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Revisiting fundamentals

Check out past issues of the newsletter along with more interesting crypto content as well as our rec

Satoshi&Co Daily Crypto Newsletter

May 13 · Issue #175 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as our recently-launched podcast series with leading crypto industry participants at our newly-launched website

(Listen to our latest podcast here. It is with Dhruv Bansal of Unchained Capital, and it is proving to be a sleeper hit! In case you just want to read the summary notes, you can find them here).
It is fairly easy being a crypto columnist these days, especially if you are the bullish sort. Start with a broad statement, around crypto spring, or the bulls being back or some such. Throw in a few technical analysis graphs, basically some lines on a graph going up one way and intersecting another group of lines, with the whole concoction being given some name such as a ‘head-and-shoulders’ pattern or a ‘cup-and-saucer’ pattern. Most of the superficial ‘pseudo-technical’ analysis that is bandied about as gospel truth by breathless commentators, without anyone bothering to backtest or validate claims in-depth is’ second only to how the constellations are defined in their utter indecipherability. Once this is done, mention a few announcements of upcoming blockchain launches by traditional institutions. To spice things up a bit, add a dash of potential regulatory headwinds, and call them out as ham-handed/ill-advised/innovation-unfriendly etc, to taste (they most likely are, but that is besides the point).
The above tirade notwithstanding, we continue to see an upturn in the markets. Bitcoin has appreciated by about 90% since the beginning of this year and ETH has gone up by more than 100% from its lowest level of $80 towards the end of 2017. The prices have even shrugged off the negativity in the press due to the Bitfinex/Tether debacle. (Let us for a moment ignore theories around how Tethers are being converted into BTC, even though the belief that they are being converted is probably as powerful a driver in the short-term).  We are still of the opinion that price movements are highly unpredictable and extremely sensitive to a variety of extraneous factors which may or may not reflect the true underlying fundamentals of Bitcoin. It therefore makes sense to revisit fundamental metrics that speak to the health of the Bitcoin ecosystem.
Revisiting Bitcoin Fundamentals
Transactions Per Day Chart
Confirmed transactions per day has shown a consistent increase in the past one year, growing by more than 2x from the nadir of 171k in Apr’18. Current level of 350-360k transactions per day is closer to the all-time high of 410k transactions per day recorded during the 2017 mega bull run.  
Hashrate Chart
Bitcoin network’s hash rate decreased significantly towards the end of last year as the prices fell to 3k and mining profitability decreased. However, hash rate since then has increased by about 50% and currently stands at less than 5% below the highest level of 52 TH/s.  
Number of Unique Addresses Used on the Blockchain
The total number of unique addresses used on the blockchain is at an 18-month high and up by nearly 25% since the beginning of this year.
There has been a persistent growth in all of the above metrics over the past 12-15 months. The metrics point to fundamentals that are in decent shape, and heading in the right direction slowly but steadily. Especially with increased institutional acceptance, lightning network progress, and upgrades with the Ethereum protocol as well, crypto has not felt this bullish since the beginning of 2018. All it needs for the price of BTC to retest 20k again would be a couple of traditional institutions announcing moves in custody, or asset management, on the sidelines of Consensus week. It would be too soon to 20k for sure, but the markets have been known to become irrational faster than you can explain with logic, with apologies to Keynes.
Meanwhile in Crypto Wonderland....
“Whole Foods To Start Accepting Bitcoin Payments”
Since its arrival ten years ago, cryptocurrency has struggled to enter mainstream commerce. This could soon change thanks to a new initiative, announced on Monday, that will reportedly see big name retailers—including Crate and Barrel, Nordstrom, and Amazon-owned Whole Foods—now accept Bitcoin and three other types of digital money. The retail initiative comes via a partnership between Flexa, a payments startup, and Gemini, the Winklevoss-owned digital currency company. It works by piggy-backing on the digital scanners that many big retailers use to accept phone-based payments from their apps and from digital wallets like Apple Pay.
“Microsoft’s First Decentralized Infrastructure Implementation”
Microsoft is launching the first decentralized infrastructure implementation by a major tech company that is built directly on the bitcoin blockchain. The open source project, called Ion, deals with the underlying mechanics of how networks talk to each other. For example, if you log onto Airbnb using Facebook, a protocol deals with the software that sends the personal information from your social profile to that external service provider. In this case, Ion handles the decentralized identifiers, which control the ability to prove you own the keys to this data.
“City of Austin Partners With IOTA”
The transportation department in the city of Austin in Texas has recently partnered with IOTA Foundation. They will work on blockchain transportation use cases, which will likely improve the interoperability between different transportation systems. The partnership underlines the growing importance of smart transportation in modern urban settings. It also indicates how crucial “Internet of Things” (IoT) and blockchain are, given the complex nature of smart transportation systems.
“eBay Rumored to Start Accepting Crypto Payments”
Adverts seen at Consensus 2019 are fuelling rumors that eBay will incorporate crypto payments on their website. While there has been no official announcement to this effect, the internet is already awash with hearsay on which cryptocurrencies eBay will use. At the same time, this has put their relationship with PayPal back in the spotlight. As an event sponsor, it’s clear that eBay is interested in exploring how blockchain can benefit their business. But of more considerable significance is the endorsement of crypto from a major internet retailer, which gives further confirmation of changing sentiment towards cryptocurrency.
Crypto Twitter Pick
Jake Chervinsky
Bakkt makes a play for Blockchain Week news coverage by self-certifying their bitcoin futures with the CFTC, a good step forward.

But, they still can't launch until NYDFS approves their warehouse, which could take a while.

They predict July 2019. I'll believe it when I see it.
What We Are Reading / Listening To
Overnight Performance of Top 10 Currencies
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