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Crypto Market Updates for Nov 2021


I really wanted just to aggregate some ideas and thoughts about crypto in one place for myself. Then I decide I would send these thoughts to other people so they could leave them unread in their inbox. So if you read any of this great and if you don't that fine too. It's strange to have a message to people that wont read it but regardless, I did not come up with any of these ideas and I am just parroting what other people have said.


BASICS OF BITCOIN AND JUST BITCOIN

 

Bitcoin is a token and a technology.


The token is traded on exchanges and the tech behind it is BlockChain. You really don't need to know how exactly the block chain works other than that it is 100% trusted and 100% transparent. Anytime someone moves a BTC (Buy, Sell, Send) that can be viewed on the blockchain by everyone without knowing exactly who anyone is. Kind of like Verizon can see every single call you make but they don't know specifically who was talking.


Someone just sent this transaction a few seconds ago (See Image). I can see where it came from and where it is going. How much it was, fees, etc but I cannot tell who either party is which is great for privacy and great for trust. I think all of this just highlights how easy crypto is to use and understand. Every single cent is accounted for at every second. If you don't believe someone that tells you they just sent you 30 BTC but it hasn't got there yet, you can just go look for yourself and so can anyone else in the world.



STOCK TO FLOW MODELING

 


Bitcoin is its own category by itself. Nothing else is like it. Only 21.5 million will ever be created. Every 4 years there is a halving which means the amount of Bitcoin given out to miners as a reward is cut in half. So the supply is cut in half for the next 4 years. This makes the asset more scarce as time goes on. There will be less and less Bitcoin created every year until the year 2040.

Some people consider it to be very much comparable to Real Estate or Gold. The only difference being that you can alway build more houses and mine more gold but you cant alway create new Bitcoins. That is why the Stock to Flow model was applied to BTC.

Comparing it to other asset classes using Stock to Flow Modeling. Stock to flow is a model that commodities traders came up with a long time ago. It tried to measure how scarce an asset is. The lower the current supply and the lower the incoming supply makes a very scarce asset bc there isn't much around now and there isn't much more being coming in the future. An asset like Apple Stock is not scarce because there are millions of shares now and they can issue as many shares as they want to in the future.


Formula = Current Supply / Annual Incoming Supply


BTC would be =

18,870,581.25 / 328,500 = 57.44

Gold Ratio is 62 with MarketCap of 11.843 Trillion

Silver Ratio is 22 with a MarketCap of 1.405 Trillion

BTC (Current) 57.44 with a MarketCap of 1.23 Trillion

RealEstate Ratio is 112 =

139,000,000 Residential Units in US / 1,240,000 Completed Home Builds in 2021




REGULATIONS & SOCIAL PROOF

 

The worry for some is that regulation or some other black swan event will kill crypto in the future. I don't think that is going to happen and actually I think SEC Regulation Clarity will continue to improve and the space will get more mature. Also, if that did happen that would make Tim Cook and Elon Musk wrong and that doesn't happen often.



BTC Futures ETF Approved by SEC. The Securities and Exchange Commission (SEC) approved bitcoin futures ETFs in a first for the industry after the regulator’s five commissioners met on the issue.






Tesla buys 1.5 Billion in Bitcoin for its balance sheet. They currently have not sold any of those holdings.







Apple CEO Tim Cook says in an interview that he personally owns Bitcoin and is looking into how to add it to the Apple Wallet.




Summary: I now think BTC is one of the strongest longterm investments you could ever make. You can borrow against it, you can leverage it, you can hold it securely, you can liquidate it at any moment for cash, you can transfer it anywhere in the world, you can expect about 120% returns annualized, it creates a cash flow by staking it.

BTC is my 2nd largest holding and I will be accumulating more after the price drops this cycle and I want to put at the very least 1 BTC into an IRA for McKinley.


ETHEREUM & MY BIG BET

 

Bitcoin is not even close to my largest holding. My largest holding by a large factor is Ethereum and here is what is it and why?

Ethereum is a totally different asset. Ethereum is a separate blockchain that is kind of like the internet of Crypto. It's blockchain is what the vast majority of coins are built on. So if you want to create a new coin that is going to write smart contacts you build it on ETH. If you want to create a coin that looks to help tracking of supply chains, you do it on ETH.


That is all without even mentioning the deflationary nature of ETH and the fact that ETH 2.0 is coming out next year. All this really means is that there is a catalyst coming and that there are less and less ETH tokens everyday. That is why I believe that ETH will give better short term and long term returns than BTC. Not to mention it is just easier to 2x,3x,4x a $5k asset than it is a $70k asset.



Over the last 30 days there have been 1.39 million transactions over the network. Whether that is NFTs, decentralized apps, Defi, etc. I think this really just points to how integral the network is to crypto as a whole and that so many coins rely on it. The NFT market as been in a full blown parabolic rally since Jan and all of those transactions are done on ETH.

And this part is one of my personal high conviction pieces of evidence. Right now, there are 113 BILLION dollars locked up in Defi Apps in the last 30 days. What that means is people own 113 billion dollars worth of tokens built on the ETH network and they locked them up to earn 8%, 9%, 10% even 20% APY. This is a show of confidence and width of the network. Why lock up 113 billion if it is going away.

ETH is also deflationary which means the more the network gets used the more coins get burnt. About $2 billion worth of Ethereum (603,452 ETH) has now been burned by the network. Ethereum started burning ETH after EIP-1559 was introduced on August 5. The mechanism removes about $30 million ETH from circulation each day by sending it to a defunct address. This replaces the previous method of paying ETH to miners for validating transactions.


Bitcoin is like investing in Apple early on and Ethereum is like investing in the internet as a whole early on.



OTHER INTERESTING CRYPTO PROJECTS

 

BurstIQ’s big data blockchain contracts help patients and doctors securely transfer sensitive medical information. The smart contracts establish the parameters of what data can be shared and even displays details of personalized health plans for each patient.




Any user, located anywhere in the world, can use ada as a secure exchange of value. Every transaction is permanently, securely, and transparently recorded on the Cardano blockchain. Every ada holder also holds a stake in the Cardano network. Ada stored in a wallet can be delegated to a stake pool to earn rewards or pledged to a stake pool to increase the pool's likelihood of receiving rewards.



Power Ledger is probably one of my favorite projects that is actually making a real use-case out of crypto and blockchain. They are aiming to disrupt the energy sector with a heightened focus on renewable energy. Their software allows for three core things:

  1. Energy Trading (if you have excess energy from your solar panels, for example, you can trade that to your neighbor through Power Ledger).

  2. Environmental commodities trading (to help for the reliable tracking of renewable energy credits)

  3. Renewable asset ownership (This will allow people who cannot afford their own renewable energy set-up to invest in fractional ownership).

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