Thread by @hansthered

In light of my recent poll results, I'll be shilling the #Bitcoin price today and talking a bit about why the dollar is doomed.

https://twitter.com/hansthered/status/1239770645442912256

While it's clear that speculation is one of the primary use cases of Bitcoin, I still hold that there is underlying value. At some point, there has to be or how do you attract smart people and get them to write code for free? How do you get anyone interested in the first place?

To that end, I've been writing about Bitcoin Valuation Models for a while now as have many others. Let's just touch on some of the interesting work that's out there and see where we are now.

Bitcoin Realized Value - @nic__carter
Source: coinmetrics.io/charts/#assets…

Here we see the "market cap" of Bitcoin (the red line) versus the realized value (the red area). The difference between the two? Well, do you take the price at whatever the last trade was, or whatever the coin was worth the last time it was moved? See a pattern here?

@woonomic @kenoshaking and @MustStopMurad came up with the MvRv Ratio so you can visualize this pattern more easily. This metric does not attempt to predict the price, but it does inform you when Bitcoin might be overpriced, or undervalued.

Source: charts.woobull.com/bitcoin-mvrv-r…

A lot of what happens in the Bitcoin price discovery process is reflexive, meaning that you get these positive and negative feedback loops. Interestingly, you can use the age of coins that move to determine if the people engaging in trading are degens from Bitmex or OG HODLers.

I've written about this at length. But essentially the whales and OG HODLers don't make a move very often. They are the most well capitalized and knowledgeable about the market. Thus, following their movements might make a lot of sense. But how can we do that?

Enter Bitcoin Days Destroyed and the Reserve Risk Metric. Notice that if you plan to take a long-term position (which I advocate), then it's desirable to do so at times of low Reserve Risk. Consider taking profits when Reserve Risk is elevated.

Source: kanaandkatana.com/valuation-depo…

I hope it's clear that in the short-term, anything can happen. We're currently in a black swan global pandemic. But I think there's strong evidence that Bitcoin will survive this. And if that's true, then you should be thinking about potential entry points.

Right now the dollar is under incredible pressure. I think the dollar's days are numbered and what will replace it is the digital dollar. Look who just got appointed to a key regulatory role at the Comptroller's office. A former Coinbase exec.

dailyhodl.com/2020/03/16/us-…

And Trump knows this, he knows low rates will prop up our failing system. He knows QE infinity won't end well. As someone astutely pointed out "If we can print infinite money, why do any of us have to pay taxes?"

Listen to Trump in 2015 below.

“Janet Yellen for political reasons is keeping the interest rates so low that the next guy or person who takes over as president could have a real problem,” Trump said. “They are trying to put the next recession — it could be a beauty”

Source: marketwatch.com/story/donald-t…

Trump wanted rates at zero now that he's in charge and he got it. But what's the end game? Think about the pillars of our society.

The middle class - shrinking

Source: pewresearch.org/fact-tank/2018…

The petrodollar is in grave danger. Shale production breaks even with oil at $50-$58 per barrel. Price today? $28.42

Source: rystadenergy.com/newsevents/new…

Recent estimates are that 11% of high-yield debt is from the oil industry. What's going to happen when all that debt gets downgraded to junk?

Source: ft.com/content/c048d8…

We are entering a recession, or worse. This means government revenue will fall and many entire industries will need to be bailed out. But remember, we had trillion dollar deficits projected for the next decade BEFORE the coronavirus hit.

Source: cbo.gov/publication/56…

In the absence of sane fiscal policy, we've had to resort to increasingly exotic monetary policy. In other words, we can't balance our national check book, so it's print, baby print!

Are you starting to see why we need Bitcoin? Bitcoin is the ultimate reserve asset.

From the ashes of all this mess we will end up with a new currency. God help us if it's the "full faith and credit" of the USA that's backing it. It's going to need some real backing from a high-tech, secure, immutable, decentralized, digitally native store of value. #Bitcoin

By the way, the new digital dollar is necessary because it will allow even greater power to the government over our lives. It will let them surveil us like never before. It will allow the government to control us like never before. Desperate times, desperate measures they'll say.

What are some of the dystopian things the new digital dollar can and will probably do? How about increasing your insurance rates automatically if you order a large soda? How about just taking money right out of your bank account when the government decides to bail-in itself?

How about tracking every dollar you spend and its entire journey through the entire economy? How about directly targeting certain demographic or geographical regions and Big Brother data collection like never before? How about the elimination of cash and the removal of privacy?

How about weakening your property rights and controlling your life with the click of a mouse from Camp David? How about selling all this data to the companies that can afford lobbyists?

Satoshi showed us how to fix all of this, #Bitcoin. Do you understand why it matters now?