This is NOT investment advice.
Yes, we owe you the final resolution to our "When is Checkmate?" ongoing series and evaluation. Checkmate is not here yet.
This post takes a look at where Bitcoin is right now, or rather where isn't Bitcoin right now? But - this isn't about the price or market value per se but rather what is actually happening with . . . . . . . . . actual use of Bitcoin. Crazy topic right? People lose sight of the fact that BTC is a lot more than an exchange rate that makes you check it's value a hundred times a day.
About that exchange rate though - measured in USD it's been bouncing between 15% to 25% off its all time high for more than six months now. Why? Lack of official capitulation by Central Banks is one reason, but there's more. Let's take a look. Oh - another big problem remains the lack of real wage growth and disposable income. Retail buying power is in the toilet.
Do people care about Bitcoin? Has everyone given up hope? The BTC Fear and Greed Index posted by BitcoinMagazine.com frequently has been flashing EXTREME FEAR for weeks now. Gemini conducted an interesting survey recently looking at "crypto" holders in the U.S., UK, France, and Singapore.
Here is a chart from Gemini.com depicting the percentage of owners of cryptocurrency in 2022 and 2024 in each country:
This looks . . . . . pretty steady considering FTX, crypto winter, Liz Warren, SEC, price getting knocked down, no post halving rally, and all the other drama. The general public is hanging in there.
Here is another chart from Gemini showing why people sold their crypto:
So - basically people got shaken out and sold. That happens in every market.
The next chart shows the likelihood that the same people will buy again in the intermediate term (next year):
About 70% of people are likely to come back in. That's not so bad.
The next chart, from the great work by Glassnode, compares the exchange rate to the hash rate:
Our take - miners are not only not giving up, they are investing even more into the strength of the network.
The last chart shows the revenue breakdown for miners:
Miner fee revenue is highly correlated with the exchange rate and bullish and/or exuberant periods. This is not a surprise. We expect this to continue until a point where a critical mass holds and uses Bitcoin (via the Lightning Network) such that volatility eases and usage remains in consistent but reasonable growth.
In summary:
- sentiment makes it "feel like" it is all over and "Bitcoin will never go up again"
- main reasons for individuals lowering their engagement with crypto is because they got shaken out of their positions due to volatility
- miners are putting even more capital and effort into the network, in fact it is at all time highs
- miner revenue not so great right now with transaction revenue (and network usage topically) down as well with price
- most individuals indicated a willingness and likelihood to come back into the market within a year
What we can't truly measure is how much conviction is behind the Store of Value position held by many that haven't moved coins for a long time and how much BTC is being used as collateral (not something that would per se show up 'onchain' as movement). The reality is still that a major chunk of the coins are locked up in diamond hands if you will. That has not deteriorated. Game Theory is picking up speed at the nation state level and certainly within the energy space and the movement to capture excess energy and waste to convert to BTC via mining.
Retail is very muted and bland right now and the hype and euphoria is certainly way off higher levels no doubt. Usage topically (transactions, inscriptions, ordinals, miner fees, etc.) are down and that is a concern along with miner centralization, but are these chronic structural problems or ongoing variables that can and do shift with market sentiment?
With so much uncertainty geo-politically nobody truly knows what can and might happen in the next say weeks to six months out, but there is plenty to be happy about in terms of the network itself and the ecosystem. Your call.
Has the UPB (unpaid balance) on any sovereign debt been paid down?
China is an absolute horrid mess in a deflationary collapse - how will the PBOC address this?
Japan? Apologies, but the 'LOL' might have to be used here.
Japan and China both MUST have export growth, how will they try to achieve this?
Why is DXY trending towards breaking to new lows?
Have the banks in America resolved the unrealized losses on their balance sheets that dwarf the size of the same issue seen back in 2007-2009?
Do you see more or less of a need for Bitcoin moving forward?
