Dispatch #144: Are We Missing the Point with Bitcoin?

In this patch of your weekly Dispatch:

• Bitcoin times ahead? 🍊
• Fed pauses rate hikes ⏸️
• Vitalik’s roadmap 🛣️

The Big Idea

Bitcoin Times Ahead?

The cynics among us will hardly miss pointing out that over the last few months, it all aligned perfectly for a Bitcoin price rally to happen. After all, in the first six months of 2023, multiple TradFi banks closed shop while global inflation persisted. BTC’s potential was seemingly further strengthened as top U.S. regulatory bodies showed their willingness to treat the world’s pioneering digital asset separately from the rest of the market.

Still, though, BTC failed to regain $30,000 in a satisfactory manner. That’s a valid point, but not the whole point.

Yes, in USD nominal, Bitcoin has been timid. As our-founder Antoni Trenchev said, “once the penny dropped that more hikes are likely and we’re in a higher-for-longer rates environment, Bitcoin lost its hold.”

However, it is hard to argue with these statistics:

• Bitcoin has outperformed the entire crypto market since the last ATH of the industry – it has lost around 64% since its top, but you’d struggle to find another crypto where the number is less than 90%.
• This implies that BTC holders are largely unmoved by the recent regulatory shake-ups.
• Hashing rates are crossing all-time highs on a weekly basis.
• The number of new addresses created steadily increases.
• Some of the biggest enterprise leaders genuinely use BTC in their reserves to store value.

These are hugely promising signs which tell one thing – adoption is happening despite the current fearful economic sentiment globally. And this makes disproving the cynics above a matter of “when” and not an “if.”

The community only needs to bring their patience to Bitcoin’s alignment.

The Latest In…

The Fed’s Act of Balance

• In what can only be described as an “act of balance”, the US Fed paused its long run of interest rate hikes, signaling that the country’s central bank is getting a handle on inflation.
• The pause in interest rate hikes is the first in over a year of consecutive increases, suggesting that the Fed is taking a cautious approach toward economic growth, price stability, and employment.
• This “not-too-hot" and “not-too-cold” take has seemingly been welcomed by markets, signaling maturity if not outright economic optimism.

The Latest In…

Ethereum’s Losing Ground?! Not on Vitalik’s Roadmap!

• Ethereum transactions may have decreased 26% from their peak, but that’s wrongly taken as an indicator of a decline in activity on the network.
• A more telling story emerges when you consider both mainnet and L2 transactions, where the total number represents a 146% increase over the last two years – a true demo of Ethereum's rapidly growing usage.
• Within the roadmap, ​​Ethereum fans cannot but look towards a promising future. With upcoming upgrades and advancements in data availability and security, improved performance, and increase throughput, Ethereum is poised to enable new use cases and functionalities, solidifying its position as a global settlement layer.

The Latest In…

Brazil’s Central Bank Takes Charge of Crypto

Brazil’s President Luiz Inácio Lula da Silva, also known as Lula, may have been inspired by Aristotle's famous words – “Nature abhors a vacuum”, as he issued legislation that defines the Brazilian Central Bank as the leading digital assets regulatory body in the country.

The move is expected to catalyze growth in Latin America's largest economy and create an optimistic environment for crypto ventures. While some issues – such as asset segregation and clear definitions of securities – appear to be “work-in-progress,” the regulations introduce clarity, paving the way for increased activity and developments in the industry. Ordem e Progresso, indeed.

The Week’s Most Interesting Data Story

BTC:Gold Post-Covid – 1:0

Bitcoin and gold are locked in an apparent showdown for supremacy when it comes to the best store of value. BTC's performance has outshined gold by a whopping 430% since the COVID-19 low. In 2023, Bitcoin went up more than 50%, while gold is chugging along at a far more modest 6.2% increase. Do you get on a wild ride or prefer ascending slow and steady?

Hot Topics

What the Community Is Discussing

Apparently, the end has justified the means… Borrowing $200M for a $3 gain.

Is this the definition of “peer pressure?”

It really is no fun when FUD has the gun.

What to Watch for Next Week:

• What will be the next country to shed regulatory clarity on crypto?
• Ease-of-use improvements in the Nexo app!
• What’s next for Bitcoin Core development after the $5M pledge?