Bitcoin and Crypto Thread

[Blade Runner]

I didn't buy as much as I should have this year owing to worry about what a recession would do to the price. It seems the best option would be to DCA over the coming year. I'd say this has about 4-6 weeks to come down on TA. Down to about $30K.

Has Woo made an ATH call? He was pretty good at calls last season, up until the end )

He's been fairly negative since his predictive models more or less failed and eyeballs went elsewhere. After the 2020 halving that was pretty much the case. He seems like a decent guy otherwise, but I'm not exactly sure what his stance is on what role BTC plays in the longer term, with greater and greater adoption.

 

[Cynllo]

How do people think rate cuts will affect crypto and the economy next year?

It seems inevitable, and that inflation is slowly tipping over. But I think the best they can do is pretty flat "economic growth". Germany is looking at negative printing for GDP this year. I think it's about 0.3% over the year. And it will probably take them at least a year to get back into easy money mode. But at least that easy money mode may hit in 2025.

 

[Cynllo]

 

[burner]

Rate cuts are always positive for asset holders. They just coincide with recession because they are introduced by central banks when there are economic catastrophes (dot com bubble, 2008, covid, and now the US regional banking crisis).

Re: Solana
I don't look at blockchain transactions or dev activity because these are easily inflated. Maybe a better metric is amount of devs, TVL, wallet #'s. I think Solana can go to 150-200b cap. I also think the top 3-10 cryptos this bull cycle top will be in the 100-200b cap range.

Re: btc spot etfs
I think GG at the SEC might be serious about approving it before April. The bouncing back of the Blackrock application multiple times already with amendments signals to me there is a 50% or more likelihood of this happening before the halfing.

 

[Blade Runner]

Re: btc spot etfs
I think GG at the SEC might be serious about approving it before April. The bouncing back of the Blackrock application multiple times already with amendments signals to me there is a 50% or more likelihood of this happening before the halfing.

It'll happen before the halving (still late April?). What will be interesting is the reaction to the ETF being delayed, both socially and price wise.

 

[burner]

It'll happen before the halving (still late April?). What will be interesting is the reaction to the ETF being delayed, both socially and price wise.

I've talked to my friends from back who are new to crypto and even they speculate that the Jan 10th ARK spot etf application will be rejected to manipulate the price downward. They are even shorting which is ballsy. If it gets rejected again in March I am not sure how I will cope with a stagnant bull market

 

[Cynllo]

I wouldn't buy Solana now, as the best it's got in it is #6-4 (IMO). I did buy some at the beginning of the year and now, obviously wishing I bought much more. The whole ecosystem is booming and its' looking good on pretty much every metric. The main reason I didn't buy more at the beginning of the year is because the ecosystem was so shot. SOL was down 97% and I didn't know how well it would recover. Although I still saw it as the best ETH competitor since 2021. Also, Solana was heavily financed by Dr. Shekelstein at FTX, which made the picture look bleak. BNB looks very weak, and think Solana will pip it for #4, with BNB never to recover.

I would take a guess that Blackrock get the EFT and end up holding something like 10%+ of all BTC. Maybe more.

After further thought I think we should be looking at $100,000-200,000 range for the ATH by the end of 2025. That's looking at the trajectory of the ATHs, which looks like $100k to me. $200k on very good news, circumstances.

ALEX has now 38X'd. The ship has sailed with that one, which I was shilling early this year on RVF. Along with a few others. But I would look at picking up Stacks, in what looks to be the current pullback. Looks like downwards movement for about 2 months... ENS + GALA <- I would also look at. Star Atlas if it has a good pullback.

 

[Teedub]

I also really regret not going all in SOL when it plunged last year - but hindsight eh. I thought it might go to zero. I might take your advice on Stacks. Thanks for the tip!

I think we could be in for 200-300k for bitcoin in 2025. Going off that beautiful BTC power law model you posted.

 

[Cynllo]

Stacks is an L2 for Bitcoin, which will be going live with a 1:1 peg of Bitcoin (sBTC) soon. It had a low of about $0.20 this year. A high of $1.18 and is currently about $1.03. It hit a high of $2.78 in 2021. I would look at buying some in pull-backs next year.

You can stake Stacks and earn about 9% pa in BTC, in a wallet or pool - https://pool.xverse.app/

From the project team:


A summary of the sBTC white paper, a plan to unlock hundreds of billions of dollars of latent capital.

What if Bitcoin could be more than a store of value?

What if the hundreds of billions of dollars worth of passive BTC were put to use?

What if we could create a robust decentralized finance ecosystem on Bitcoin (similar to that of Ethereum)?

The opportunity is tremendous and has been a dream for over a decade.

sBTC aims to make this dream a reality.





sBTC in a sentence
“sBTC is a 1:1 Bitcoin-backed asset on the Stacks Bitcoin L2 that will allow developers to leverage the security, network effects, and .5T in latent capital of the Bitcoin network.” - sBTC․tech

The white paper breaks down each part of this definition.

A 1:1 Bitcoin-backed asset
A 1:1 Bitcoin-backed asset is an asset that is distinct from Bitcoin but “represents” Bitcoin — it's an asset that is derived from Bitcoin. This new asset (sBTC in our case) adds functionality to Bitcoin while maintaining important monetary features of Bitcoin.

1:1 Bitcoin-backed assets, like wBTC (wrapped Bitcoin on Ethereum), already exist in the market. However, they are not perfect and require significant tradeoffs.

In Bitcoin-backed asset designs like wBTC, the backed Bitcoin is entrusted with a single custodian (or a federation of custodians). Entrusting the backed asset with a single custodian is risky. And with a risky foundation, building applications on these layers is not as attractive.

sBTC is a new way to create a Bitcoin-backed asset that is linked or “pegged” to Bitcoin in a decentralized way. This enables builders to build stablecoins, NFTs, DeFi, and more with Bitcoin as the bedrock foundation.

Bitcoin layers are essential
given the speed (or lack thereof) and simplicity of Bitcoin at the base layer, we must build additional layers on top of Bitcoin. These additional layers will give Bitcoin added functionality (like smart contracts) and make decentralized finance possible on Bitcoin.

According to the white paper, a viable Bitcoin layer must have the following properties:

1. Smart contracts
2. The ability to transfer BTC in and out of the layer and to “write” to Bitcoin
3. The security of Bitcoin

The current Bitcoin layer solutions (Lightning, @Liquid_BTC, @rootstock_io) do not have all of these capabilities, which limits their potential.

sBTC (along with Stacks) aims to build the ideal Bitcoin layer with all three qualities. Its success will unlock the true potential of Bitcoin and enable developers to build applications on Bitcoin, similar to the applications that we've seen in other ecosystems.

There's an opportunity and need for sBTC.

So, how does it work?

sBTC is a decentralized two-way Bitcoin peg
sBTC uses the @Stacks Bitcoin layer to create a decentralized two-way Bitcoin peg. First, let's cover how the “two-way” part works. It’s pretty simple:

1. BTC is locked on the Bitcoin Layer 1 and an equal amount of the derivative asset, sBTC, is issued on the Stacks layer.
2. This new derivative asset, sBTC, can be used for smart contracts.
3. Then, when ready, sBTC can be converted back into Bitcoin, and the sBTC is destroyed.

This two-way Bitcoin peg design is technically feasible and has already been implemented, as proven by wBTC on Ethereum, R-BTC on RSK, and L-BTC on Liquid. The problem with these pegs, however, is the decentralization.

The pegs are managed by a centralized custodian or a group of trusted entities. And if the past decade of crypto disasters has taught us anything, it’s that it is dangerous to trust a centralized entity to hold your money.

So, while wBTC and R-BTC are important projects that have gained traction and proven the demand for sBTC, you can understand why developers are relatively cautious about building on these layers.

Solving the “holy grail” problem: sBTC creates a decentralized peg

Stacks makes a decentralized peg possible. Stacks is a Bitcoin layer that went live on main net in early 2021. The Stacks layer uses Proof of Transfer (PoX) to economically align incentives and maintain the 1:1 Bitcoin-backed peg.

1. In PoX, Stackers (or participants who lock assets in the Stacks network) are paid in BTC for completing the task of threshold signing the peg-out transactions (more on thresholds later).

a) These Stackers have the clear monetary gain of BTC payment, so they will complete the peg-out requests (in other words, they’ll sign the peg-out transactions).
b). The Stacks protocol is critical to the functionality of being paid and incentivized with BTC.

2. Stacks miners spend BTC to mine Stacks blocks, and this BTC is then redistributed to the Stackers as their reward.

3. This PoX design ensures that the most profitable course of action for a Stacker is to maintain the peg.

This decentralized peg design is building on top of the existing progress of Stacks. In addition, this peg design gains some additional benefits:
- There are no “wrapping fees” when pegging their BTC — Stackers are rewarded by the core Stacks consensus protocol. So, the peg-in/out functionality remains free to users.
- There is no fork risk. Since the Stacks layer mirrors the Bitcoin layer, any Bitcoin fork would be reflected on the Stacks layer.

This sBTC design unlocks billions of dollars in latent capital. sBTC will make it possible to create decentralized BTC lending, BTC-backed stablecoins, and other apps. Without introducing a trusted centralized party, builders can be confident building with sBTC.


Other 1:1 Bitcoin-backed assets rely on a federation of trusted entities. They can be considered decentralized, but in reality, there is a risk as the federation model relies on trusted third parties.
sBTC goes further than the federated model to bring a truly decentralized Bitcoin peg. sBTC:

1. Allows an open membership where anyone can join the system and become a signer for peg-out transactions.

2. Requires peg-out signers to lock more collateral than the value of BTC pegged-in. So, they are economically incentivized to process peg-out requests (so they can get their BTC back).


Unlike other Bitcoin pegs, sBTC can only be minted by depositing an equivalent BTC in a script on the Bitcoin main chain. This script on the Bitcoin main chain is maintained by an open-membership group. It's an open system and anyone can monitor the 1:1 BTC to sBTC ratio. Other models rely on less transparent models.

Finally, as noted above, Stackers are economically incentivized (paid in BTC) to complete the task of threshold signing the peg-out transactions. This ensures the 1:1 ratio is maintained.

Therefore, sBTC can maintain a 1:1 BTC to sBTC ratio transparently, without relying on a custodian.

 

[Cynllo]

I think we could be in for 200-300k for bitcoin in 2025. Going off that beautiful BTC power law model you posted.

My back of a cigarette packet calculation on global assets was way out on the previous page or so. It seems there are over $1 quadrillion in financial assets, as of 2020. So probably $1.1 or $1.2 quadrillion now.

So with a current coin market cap of $1.6 trillion, crypto accounts for less than 0.2% of financial assets. Every 0.1% of global financial liquidity that flows into crypto will add around $50,000 to BTC's price. So at 1% allocated to crypto, a Bitcoin would be around $250,000. And a 2% allocation would = $500,000. With ETFs that is not that far fetched. Particularly as that would be a fleeting 1-2% of global liquidity that would bear market down 70% or so.

 

[chestmilk]

Guys, I joined RVF in the late stages and maybe got in 15 posts. My first post here. So I want to use this opportunity to thank those that had the drive and commitment to continue this community and may God bless your efforts.

I've looked into BTC a lot and am still on the bubble. I understand well the arguments on how it is superior to fiat, it is decentralized, etc.

I have one point of resistance and I'd like to hear the pro BTC case. To me, the energy to create BTC, which is a major part of the strength because you cannot just print it out of thin air, is also a downside. It is not wealth producing. At this point in time, not a major deal. But as halvings continue, price will need to nearly double every 4 years for miners to stay profitable. I've ran my own spreadsheets on this to try to understand just how large over time... and it's hard to calculate.. but we do know energy directed towards this will continue to grow exponentially. This is actually siphoning investment and productivity away from activities which produce value - ie what you would be storing BTC for in the first place. No different than if we shifted more and more economic activity towards digging holes in the desert and then refilling them. So to me it looks like BTC will reduce overall human wealth as it will eat more and more productivity. Fundamentally, should economic inputs be directed towards creating the money itself or towards the fruits of the labor whatever money system you use can ultimately buy? And FWIW I do understand very well the terrible limitations with our current financial system and the evils of the usury basis of it.

I'm not trying to detract from BTC, I'm very open to my thought process above being off somewhere, so I'd like to understand this better.

 

[Diadem]

No different than if we shifted more and more economic activity towards digging holes in the desert and then refilling them.

Sometimes I wonder if there were a way to put all that effort to good use. For example, the only limitation to AI right now is that there isn't enough processing power, and here we have BTC miners using processing power to do math homework.

 

[Cynllo]

This is actually siphoning investment and productivity away from activities which produce value - ie what you would be storing BTC for in the first place. No different than if we shifted more and more economic activity towards digging holes in the desert and then refilling them.

Very good point.

I found one reference from 2022 -

The current annual consumption of Bitcoin is 73.12 TWh, according to the Digiconomist Bitcoin Energy Consumption Index. Despite the fact that bitcoin now actually consumes more energy than 159 countries in the world, this is only about 0.13% of the global volume, according to a study by powercomare.

There are a number of things that can be said and changed here. For example, it could be mandated that Bitcoin mining should only use certain sources of electricity, such as surplus electricity from power plants, or renewable.

The argument in favour of Bitcoin is that it is the most secure. To perform an attack on BTC to take it over and be able to write at will to the ledger you'd need ...

to control 181 EH/s of hashing power to attack the Bitcoin blockchain as of June 7, 2023. This is more than 941,634 of the most powerful ASIC miners, which have a hashrate per unit of 257 TH/s and cost more than $7.9 billion in equipment only.

Source: https://www.investopedia.com/terms/1/51-attack.asp

Keep in mind that you'd actually need more than that, to be able to do so, as you'd need them quickly. And it would be pointless, as BTC would be forked, and the subverted chain would be discarded. That would cause some issues. i.e. people who made Txs after the attack would loose them on the recovered chain. So it's a very costly attack for very little effect and no monetary gain.

ETH and pretty much all other chains are using proof of stake to secure the network. BTC is secured by mining, which is difficult to do. While proof of stake (POS) uses nodes/validators that have the token staked in them. Abusive nodes face harsh penalties. And the system has stood up. But it's regarded as less secure. Though I'm not how sure how true that is.

So, if there are problems with BTCs energy use, it could adapt, or be forced to adapt. People in the EU have spoken on banning the mining model. If that is the case, then at worst BTC withers and another chain takes its place. What exactly that would mean we will see at the time.

At the moment I see it there are three possibilities for a chain becoming hyper-dominant long-term.

1) Bitcoin with Stacks
2) Solana (POS), a very fast proof of stake chain, with a lot of fire under it ATM
3) Ethereum (POS) with an L2

But at the moment Bitcoin is dominant, with no apparent sea change on the horizon. And in terms of being able to handle rapid growth of blockchain use, Solana is probably the only one that could handle it at the moment.

 

[Blade Runner]

the only limitation to AI right now is that there isn't enough processing power,

the only limitation?

So, if there are problems with BTCs energy use, it could adapt, or be forced to adapt.

It might take a while, but one of the common things that people miss, just like with the original [dirty] "energy" attacks, is that the people look at the BTC system without buying into the world where it is legitimized, because to them, it isn't. That is to say, they apply the current paradigm to BTC, where BTC is actually fighting against the system for obvious reasons. It denies that it is worthwhile to utilize energy for honest/sound money. What is missing is the cost benefit analysis, and I would challenge you directly to estimate how much of current energy we use overall is applied to the network, and how much will be (I don't know the answer to this, by the way). I find it very hard to believe that using energy for an honest store of value wouldn't be worth it. To prove it, you can imagine how much energy is stolen from people from fiat systems debasing their currency and more.

 

[JayR]

Does Bitcoin create any short-selling opportunities, near or long term? For example, Western Union (NYSE: WU) and its competitors handle loads of remittances from unbanked workers in the USA back to Mexico/Central America/South America, charging terrible 10-15% fees to convert USD to Pesos, Bolivar, etc.

If there is an expected/gradual adoption to Bitcoin as a currency in countries experiencing currency debasement via hyperinflation or whatever, might there not be money to be made shorting WU and it's ilk?

 

[burner]

Does Bitcoin create any short-selling opportunities, near or long term? For example, Western Union (NYSE: WU) and its competitors handle loads of remittances from unbanked workers in the USA back to Mexico/Central America/South America, charging terrible 10-15% fees to convert USD to Pesos, Bolivar, etc.

If there is an expected/gradual adoption to Bitcoin as a currency in countries experiencing currency debasement via hyperinflation or whatever, might there not be money to be made shorting WU and it's ilk?

WU has a ton of competition outside of btc so yeah the outlook doesn't look bright anyway.

I don't see btc getting adopted as a currency in most countries. If governments adopted it they could not print it to pay for things or even collect taxes, it would essentially be self deletion. Also other countries that could print money would have a bigger country and military and crush smaller countries with a btc currency. Adoption of btc is as a reserve asset.

 

[Cynllo]

Does Bitcoin create any short-selling opportunities, near or long term? For example, Western Union (NYSE: WU) and its competitors handle loads of remittances from unbanked workers in the USA back to Mexico/Central America/South America, charging terrible 10-15% fees to convert USD to Pesos, Bolivar, etc.

If there is an expected/gradual adoption to Bitcoin as a currency in countries experiencing currency debasement via hyperinflation or whatever, might there not be money to be made shorting WU and it's ilk?

I don't think so.

The death knell for WU, Moneygram would be traditional fintech like Wise. Where they provide accounts to people with no bank account and very cheap transfers. But there are huge hurdles to that with KYC and compliance. Difficult to see broad bank killing alternatives getting wide adoption. You'd probably need large amounts of money to do it, and be up against kabals at every turn.

As for the above, I think we will see more corporations buying Bitcoin, but mostly at bad entry points, as was the case last time.

 

[Cynllo]

Thanks for the user who provided the email address for Deep Diver. I sent him an email, and he replied. But from the sound of it, he won't be joining.

So this will likely be the last piece of intel from the nuke sub:

 

[Teedub]

Some Twitter crypto accounts are pontificating we're set for a BIG blow off top in early-mid 2024 and that'll be the peak for this cycle, with a prolonged slow downturn that could last 8 years. Thoughts? Others think similar but that while it will be a prolonged bear market, it could still be 2025 for the ATH.



Click on the tweet to see the full thread.

 

[Cynllo]

Some Twitter crypto accounts are pontificating we're set for a BIG blow off top in early-mid 2024 and that'll be the peak for this cycle, with a prolonged slow downturn that could last 8 years. Thoughts? Others think similar but that while it will be a prolonged bear market, it could still be 2025 for the ATH.



Click on the tweet to see the full thread.

Worth noting is that in the 18-21 cycle BTC did not reach its previous ATH until November 2020.

In Jul 2019 it hit $13,800 - 69% of the previous ATH.

Now it's just hit $44,700 - 65% of it's previous ATH.

If we are expecting these four year cycles to contract, that is not much of a contraction. The move up this year has been very strong in both March- and November-.

There are people worrying about the upside over the next two years, but I don't think there is much to worry about based on the last year. What the next two years brings is the question.

Worth noting is the volume. By this time in the 18-21 cycle it had already smashed through the '17 peak. While this time volume bottomed out in a second broader bottom in September this year. BTC was up in September, but a lot of alts hit their low.

So, this time round a similar price movement has occurred with less volume. In one that's bullish that the buying up has been ferocious, but the lower volume is obviously not a great signal. The query is where does that go.

It also suggests this bull cycle is stretched out a bit over last season.

I'm still looking at $100,000-200,000 based on the conditions outlined in the thread. Considerably more is possible, but I'm not expecting it.