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In This Issue:
The Road To One Zettahash
Twitter Spaces TODAY with Anthony Scaramucci And Meltem Demirors
Bitcoin Thoughts And Analysis
Legacy Markets
A Guide to Value Investing
Citi’s Newest Trillion Dollar Prediction
Investors Are Accumulating
Elon Musk Replaces Twitter Logo With Doge
There Is No Interpol Red Notice For CZ
The Road To One Zettahash
Delving into the intricacies of Bitcoin mining is captivating. We find ourselves contending with the notion that over 90% of all Bitcoins that will ever exist have already been mined, while simultaneously attempting to comprehend the early stages of Bitcoin's journey towards worldwide adoption. Central to this process are the miners—technologically adept entrepreneurs who tirelessly strive to enhance our knowledge of energy capture and utilization, all the while fortifying the Bitcoin network.
The aim of today's newsletter is to examine the evolution of mining since its inception and to anticipate its future trajectory. Our inspiration for the introduction stems from a report entitled, "What Could Bitcoin Mining Look Like At One Zettahash?" published last December by River Financial, a Bitcoin-centric institution. To begin, let's provide a basic overview of mining.
When discussing Bitcoin mining, we often resort to simplified explanations like "computing output" or "complex calculations" depending on the context. What we actually mean is that the Bitcoin blockchain relies on SHA-256, a widely utilized cryptographic hash function responsible for Bitcoin's encryption as well as numerous other contemporary software and firmware applications. A hash is simply the output of this function.
In the world of cryptocurrency, we often encounter the term 'hash' in conjunction with prefixes that designate a unit of measurement for the processing power of the Bitcoin network. Since each hash is unique, the following are the hashes for 'Scott Melker' and 'hello'. These hashes are immutable, always representing the same input values.
75454e9d11d5f49b961cff838cd5029a560d6578364d401f0762cfac51d9e5f1
2cf24dba5fb0a30e26e83b2ac5b9e29e1b161e5c1fa7425e73043362938b9824
The graphic provided below concisely illustrates the growth of Bitcoin and the units of measurement associated with hash power.
Tracing back to the inception of the network, Bitcoin's output started at over a megahash (million hashes) per second. Though this figure may appear substantial, a single computer was, and still is, capable of producing such output. As depicted in the graphic above, Bitcoin's output experienced a tenfold increase every 1-2 years. However, the pace of Bitcoin's rapid growth is not sustainable, which is why it might take a decade or more to attain the highly sought-after zettahash, the unit succeeding our current exahash level. Refer to the graphic below for further elaboration on the upcoming discussion.
The graphic you just examined projects when Bitcoin is expected to reach a zettahash (a sextillion hashes) per second. It calculates this by taking the growth rate of a popular year as an average and extrapolating from there. If Bitcoin follows the 2022 growth rate, it will attain the zettahash slightly after 2030. However, if its trajectory is more akin to that of 2016, it could take until after 2040.
Here is what River Financial had to say regarding their prediction.
“Whichever scenario you may believe to be most realistic, which is perhaps none of the above, it is important to remember that hashrate growth does not live in a vacuum. There is a range of conditions that must be met in order to sustain this kind of growth. It is important to reiterate that the need for Bitcoin’s hashrate to grow to such levels is not clear today. A zettahash is very much an arbitrary milestone that we are using to explore the future of the mining industry.”
So, what precisely needs to occur for Bitcoin to achieve a zettahash? The answer is multifaceted, but it generally revolves around several factors: increases in Bitcoin's price, a larger security budget, advancements in mining equipment, energy costs, exploration of new energy sources, supportive legislation, reduced geopolitical tensions, and minimal energy crises. Predicting the outcome is challenging due to the numerous variables at play.
As long as Bitcoin continues to exist, it will eventually reach a zettahash, though the journey may not be straightforward. It is also unwise to assume that the hashrate will continue to climb along its current trajectory towards a zettahash. While possible, unforeseen events like China's ban can occur, and growth can decelerate just as easily as it can accelerate. The crucial aspect isn't the arbitrary numbers, but rather humanity's recognition that this technology is inevitable. It may be enjoyable to celebrate Bitcoin's increasing hash power, but genuine support lies in educating one another throughout the process.
I hope this enhances your understanding of Bitcoin, and special thanks to River Financial for their insightful report. If you wish to read it, you can do so HERE.
Also, see the last news article in this newsletter for what happens when the interpretation of a hash goes wrong…
Twitter Spaces TODAY with Anthony Scaramucci And Meltem Demirors
My twitter spaces have become the highlight of my week. Today, I will be hosting Mooch and Meltem (and others) at 11 AM EST.
Tune in HERE!
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Bitcoin Thoughts And Analysis
There is nothing to share on the Bitcoin chart today, as it is the same price as yesterday… and the day before… and the week before.
Keep an eye out for a daily close above $28,600. Weekly even better.
Legacy Markets
US index futures and global stocks have risen as inflation expectations recede and central banks appear less likely to hasten monetary tightening. S&P 500 and Nasdaq 100 index contracts increased by at least 0.3% each, and the MSCI benchmark for world equities reached its highest level since February 16. European stocks reached a one-month high, boosted by banks and industrial shares. Crude oil prices also rose due to an OPEC+ output cuts plan. Market sentiment has been influenced by the belief that higher crude oil prices won't allow the Federal Reserve to speed up interest-rate hikes, and by central banks' softened stance on tightening.
Key events this week:
Eurozone PPI, Tuesday
US factory orders, US durable goods, Tuesday
Cleveland Fed President Loretta Mester speaks, Tuesday
Eurozone S&P Global Eurozone Services PMI, Wednesday
US trade, Wednesday
UBS annual general meeting, Wednesday
US initial jobless claims, Thursday
St. Louis Fed President James Bullard speaks, Thursday
US unemployment, nonfarm payrolls, Friday
Good Friday. US stock markets closed, bond markets close for part of the day
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.3% as of 6:17 a.m. New York time
Nasdaq 100 futures rose 0.5%
Futures on the Dow Jones Industrial Average rose 0.1%
The Stoxx Europe 600 rose 0.6%
The MSCI World index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.3% to $1.0931
The British pound rose 0.7% to $1.2504
The Japanese yen fell 0.4% to 132.95 per dollar
Cryptocurrencies
Bitcoin rose 2.6% to $28,311.75
Ether rose 3% to $1,834.37
Bonds
The yield on 10-year Treasuries advanced four basis points to 3.45%
Germany’s 10-year yield advanced five basis points to 2.31%
Britain’s 10-year yield advanced seven basis points to 3.50%
Commodities
West Texas Intermediate crude rose 0.9% to $81.17 a barrel
Gold futures were little changed
A Guide to Value Investing
“The Intelligent Investor” by Benjamin Graham is a classic book on value investing that has stood the test of time. Published in 1949, it has been hailed as one of the greatest investment books ever written, offering timeless wisdom and guidance for both experienced and novice investors. I wrote this blog on the key concepts and principles from Graham’s book, providing you with a valuable foundation for your investment journey.
Citi’s Newest Trillion Dollar Prediction
In yesterday's introduction, I discussed Citi's highly optimistic metaverse predictions from 2022, and today I return to Citi, but this time their ideas appear somewhat more grounded in reality. Just a few days ago, Citi published a 162-page crypto research report titled "Money, Tokens, and Games," which outlines how blockchain could become the next technology to generate "billions in users and trillions in value."
Citi argues that blockchain differs from other transformative technologies because it functions as a back-end infrastructure. Innovations like Chat GPT, the metaverse, or automobiles were and are widely recognized and understood, whereas blockchain remains mostly invisible, which influences how the transformation unfolds. In any case, I've highlighted the juicy part of Citi's key insight below:
“By 2030, up to $5 trillion of CBDCs could be circulating in major economies in the world, half of which could be linked to distributed ledger technology. Tokenization of financial and real-work assets could be the killer use case driving blockchain breakthrough with tokenization expected to grow by a factor of 80x in private markets and reach up to almost $4 trillion in value by 2030.”
Investors Are Accumulating
Glassnode's on-chain data suggests that the current Bitcoin accumulation is robust, with the ongoing activity exhibiting a pattern reminiscent of the 2018-2019 BTC cycles. The metric Glassnode investigates is known as the "accumulation trend score," which considers variations in wallet size and investor buying/selling behavior.
In late last year and earlier this year, the graph displayed significant distribution from large entities. However, since the rise to $30,000, the activity has decisively shifted into the accumulation phase. The current metrics closely resemble the 2019 pattern when exiting the bottom. While historical technical analysis should not be viewed as a guarantee, it does offer valuable context for forming ideas, which is what we are observing here.’
Elon Musk Replaces Twitter Logo With Doge
Twitter recently replaced its traditional bird icon with a Shiba Inu image, seemingly referencing Dogecoin, the joke cryptocurrency that CEO Elon Musk is being sued over. Musk tweeted "as promised" above an image of a year-old conversation where another user suggested he "buy Twitter" and change the logo to a doge. This change comes after Musk asked a judge to dismiss a $258 billion racketeering lawsuit accusing him of supporting a pyramid scheme for Dogecoin. Musk and Tesla's lawyers described the lawsuit as a "fanciful work of fiction" based on Musk's "innocuous and often silly tweets." It is unclear whether the logo change is permanent. The price of Dogecoin increased more than 20% over the past 24 hours, reaching about 9 cents.
There Is No Interpol Red Notice For CZ
Binance CEO Changpeng Zhao (CZ) has denied rumors of an Interpol Red Notice issued against him. The rumor was shared by a popular Twitter user, Cobie, and caused a stir. The news affected Binance Coin's price (BNB), leading to a 3% decline in market value, while Bitcoin's price (BTC) dropped by 1%. CZ addressed the rumors and advised community members not to panic sell due to misinformation. The rumor follows a recent lawsuit by the Commodity Futures Trading Commission (CFTC) against Binance and its CEO over alleged federal law violations.
For a group of people that claim to believe in the idea of “don’t trust, verify,” the crypto twitter community is quite gullible.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.