Week of 4.5.20 - Issue #22
Welcome to the 22nd edition of the ₿it Economy! Each week, I break down the top stories in Bitcoin in a simple in clear format. Enjoy!
Topics: Irrational Markets, Fold Debit Card & HODL HODL Integration
The Brief:
Another week has came and gone as a majority of the global population remains in some form of quarantine. The past seven days have been relatively slow for Bitcoin, however, this cannot be said of its traditional market counterpart.
On Thursday, the Federal Reserve announced that it will dip its toe into the junk-rated corporate bond market while not ruling out purchasing noninvestment-grade corporate bonds and exchange-traded funds (ETFs). This unprecedented move to so-called "fallen angels" aims to shore up some of the hardest-hit parts of the American economy.
“The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible” - Jerome Powell
The additional $2.3 trillion rescue package brings the Fed's balance sheet to a record total $6.13 trillion or up 46% since year-end. In the four weeks since the Fed slashed interest rates to zero, restarted bond purchases and rolled out numerous programs to limit the economic damage from the COVID-19 outbreak.
If the Fed throwing the "kitchen sink" was not groundbreaking enough for you, the Department of Labor reported that 6.6 million Americans filed for unemployment benefits for the week. Thus, bringing the total claims to an astounding 16.8 million over the last three weeks. The claims continue to rise as the government struggles to release waves of aid to the economy.
Finally, I want to bring your attention to the oil markets. Though the coronavirus has had an impact on the energy sector, the recent quarrel between the Saudi Arabia and Russia have played a critical role in the sharp drop. As the global economy has come to a near standstill, the demand for oil has evaporated. How much has it evaporated you ask? U.S. oil is down 63% for the year and the outlook is grim at best.
Typically the lack of buyers would result in a cut down from production, however, Saudi producers have ramped up output. Over the last several weeks, individuals from both side in addition to other G20 nations have worked feverishly to sign a deal that would cut production.
Even if the deal is finalized, the decline in production would amount to only about 10% of the world's normal supply of oil, far below analyst estimates. The decline in demand could cause inventories to fill up, enforcing substantial curtailments by refineries and shut ins at oil wells. The pipelines are clogged with oil leaving drillers with nowhere to sell. On Friday there were reports a deal has been struck but at best, there remains considerable downside risk on the price of oil.
After reading about all of this pandemic and economic concerns, one would expect the global markets to further plunge right? Nope. Despite more than 6 million new job losses, the stock market rallied again, with both the S&P 500 (12.1%) and Dow Jones Industrial Average (12.67%) seeing double digital jumps. This feat solidified its place in history as stocks closed out their best week since 1974. For those who are a little confused, don't worry, I am too. Jill Carlson of Slow Ventures accurately sums up how many feel at the moment.
It does not appear that the market has digested the scale of economic impact from the corona virus, thus exposing it to future lulls.
Amid all this turmoil there is some good news, Fold, the lightning-friendly app which allows users to earn bitcoin-back rewards on purchases at Amazon, announced that it has joined Visa's Fast Track program, which will allow the San Francisco-based startup to offer a co-branded debit card. Though it missed my feed for last week’s issue, BlueWallet, a non-custodial mobile wallet for iOS and Android, has completed its integration with HODL HODL to add private bitcoin trades.
As for the content sections of the newsletter, make sure to checkout this weeks announcements and take the time to listen to Peter McCormack’s What Bitcoin Did Podcast with Pantera Capital’s Dan Morehead. The two discuss Bitcoin’s maturity and what impact will coronavirus have on the digital asset and the global economy.
S1: Fold Partners With Visa
What is it? - Bitcoin payments app Fold announced on Thursday that it will be launching a Visa debit card with bitcoin cashback rewards. The firm has joined Visa's Fintech Fast Track program in order to accelerate its integration with the payments giant. The card allows users to spend US dollars and earn bitcoin rewards. Compatible with the Lightning Network, Fold offers rewards in Bitcoin for purchases on a number of major retailers and service providers including Amazon, Uber and Starbucks. The card is set to be released in Q3,
Why it Matters? -
“People are not interested in spending Bitcoin right now, but are interested in accumulating it. If people don’t understand Bitcoin as money yet, they certainly will understand it as a better reward.” - Will Reeves, Fold CEO
Readers of this newsletter should be familiar with the #stacksats movement that has swept the Bitcoin community. Stacking sats has become a popular term for investing or earning small amount of bitcoin. While $5 may seem like a drop in the bucket compared to the price of 1 BTC (~6,900), Bitcoin has a very bullish long-term outlook. Therefore, the more one accumulates in the near term the better. This handy tool form CoinGecko shows one how many BTC you can accumulate, and what it can amount to in the future.
As for Fold, in sticking to Bitcoin's privacy-minded ideals, the firm allows users to earn Bitcoin without the associated issues with legacy financial issues such as Know-Your-Customer (KYC) restrictions. However, since the card is administered by Visa one would have assume it will come with the traditional KYC requirements. This product is great for individuals who understand the privacy risks but at the same time want to acquire bitcoin passively. If people are buying items with credit cards, they might as well receive hard money spending soft money.
would not be surprised if more traditional finance cards move into this realm
Final Take - I would not be surprised if traditional finance sees this as a way to dip their toe into Bitcoin
S2: Hodl Hodl Partners with BlueWallet
What is it? - Bitcoin open-source mobile wallet 'Blue Wallet' to introduce private peer-to-peer (P2P) Bitcoin trading by integrating with P2P exchange Hodl Hodl. With this integration, users will be able to buy and sell bitcoin privately without revealing their identity or transaction records. Hodl Hodl, a multi-signature P2P Bitcoin-only trading platform that does not (and has no intention to) do KYC checks. And for this very reason is why Blue Wallet wanted to proceed with the integration.
“We chose Hodl Hodl because it’s the only peer-to-peer marketplace that isn’t doing KYC and isn’t going to. This will be very important in the coming battle for privacy in bitcoin.” - Igor Korsakov
Why It Matters? - The integration marks the first combination of a non-custodial wallet and non-custodial exchange. As pressure builds to abide by new government KYC/AML regulation, this partnership offers a lifeline for those who want to transact privately. The process can go as follows:
Blue Wallet user finds a counterparty
Create a 2-out-of-3 multisignature escrow
Blue Wallet provides each party a key while the third is held by Hodl Hodl
Seller locks bitcoin in the escrow and releases it once they receive the fiat currency payment by the buyer
Hodl Hodl utilizes the third key to resolve any disputes.
Economic freedom is the ability of people of a society to take economic actions. Partnerships like Blue Wallet and Hodl Hodl's are imperative in preserving this liberty as the future of cash remains up in the air.
Final Take - Personal freedom is an instrumental part of Bitcoin.
Market Watch
- Total Market Capitalization: 196.12B
- Bitcoin Market Cap: 128.23B
- BTC Dominance: 65.47%
- High: $7,340.52
- Low: $6,783.53
- ATTOW: $6,930.36
For the third straight Monday the price of Bitcoin rose above 5% as the asset saw an approximate 8% gain on the day. Though still on a downtrend, the price of the digital asset broke out of an ascending triangle that formed after the March 12th crash and stabilized between $7,000 and $7.350. However, after multiple attempts to take $7,500 level, the price of Bitcoin fell below sub $7,000 levels. This resulted in the formation of a "hanging man" candlestick pattern which is a bearish reversal pattern, made up of a long wick and short body.
Over the weekend, the price of the digital asset has settled above the $6,800 level but continues to play out a bearish pennant pattern than could hint at a possible breakdown that could test levels near $6,300. They key area remains $6,800 for this price level proved to be a difficult resistance level to break back in late March and can offer bullish investors a lifeline.
Bitcoin's path of least resistance appears to the downside, with the Relative Strength Index (RSI) inching lower towards the oversold territory below the midline. A drop from this level will likely cause a continuation of the macro downtrend with Bitcoin looking like it may re-test $6,300. Since the COVID-19 crisis started, both Bitcoin and Wall Street major indices had plummeted 40%. Though both have rebounded in the past couple of weeks, it is hard to say that we are out of this mess.
Together with lowering volatility within the spot value of Bitcoin, buying and selling volumes the digital asset's futures contracts have seen scare activity compared to pre-crash levels. The lack of volume is an indication that there may not be many bullish investors.
The price of Bitcoin is hanging in the balance as a bearish scenario becomes more realistic for the coming week. The traditional markets have had three days of no activity due to the holiday weekend and futures open at 6:00 PM EST. Though the digital asset has found support at $6,800, a lot can happen in the short term.
Announcements
- MyNode v0.2.01 Released - Link
- ACINQ Eclair v0.3.4 Released - Link
- Ronin Dojo v1.4 Released - Link
- Tails OS v4.5 Release - Link
- Nodl Dojo & One v0.0.8a Released - Link
- Phoenix Wallet v1.3.0 Released - Link
- Samourai Dojo v1.5 Released - Link
- Tor Browser v9.0.8 Released - Link
- Lightning Labs Announces Jamal James as Lead Frontend Engineer - Link
- NY Power Plant has sold ~30% of hash rate - Link
- RaspiBlitz v1.5 RC1 Adds JoinMarket CLI Support - Link
- Bitcoin Magazine Announces 21-Hour Halving Party - Link
Interesting Reads
- LN Markets Newsletter #1 - Link
- Bitcoin Optech #92 - Link
- Bitcoin Garners New Users As Governments Flood World With Fiat - Link
- Privacy Isn't Free - Link
- The Cantillon Effect: Why Wall Street Gets a Bailout and You Don't - Link
- A New Ultrasonic Hack Can Exploit Your Siri - Link
- How Coronavirus is Driving New Surveillance Programs Around World - Link
Great Listens
- What Bitcoin Did #210: Jonathan Levin - Link
- What Bitcoin Did #211: Dan Morehead - Link
- Tales From The Crypt #148: Matt D’Souza - Link
- The Chaincode Podcast #7: Nadav Kohen - Link
- Citizen Bitcoin: WTF Happened in 1971 - Link
- Unqualified Opinions: Ben Hunt - Link
- Alex Gladstein about Bitcoin, government responset to COVID019 - Link
- Stephan Livera Podcast #165: Rafael Yakobi - Link
- Pomp Podcast #267: Preston Byrne - Link
Final Quote
Dave Portnoy, Founder of Barstool Sports on the Federal Reserves credibility.
Have a great week! See you next Sunday.
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