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In this episode of Bitcoin MagazineThe podcast for “Fed Watch” we invited Dylan LeClair, writer at Bitcoin MagazineBack to the podcast. LeClair goes deep into the weeds of the basics of the bitcoin market. After touching on the price crash on September 7 (the day of the podcast recording), our conversation turned to the monthly LeClair deep divingGreat report to write for Bitcoin MagazineExclusive members.
As we made our way through the LeClair report, we stopped at several of our favorite charts. The first is “Show by Liquidity Group”, as shown below. He walked us through meaning and fast food. As you can see on the chart, the vast majority of the circulating supply of bitcoin (all bitcoins mined so far) is illiquid, meaning it hasn’t moved in a specific period of time.
Bitcoin Schemes in a Deep Dive
Next, we touched on a chart you may have seen moving around the interwebz, “HODLer Net Position Change,” which measures the amount of coins that has entered the hands of HODLers. We discussed many aspects of the chart below, of course, noting the recent increase as well as the net selling that occurred on the way to the top. This is a lagging indicator, which clearly shows that accumulation precedes rallies by the time it gets short squeezed and distributed as prices rise.
At this point in our conversation, we’ve also talked about Grayscale Bitcoin Trust (GBTC) and its potential impact on holding and price behavior. It’s not covered in Deep Dive, but we had a good discussion that brings up several important points. I wrote more about the dynamics of GBTC Here.
Perhaps the chart we spent the most time on was the tick bar chart. It’s one of my favorite Bitcoin charts, because it simplifies the entire industry into one chart, with price and hash rate. You can find my version on “Bitcoin Pulse” posted by BitcoinandMarkets.com. Perhaps this indicator is an oversimplification, but the more familiar you are with bitcoin, the more details you can find in this chart.
LeClair, Christian Keroles and I have detailed how unexpected drops in the hash rate could signal a price crash as occurred in March 2020 and again in May 2021. The period around the halving in May 2020 and again in October 2020 to November 2020, with the end of the rainy season in China, was expected.
Macro Charts in Deep Dive
In August Deep Dive from Bitcoin Magazine, LeClair included a great section on setting the macro, from an American perspective. Here we are starting to disagree a little. It has charts for the Consumer Price Index (CPI), Treasury interest rates, government deficits, and more. Listeners should know Kerolz’s views and my views on inflation by now, but Leclerc puts together some compelling charts and arguments for why the end of the US dollar system is approaching.
LeClair also made a great comment when covering his section on the Triffin Dilemma. Paraphrasing, he said, “Robert Treffin’s proposed solution to the dilemma in the 1960s was to adopt the Keynesian bank as the international reserve currency. Today, we have bitcoin, which could fit into this role.”
Interestingly enough, Bitcoin is a perfect combination of the gold standard and a currency similar to Bancor.
We can’t cover everything from the podcast here, you really have to go listen and watch on YouTube. We will try to bring LeClair back to the show on a regular basis to discuss his deep knowledge of the Bitcoin industry.