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Sunday Rundown - June 6, 2021
Not going to mention Miami
Happy Sunday! Guess what?
El Salvador’s president announced his country will accept bitcoin as legal tender.
Some wonder why bitcoin’s price didn’t pump after the aspiring dictator announced his people can use bitcoin to pay for things. Perhaps people don’t know or care? Maybe smart money’s worried about how the Biden Administration will react, given two crucial implications:
El Salvador uses the US dollar as its official currency. Adding bitcoin would undermine this policy and give the US one less string to pull when it wants leverage in its dealings with El Salvador. How does the US government feel about that?
Biden wants to root out corruption in Central America. His diplomats consider El Salvador a corrupt government. His advisors worry about bitcoin’s use by criminals and terrorists. What will they say about bitcoin’s use by corrupt government officials?
Interestingly, the Google Trends metric “interest over time—worldwide” remains elevated and has gone sideways since the beginning of 2021. That’s a sharp contrast to the steep pop-and-drop we saw after the 2017 market peak.
Should we read anything into that?
In my most recent update, I compared our most recent drop to seven other drops we’ve seen during bull markets. If you missed that, watch it now.
Read below for some content you may enjoy and comment with your own!
Bottom line: several Ethereum scaling solutions are gaining traction.
My take: good to see. Ethereum is publicly, actively pursuing a protocol change that will replace the current version with a new one that nobody’s ever used. It’s not the worst thing to have other options.
Why we care: as the writer says, the competition between layer-2 Ethereum projects and Ethereum-killers will be very exciting.
Bottom line: smart money and OGs are accumulating, miners are hoarding, and newer entrants are selling at a loss.
My take: this data looks at a shorter timeframe than I do, but it supports the same general conclusion: strength has started to return to the market, the opposite of what we saw from November to April. I’m still wary of the miners’ behavior—another index, MPI, shows they’re selling at a historically low rate. Why are they hoarding bitcoin? What happens if they stop doing so?
Why we care: in this market, shifts in momentum take a long time to play out. Prices change quickly, trends change more slowly. With enough data, we can spot the trends before they unfold.
While I don’t make decisions based on data models, I appreciate the analysis. Watch this video for interesting comparisons with previous market cycles.
Relax and enjoy the ride!