The FTX and Almeida drama and bitcoin contagion
Bitcoin crashed by 10% on 9th November after being relatively stable for the past few weeks.
It started with a Coindesk article on 2nd November on FTX, the 3rd largest cryptocurrency exchange and Almeida, owned by Sam Bankman-Fried. It said that Almeida's most significant asset on its balance sheet was FTT tokens issued by the FTX exchange. The issue with this was that any drop in the market price of these tokens would mean that Almeida would not be able to meet its liabilities.
This news led to a rush of withdrawals on FTX of $6 billion in 72 hours, causing a massive crisis at FTX. In a dramatic sequence of events, Binance, the largest cryptocurrency exchange, has agreed to acquire FTX.
The event had a contagion on bitcoin, which dropped by 10% on 8th November, Tuesday, briefly touching $17,300, the lowest level in this bear cycle, before recovering to $18,400.
Bitcoiners who warned against FTX are now saying that the next cryptocurrency exchange in line to go bust is Crypto.com.
It is vital that you self custody your bitcoin rather than store your bitcoin at exchanges. You should only use exchanges to buy and sell bitcoin and never to custody bitcoin.
The mainstream media covering this news suggests that diversification is essential to avoid losses. We suggest the contrary in this asset class. Focus your knowledge and time on bitcoin. And stay away from the non-bitcoin cryptocurrency circus.
New 21Towers podcast episode with Lyn Alden
I had a great conversation with Lyn Alden on 2nd November, Wednesday just before the FTX drama started. Lyn Alden is a macro investment advisor and has risen to fame in the bitcoin community. This episode is notable because it's the first episode of 21Towers which was previously Sunny Bitcoin.
In the show, we discuss the FED and future interest rate increases, the state of the US Dollar, her recommended portfolio positioning, investing in big tech and her views on bitcoin's price.
Mayer Multiple
Mayer Multiple is the ratio of bitcoin’s current price and its 200 day moving average. It’s an indicator of how bearish (long term opportunity) or bullish (short to mid term risk) bitcoin’s current price is.
The current Mayer Multiple ratio is 0.77 and has historically been higher 83% of the time.
Highlights from Fidelity Digital Assets, November 2022 report
The price of bitcoin increased by about 5.4% in October.
Bitcoin's layer-2 payment platform, known as Lightning Network, has eclipsed a milestone capacity of 5,000 BTC, equivalent to $96 million in nominal terms. The layer-2 solution allows users to send small denominations of bitcoin, known as satoshis or sats, to other users faster and with lower transaction fees.
McDonald's has begun to accept bitcoin and tether as an experimental payment method in the Swiss town of Lugano.
How Long Can Bitcoin’s Price Stay Below the 200-Week Moving Average?
Summary of bitcoin price by Glassnode on 8th November
“Despite unprecedented conditions across global markets. the structural price action of Bitcoin remains similar to prior cycles as price marches towards both the market wide cost-basis, as well as the Short-Term Holder cost-basis. Reaction to these key levels will be imperative to monitor in the coming weeks, as a confirmed flip of these resistance levels suggests the first glimmers of recovery across the long, arduous road ahead.”
100 million bitcoin wallets now
In an interview at Web Summit 2022 in Lisbon, Portugal, Billionaire venture capitalist Tim Draper says that bitcoin hitting 100 million wallets is an extraordinary achievement.
We here at 21Towers agree and are waiting for the 1 billion bitcoin wallets milestone to happen over this decade.
Changing the world, bit by bit,
Sandeep Goenka