The Wolf Den #646 - Crypto's Resolution - Get Jacked
In This Issue:
Crypto's Resolution - Get Jacked
Bitcoin Thoughts And Analysis
Legacy Markets
SBF Update
What Is Candle 3?
Vitalik Is The Voice Of Reason
Bitcoin Core Developer Hacked
Operating A Crypto Exchange In The USA Is Like Navigating A Minefield | Bobby Zagotta, Bitstamp USA
Sponsors
Crypto's Resolution - Get Jacked
It is not uncommon for people to make resolutions at the start of a new year. These are often focused on health - eating better, losing weight or getting buff.
If the crypto market were to "take its shirt off," it would not be a pretty sight; rather than being overweight and in need of a diet, it would be emaciated, with nothing but skin and bones. In 2023, the market needs to focus on building up its size and strength.
To gauge the current state (and weight) of the market, let's take a look at some of the key players.
Bitcoin - Bitcoin represents about 40% of the market and has a total value of approximately $319 billion. For comparison, its size is similar to that of Facebook or the combined size of Netflix and Toyota. It is worth noting that the market capitalization of Bitcoin is still significantly smaller than that of major corporations like Apple, and is only a fraction of the size of the gold market. When compared to other assets based on market capitalization, including public companies, precious metals, and ETFs, Bitcoin ranks 27th. There is certainly room for improvement, given that it was once in the top 10. In my opinion, a fair value for Bitcoin would be at least the size of Apple ($2 trillion), but it could potentially be even larger. Bitcoin needs to hit the gym again.
Ethereum - Ethereum makes up about 18.5% of the cryptocurrency market and has a total value of approximately $147 billion. This puts it on par with financial institutions like Morgan Stanley and UPS, and at only one-third the size of Visa. When compared to Bitcoin, Ethereum's market capitalization is about 45% of its size. On the global list of assets, Ethereum ranks 80th. A fair value for Ethereum would be at least within the top 30, which would equate to a market capitalization of around $300 billion.
Tether, USD Coin, and BNB - Tether, USD Coin, and Binance Coin (BNB) also hold significant portions of the market, with a combined market capitalization of approximately $150 billion. These three coins make up nearly 19% of the market and are the same size as Comcast when taken together. Despite this, Bitcoin is still about 7% larger than the combined size of these three coins and Ethereum. If they were to be combined into a single asset, they would rank 75th on the global list of assets. In my opinion (not financial advice), a fair value for these coins would be for each of them to individually make it into the top 100.
Everything Else - The rest of the market, comprising various other cryptocurrencies, has a combined market capitalization of roughly 22.5% of the total market. If all of these coins were combined into a single asset, it would be roughly the same size as T-Mobile US or Nike, at about $179 billion. It is likely that there will be changes in this category over the next year, as some coins may be abandoned while new ones are created.
NFTs - The market for non-fungible tokens (NFTs) is relatively small, with a market capitalization of between $10-$11 billion. For the NFT market capitalization to equal the size of Bitcoin, it would need to increase by a factor of 30. To reach the 100th spot on the list of global assets, it would need to increase by a factor of 11. For comparison, the NFT market capitalization is only slightly larger than that of Doge and Coinbase. It is difficult to determine a fair value for NFTs, but it is clear that the concept is currently undervalued, with significant potential for growth in areas such as gaming, music, and identity in addition to art.
The cryptocurrency market is currently underweight. It needs to get on a high-protein diet and hit the gym.
In the future, as cryptocurrencies continue to absorb sidelined fiat and competitively gain an edge, the numbers are likely to rise. This is why it is important to consider the fair value of cryptocurrencies rather than their current state.
Let's hope crypto gets jacked in 2023.
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin remains sideways, trading on low holiday volume. The 50 MA looms above once again.
That's about it for the day.
Legacy Markets
Markets are closed today for the New Year. We will revisit tomorrow.
But it is worth taking a look at the dollar...
DXY (DOLLAR INDEX)
The dollar has officially broken key support at 103.82, the area that I have had circled for ages. As you can see, the weekly candle close below after wicking down into that area two weeks ago.
That said, this entire area marked in red can be considered support, as it includes the early 2020 highs as well.
Every market would benefit if the dollar continues to roll over.
SBF Update
The drama and potential fraud surrounding FTX continues to unfold. There have been numerous reports that SBF has been moving funds inside Alameda without authorization, though he has denied these allegations. SBF is expected to plead not guilty in court next week, and it is possible that he will claim that his state of mind was not "criminal" in an attempt to avoid certain charges.
The SBF saga is likely to continue to be a topic of discussion in the coming year.
What Is Candle 3?
The 12-month candle chart from Rekt Capital shown above serves as a reminder that Bitcoin will eventually emerge from its current difficulties. The chart shows that in the past, candle three has consistently wicked below candle two, so it is not surprising if this trend continues. However, candle three has also historically marked a bottom, which could be a reasonable expectation for this year. It is uncertain how low the price will go or if it will even dip lower, but it is likely that a bottom will be established or has already been formed this year.
Vitalik Is The Voice Of Reason
This tweet accurately reflects my thoughts on Solana. By setting aside self-interest, we can move beyond the bear market. The problem is not with Solana itself, but rather with those who seek to exploit it and capitalize on its decline.
Bitcoin Core Developer Hacked
Luke Dashjr, a Bitcoin core developer, claimed that his balance was drained by a hacker. The news has caused concern among the cryptocurrency community about the security of Bitcoin and whether normal people can keep their own Bitcoin safe. Members of the community have said that if a top Bitcoin developer with a reputation for being security conscious can be compromised, it is difficult for normal people to adopt or secure their Bitcoin. The sentiment has led some to believe that mass adoption of Bitcoin is a "pipe dream." However, Bitcoin analyst Namcios said that Dashjr's compromise doesn't mean that he cannot make mistakes, and that security and convenience often have a trade-off. Binance CEO Changpeng Zhao offered to help Dashjr and promised that their security team would freeze the Bitcoin if it was deposited into the exchange.
Operating A Crypto Exchange In The USA Is Like Navigating A Minefield | Bobby Zagotta, Bitstamp USA
I sat down with Bobby Zagotta, CEO of Bitstamp USA, at Mainnet in New York to talk about the challenges of regulation for US-based crypto exchanges, competition, and how people choose what exchange to trade on.
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