low at approximately 1.8% per year, with the issuance halving every four years and known with certainty.

Within this natively internet money, there is no coercion within its makeup. No one is compelled by its existence to hold it or to use it; they do so by choice alone. Moreover, it is open to all and permissionless barriers to entry are little more than a smartphone and an internet connection.

Unlike physically located nation states, it doesn't bow to any political pressure over its issuance or operations. It can't be shut down. It's also very hard to ban people from using it or to confiscate it.

It can't be mindlessly rehypothecated. Why not? Since it's extremely portable, divisible and easy to take custody of the underlying asset, holding it via third parties that rehypothecate it introduces counterparty risk, so rational actors will generally avoid it, or at the very least demand market-based compensation for taking on that risk.

Bitcoin is freely traded 24/7, 365 days per year, and the costs of exchanging it are likely to be driven ever lower by competition over time. Of course, its exchange rate (this term is a better framing than price in this discussion) is highly volatile. This is in contrast to currencies where there may be restrictions on trading and governments may intervene in currency markets. As may be logical, the bitcoin exchange rate flourishes in times of debasement of other currencies but struggles in periods of them tightening. (Examples of recent dollar tightening are 2018 and 2022, so far.)

Fiat currencies certainly have huge sources of demand for them that bitcoin currently doesnt have, namely to meet future transactions priced in those currencies. These could comprise taxes due, or payments for goods and services, or investment into properties, equities, etc. Commodity wise, much is made of the relevance to oil being globally priced in dollars. This undoubtedly has contributed to the number of foreign nations holding dollars in their reserves. Why? If the oil price in dollars can remain relatively stable, holding dollars will help closer match the cost of future energy needs than another currency.

I deliberately hesitate to term bitcoin as a currency by the way. It is another lazy criticism that it has already failed to have the qualities required to be one. I think the Bitcoin white paper avoided the word for good reason. Bitcoin has many years and decades ahead for sovereign nations to decide to adopt it as a currency or not, but that will not change its operations.

Due to its fixed supply and other unique attributes, it's only logical that many have started exchanging other, more rapidly debasing currencies for bitcoin. Undoubtedly, there are many short-term traders around, but the long-term exchange rate is likely driven more by those taking a long-term outlook in their positions to ride out the volatility. Note this is not investing; bitcoin is a form of money. Its saving.

What about altcoins as competing money? We dont see them in the aforementioned top 10. Take the time to learn why bitcoin has no meaningful competitors in the above context. Why proof of work is so important to bitcoins immutability and fully decentralized nature. And why any additional utility developed in another altcoin appears meaningless if they cant match bitcoins monetary properties they cant.

Just like conventional currency exchange rates or baskets, such as the DXY (a commonly observed basket of the Great Britain pound, euro, Canadian dollar, Swiss franc, Swedish krona and Japanese yen against the dollar), it's pretty tricky to predict where bitcoin will hit any particular price level in future. As weve seen above, bitcoin has several interesting and unique attributes as money when compared to fiat currencies. These make it likely that demand for it will continue to increase as fiat currencies compete to debase. As Bitcoiners often say, it's just math(s).

When framing it in these terms, are you still sure bitcoin is heading to zero any day now?

This is a guest post by BitcoinActuary. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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To The Bitcoin Skeptics, Are You Sure You Figured It Out? - Bitcoin Magazine

The host of Mad Money, Jim Cramer, has some advice for cryptocurrency investors. I would never discourage you from buying crypto, he said, adding that he himself owns ethereum.

Jim Cramer, the host of Mad Money, gave some advice regarding cryptocurrency investing on CNBC Make It Wednesday. Cramer is a former hedge fund manager who co-founded Thestreet.com, a financial news and literacy website.

I think crypto should be part of a persons diversified portfolio, he began, elaborating:

I cant tell you not to own crypto. I own crypto. I own ethereum.

He explained that he bought ether (ETH) because he wanted to buy a non-fungible token (NFT) for a charity. But, they wouldnt let me do dollars, he noted. I had to buy it in ethereum, so I researched it, and its got some qualities I like: scarcity value, not as hot so to speak as bitcoin (BTC). So, I bought it.

While noting that crypto is speculative, he said it is okay to invest in speculative assets. However, he stressed, You must admit that its speculative, emphasizing: Dont put it in the Procter & Gamble class. Its not Coca-Cola. Its not Apple.

He further noted that ever since crypto came along, he has been recommending putting 5% of portfolios in crypto and 5% in gold, instead of putting 10% in gold.

While he admitted that he has no idea what the value of crypto will be, he acknowledged that many people have made a fortune with crypto. You have every right to try to make money in crypto, he said, adding:

I would prefer that you would do it in ethereum or bitcoin, which have the largest followings I would be careful.

Cramer further warned that investors should not borrow money to buy crypto. Borrow for your house, borrow for your car but dont borrow for crypto, the Mad Money host emphasized, concluding:

I would never discourage you from buying crypto because of all the fortunes that have been made there, and how it could make a whole new group of people fortunes Id like that to be you.

What do you think about Jim Cramers comments? Let us know in the comments section below.

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons, CNBC

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Mad Money's Jim Cramer Offers Advice on Cryptocurrency Investing Featured Bitcoin News - Bitcoin News

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Listen To The Episode Here:

In this episode of the Fed Watch podcast, Christian and I sit down with Dylan LeClair, head of market research at Bitcoin Magazine Pro. Each week, he and Sam Rule write near-daily updates for subscribers, and once a month they release a large Bitcoin market report. Bitcoin Magazine Pros May 2022 Report is what we are covering for the most part in todays episode.

You can find the slide deck we use for this episode here, or you can see all the charts at the end of this post.

Fed Watch is the macro podcast for Bitcoiners. Each episode, we discuss current macro events from across the globe, with an emphasis on central banks and currency matters.

Before we get into the awesome charts that LeClair brought, I want to get an idea of where he sees bitcoin in its market cycle timing. I ask, somewhat facetiously, if we are in a bear market, because we are definitely not in a typical 80-90% drawdown.

LeClair responds by saying we are in a classic bear market, not necessarily a classic bitcoin bear market. He points out that the upswing of this cycle didnt have the typical parabolic blow-off top weve seen previously in bitcoin, as well as there being more technical and fundamental support in the mid-$20,000s up to $30,000 so drawdown pressure will also likely be limited. LeClair also adds that the average user cost basis was hit by the wick to the recent lows. All in all, there is significant support under the current price and it remains to be seen if there is enough bear momentum to break to new lows.

Lastly, on the market-cycle timing questions, LeClair points out a very underappreciated market development: the collateral type on exchanges has mostly switched from bitcoin in previous cycles to now being stablecoins like Tether (USDT) and USDC. In other words, the dominant trading pairs and cash deposits on exchanges have changed from bitcoin to stablecoins. In the past, the most important trading pair for any altcoin was versus BTC, which has changed to being versus a stablecoin like USDT. This is a monumental shift in market dynamics and will likely lead to much more stable prices for bitcoin, because less bitcoin will be forced to liquidate in the hyper-speculative shitcoin bubbles.

This is Coinbase spot volume, being the dominant American exchange, and the Perp [perpetual futures] volume aggregated over a bunch of different derivatives exchanges. What we can see is various volume spikes. Historically, when bitcoin is trading hands in that size, it signals some sort of market top or bottom, some significant change in market structure. Dylan LeClair

Bitcoin perpetual futures and Coinbase spot volume

The next chart shows the difference in market structure due to stablecoins. LeClair says that 70% of the derivative market was still collateralized by bitcoin around the 2021 summer sell-off. Today, it is much much smaller than that. Therefore, we should expect there to be fewer liquidations in bitcoin when shitcoin bubbles pop, and thats exactly what we see.

Bitcoin long liquidations are shrinking due to stablecoin collateralization

What is great about the Bitcoin Magazine Pro newsletters is they not only look at the bitcoin market but also how macro could be affecting bitcoin. The next two charts are about CPI and interest rates. LeClair does a great job breaking these down during the podcast.

Cunsumer price index year-over-year and the monthly change

Cunsumer price index year-over-year versus the 10-year Treasury yield

I ask LeClair about his thinking on the Federal Reserve monetary policy, and he focuses his analysis around real interest rates. He says real rates will have to stay negative in order to erode the massive global debt burden. Therefore, if the Fed hikes even to 3.5%, for real rates to stay negative the CPI will have to stay above that.

Next up is CKs favorite indicator, the Mayer Multiple, or the 200-day moving average price divided by current price. When the price is below the 200-day moving average, this ratio is below 1, and has historically been a good way to time the market.

Bitcoin price weighted by Mayer Multiple

One of the most dense informational charts on Bitcoin Magazine Pro is up next, and that is Reserve Risk.

The Reserve Risk chart basically weighs Hodler conviction, whether strong or weak, with price.

Bitcoin price weighted by reserve risk

Our last chart for the day is Realized Price, and this is LeClairs favorite. It is a great way to strip out much of the noise and volatility of the bitcoin price and concentrate on the trend.

One of the cool things about the transparency of this network is, we can see when every single bitcoin has ever moved, or was ever mined. We can also [assign each UTXO a price of when it last moved] to come with what we call Realized Price. [...] We can see when everyone is underwater on average. LeClair

Bitcoin realized value ratio

At the end of the show we wrap up with a discussion on the recently proposed draft legislation, by Senator Lummis, that outlines a new framework for bitcoin and what the bill calls digital assets. In fact, they dont use the terms bitcoin, Ethereum, blockchain or even cryptocurrency in the draft at all.

Suffice it to say, we tease out some opinions from LeClair and go back and forth with the livestream crew, but youll have to listen to get that whole insightful discussion! We dive into the effects on the bitcoin market, exchanges and a future bitcoin spot ETF!

That does it for this week. Thanks to the readers and listeners. If you enjoy this content please subscribe, review and share!

This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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Analyzing The Current Bitcoin Market Cycle - Bitcoin Magazine

The adoption of Bitcoin (BTC) could occur more rapidly than the adoption of past disruptive technologies such as automobiles and electric power, with global take-up likely to hit 10% by 2030 according to a new report.

In its June 8 report, Blockware Intelligence said it arrived at this forecast by examining historical adoption curves for nine past disruptive technologies, including automobiles, electric power, smartphones, the internet, and social media, along with the growth rate of Bitcoin adoption since 2009.

Using the average and weighted average of historical technology adoption curves, as well as the growth rate of Bitcoin adoption, the report was then able to arrive at its prediction.

It said that based on a metric called Cumulative Sum of Net Entities Growth and Bitcoins predicted CAGR of 60% we forecast that global Bitcoin adoption will break past 10% in the year 2030.

Blockware Intelligence is the research arm of Blockware Solutions, a Bitcoin mining and blockchain infrastructure company, so you might expect it to be bullish on adoption.

The intelligence unit said it expects Bitcoin adoption to reach saturation quicker than many other disruptive technologies, given direct monetary incentives to adopt, the current macro-environment, and because adoption growth will be accelerated by the internet.

From a consumer perspective, past technologies had convenience/efficiency-related incentives to adopt them: adopting automobiles allowed you to zoom past the horse and buggy, adopting the cell phone allowed you to make calls without being tied to a landline, the report explains.

Bitcoin, like the internet, smartphones, and social media, also derives benefits the more people that adopt the technology, which is known as the network effect.

Case in point if you were the only user on Twitter would it be of any value? It would not. More users make these technologies more valuable.

Related: 75% of retailers eyeing crypto payments within 24 months: Deloitte

However, the authors of the Blockware report stressed that the model used to predict the rate of adoption was only conceptual at this stage, adding it is neither meant to be used as investment advice nor a short-term trading tool and it would continue to be refined. However:

The report and model was reviewed by several crypto investors and analysts, including executives from Ark Invest, Arcane Assets, AMDAX Asset Management, and M31 Capital.

Cryptocurrency adoption has been growing rapidly over the last few years. In 2021, global crypto ownership rates reached an average of 3.9%, with over 300 million crypto users worldwide, according to data from TripleA, a global cryptocurrency payment gateway.

Blockchain data platform Chainanalysis last year revealed that global adoption of bitcoin and cryptocurrency surged 881% from July 2020 to June 2021. It found Vietnam to have the highest cryptocurrency adoption, leading 154 countries analyzed, followed by India and Pakistan.

In April, a survey conducted by cryptocurrency exchange Gemini found that crypto adoption skyrocketed in 2021 in countries like India, Brazil, and Hong Kong as more than half of respondents from its 20 countries polled stated that they started investing in crypto in 2021.

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Global Bitcoin adoption to hit 10% by 2030: Blockware report - Cointelegraph

On a sun-splashed day in the Swiss Alps, the chief technology officer of Bitfinex and Tether, Paolo Ardoino, shed light on the Plan B Lugano strategy, Tether as an onramp into Bitcoin (BTC) and crucially his favorite pizza toppings.

Fresh off the plane from Norway, where Ardoino attended an increasingly Bitcoiner-friendly event, the Oslo Freedom Forum, the Italian explained that, in contrast to the WEF,there was no shilling in Norway.

Tether was invited to speak at the Oslo Freedom Forum as the stablecoin is increasingly considered an instrument of freedom. Tether has been adopted by the Myanmar government while the Ukrainian government has accepted crypto donations, including Tether, since the onset of the Russia-Ukraine war.

Ardoino cites Turkey and Argentina as examples. The Turkish lira has lost 50% of its purchasing power and crypto, often seen as a hedge against uncertain currencies, is experiencing a second wave of interest. Ardoino also conceded that:

Regarding the Plan B strategy in Lugano, where Bitcoin and Tether are de facto legal tender in the Swiss city, Ardoino shared that educational models in Switzerland are being shared across to El Salvador.

Related: Tether launches crypto and blockchain education program in Switzerland

Ardoino also critiqued Satoshi Nakamoto's choice of pizza toppings.Bitcoin Pizza Day occurred the day before the WEF, a day where Bitcoiners around the world eat and attempt to pay for pizza with Bitcoin.The creator of Bitcoin, Satoshi Nakamoto, famously enjoyed pineapple and jalapeos on pizza, to whichArdoino commented, nobody is perfect.

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Tether is instrument of freedom and 'Bitcoin onramp, says Bitfinex CTO - Cointelegraph

Two Bitcoin miners have told Cointelegraph that if the bill banning Proof-of-Work mining for two years in New York becomes law, it would end up triggering an exodus of mining companies from the state and do little to address the intended goals of the moratorium.

GEM Mining CEO John Warren told Cointelegraph on June 8 thathe and other miners now view New York as an unfriendly place where they likely would not want to open up shop.

Environmental sustainability has been at the heart of the New York state governments argument against Proof-of-Work (PoW) mining. The controversial mining ban bill would prohibit any new mining operations in the state for the next two years. It would also refuse the renewal of licenses to those who are already operating in the state unless it uses 100% renewable energy.

GEM Mining recently commented that the bill will not only miss its intended target but also discourage new, renewable-based miners from doing business in the state. Warren told Cointelegraph that his operation is already 97% carbon neutral.

GEM Mining is a South Carolina-based Bitcoin (BTC) mining operation that contributes 1.92 Exahash per second (EH/s) of hash power to the Bitcoin network as of May.

Similarly, the CEO of Sweden-based White Rock Management digital asset miner Andy Long also feels that Bitcoin mining is moving in the right direction toward fossil-free energy use, as he stated in emailed comments to Cointelegraph.

The company boasts 100% dependence on hydroelectric power for its 712 Petahash per second (PH/s) hash power contribution.

Long echoed the idea that the PoW mining freeze would not have the intended effect and sends the wrong message.

Roughly 10% of the US's hashing power comes from New York according to the Cambridge Bitcoin Electricity Consumption Index (CBECI). This makes it the fourth-biggest producer in the country. As of April, miners indicated in a survey with the Bitcoin Mining Council that about 58% of the energy used for mining is from sustainable sources.

The bill, should it come into effect, could see an outflow of mining firms from New York into other states just as miners exited China in a rush following its mining ban last year.

However, GEM Minings Warren believes the contributions from other states will continue to grow whether the moratorium comes into effect or not, adding that it would probably not cause a domino effect of other bans, except that how New York goes, Cali goes.

He added that even if Governor Hochul signs the moratorium into law, New Yorks hashpower would drop anyway as Kentucky, North Carolina, Texas, and other states add new incentives for miners.

New York is already losing its competition with states such as Kentucky and Georgia for miners. Georgia is the USAs top state for hash power. Fortune reported in February that miners may be flocking there for the below-average cost of electricity and the opportunity to offset their emissions with renewable credits. Georgia produces 35.6% of its electricity from nuclear and renewable sources.

Kentuckys Governor Andy Beshear signed into law last March a tax incentive for Bitcoin miners who set up shop and help support the states fledgling renewable energy infrastructure. Kentucky has surpassed New Yorks hash power for third place in the union but produces only 6.6% of its electricity from renewable sources.

Related: IMF recommends eco-friendly CBDCs and non-PoW mechanisms for payments

The controversial mining bill is currently sitting on the desk of New York Governor Kathy Hochul, who has yet to publicly commit to signing the bill. Instead, she noted thather team will be looking very closely at the proposal over the next few months.

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Bitcoin miners say NY ban will be ineffective and 'isolate' the state - Cointelegraph

Like a number of growth stocks,Bitcoin(BTC -0.46%) has crashed hard this year. The largest cryptocurrency is down more than 50% from its peak last fall as investors have moved away from risk assets and Bitcoin has failed to live up to its reputation as an inflation hedge.

While some investors seem to believe that the cryptocurrency is cheap after falling so far from its previous peak, that argument seems suspect when taking a closer look. There's no easy way to value Bitcoin, after all.

As a cryptocurrency, the asset doesn't have any of the fundamentals that investors typically use to value productive assets like stocks, bonds, or real estate. Over its history, Bitcoin has moved more like a speculative asset, such as a penny stock, with large swings up and down. Even today, much of the value behind it seems speculative.

Bitcoin bulls often argue that gold is the best analog for the total value of the token. Since all the gold in the world is worth roughly $12 trillion, many believe that Bitcoin's market cap will one day reach that milestone, up from $580 billion today.

PayPalco-founder and billionaire investor Peter Thiel even argued that Bitcoin should be worth as much as the global stock market, or $115 trillion. But without any fundamentals to go by, it's easy to make these arguments, even if they're flawed.

If we can't look at numbers to value Bitcoin, it might make sense to consider its real-world influence in comparison to similarly valued companies, especially big tech companies, as the crypto is fundamentally a technology. The chart below shows how it compares in market value to the "big five" tech companies Apple,Alphabet,Microsoft,Amazon, andMeta Platforms.

Source: Ycharts and Yahoo! Finance

It's worth remembering that Bitcoin was worth $1.3 trillion at its peak. While it is smaller than most of the companies today, it's still very much in league with them historically, based on market value.

It's hard to overstate the influence of the big five tech companies around the globe. Apple has more than 1 billion active iPhone users and an installed-device base of nearly 2 billion. Many people would struggle to live their day-to-day lives without their iPhones, and financially and culturally, Apple's trademark smartphone might be the most successful product in history.

Microsoft has dominated enterprise technology for a generation and is a leader in enterprise software, operating systems, and cloud infrastructure. More than 1 billion people use Microsoft products for work, and there are 1.4 billion monthly active devices running Windows.

Alphabet's Google is the default search engine for the world, replacing everything from the phone book to the encyclopedia in the analog era. It processes over 8 billion searches a day.

Amazon has changed the way the world shops and reoriented the retail industry. It counts more than 200 million Amazon Prime subscribers and owns the leading cloud infrastructure service, Amazon Web Services. It gets more than 1 million orders a day and has more than 9 million third-party sellers around the world.

Lastly, Facebook parent Meta Platforms has nearly 3 billion people using one of its apps (Facebook, Instagram, Messenger, and WhatsApp) every day to connect with friends or get the news, and has more than 7 million businesses advertising on its platform.

All of these companies have disrupted their respective corners of the tech industry and have significantly changed the world. If they disappeared overnight, their absences would be glaring.

At this point, Bitcoin still seems to be more of an idea than a reality, and its value is attached to its potential rather than what it's actually doing today. As a currency, it's unwieldy and expensive to use and has only barely penetrated the addressable market of payments.

As a medium of exchange, Bitcoin seems to be trying to solve a problem that doesn't exist, as fiat currencies and credit card exchanges handle payments more efficiently than cryptocurrencies do. The recent drop in Bitcoin's price also indicates that it's a poor store of value, despite the argument that it's "digital gold."

About 114 million accounts hold Bitcoin around the world, so even ownership of the cryptocurrency pales in comparison to the daily exposure the world has to companies like Facebook, Google, and Apple. Most of those holders own Bitcoin as an investment, rather than a currency to transact with. Just 0.01% of those accounts control nearly a third of the Bitcoin in the world.

Its backers will argue that the cryptocurrency still has a long way to go in disrupting traditional currency, and efforts like the Lightning Network are underway to speed up transactions and add more utility. Still, it's a mistake to think Bitcoin is a new product at this point.

Founded in 2009, it's not much younger than Facebook, which was started in 2004. Bitcoin has built significant brand awareness in the last few years, so anyone who is interested in experimenting with cryptocurrency has probably tried it already.

Tech disruptions tend to happen quickly, as the success of Facebook, Google, or the iPhone show, so it seems like the Bitcoin disruption would have happened already if it were going to. Now, valuations in the tech sector have crashed as we've moved past the peak of the hype cycle that was inflated by the pandemic.

It's not surprising to see Bitcoin falling with tech stocks, since so much of its value is based on its potential. But with the hype cycle now broken, it still seems like the cryptocurrency could have a ways to fall.

At a market value of $580 billion, Bitcoin is still worth more than Meta Platforms, which has its own stake in the metaverse as well as a global influence that is orders of magnitude greater than Bitcoin's. From that perspective, there's no good justification for the cryptocurrency's current market cap.

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1 Reason Bitcoin Still Looks Overvalued - The Motley Fool