Could Bitcoin Halving Bring New Highs? | Will Clemente

Bitcoin Transactions and Ordinals

In this section, the speakers discuss the recent surge in Bitcoin transactions and the role of ordinals in driving transactional activity on the network.

Bitcoin Transaction Count Reaches All-Time High

• Bitcoin's transaction count has reached an all-time high.

• The rise of ordinals is driving this surge in transactional activity.

• Ordinals have generated over $7.6 million in transaction fees for the Bitcoin Network.

What Are Ordinals?

• Ordinals are on-chain inscriptions that attach a numbering system to every single Satoshi.

• They can be used to inscribe things like text, images, etc.

• Ordinals are primarily a speculative vehicle for people to gamble on, similar to NFTs on Ethereum.

Wizards Everywhere?

• Wizards Everywhere is one of the more popular ordinal projects that has taken off.

• It was led by Udi and Eric Wall and is trolling the Bitcoin maximalist community.

Hash Rate Hits New All-Time High

In this section, the speakers discuss how ordinals are driving transactional activity on chain and how it affects miners' revenue. They also talk about hash rate hitting a new all-time high.

Impact of Ordinals on Miners' Revenue

• As there is more demand to use the network due to ordinals, there is an increased amount of fees that individuals have to give to miners to incentivize them to include their transactions in a block.

• This has resulted in higher transaction fees for users but more revenue for miners.

Hash Rate Increase

• Hash rate has hit a new all-time high, with the largest five-day increase in hash rate.

• Ordinals are driving a lot of transactional activity on chain, which is reflected in the transaction count and mempool.

Future Implications

In this section, the speakers discuss the future implications of ordinals and how it could impact Bitcoin's Lightning Network.

Lightning Network Adoption

• If ordinals continue to sustain their current trend into the next multi-year bull run for BTC, transaction fees could be extremely high.

• This sets up an interesting setup for individuals to move from using Bitcoin's base chain to actually adopting Lightning as that layer to transact without very large fees on the base chain.

• Building out lightning applications and building out very sleek user interfaces to interact with lightning will be crucial.

Four-Year Having Cycle

The speaker discusses the four-year having cycle and its impact on the Bitcoin market. They break down the report into macroeconomic factors, Bitcoin native factors, behavioral dynamics, and miners.

Segmented Report

• The report is segmented into macroeconomic factors, Bitcoin native factors, behavioral dynamics, and miners.

• The four-year cycle revolves around Bitcoin supply having. There have been three cycles so far in 2012, 2016, and May of 2020 with another one expected in late Q1 or early Q2 of 2024.

Supply Shock

• When there is an imbalance of supply and demand due to a decline in new supply coming onto the market even if demand stays the same, there should theoretically be an upwards drift in price. However, this effect diminishes over time as the overall pool of circulating supply increases.

• A chart showing the 90-day change in issuance relative to the trailing trend of issuance demonstrates this "supply shock."

Behavioral Dynamics

• Gauging profitability through on-chain metrics is used to determine whether individuals are likely to realize profit or loss. This includes looking at unrealized or realized profit or loss and comparing it to current marginal trading prices. Capitulation marks the bottom of cycles in all markets including Bitcoin.

Miners

• Miners have a diminishing effect on the overall market over time due to declining minor revenue as a percentage of overall circulating supply caused by supply issuance.

English Bitcoin Correlation with ISM and DXY

In this section, the speaker discusses two macroeconomic metrics that are worth looking at in relation to Bitcoin. The first metric is the ISM, which is a survey of all manufacturing economic pieces of information. The second metric is the DXY, which measures the dollar against other major fiat currencies.

Bitcoin Correlation with ISM

• Bitcoin has historically had a very high correlation to ISM.

• There have been periods of decoupling or divergences between Bitcoin and ISM due to sharp economic declines where the FED steps in with liquidity to counteract that decline.

• Market participants view Bitcoin as a gauge for monetary policy pivot over the next 8-12 months.

Bitcoin Correlation with DXY

• Historically, Bitcoin has traded with a very high correlation to DXY.

• Year-over-year change in DXY continues to decline, which should be a positive thing for BTC if that trend continues.

English Expectations for Next Bitcoin Halving

In this section, the speaker talks about what could happen during the next bitcoin halving and how it depends on market expectations.

• Locally, it's important to watch how people are positioned heading into the halving.

• It's not always about outright bullishness or bearishness of an event but how positive or negative it is relative to market expectations.

• Watch out for over-positioning too positively as seen in derivatives data at the beginning of 2020 where funding rates were jacked up by 200 APR heading into the halving.

• From a narrative perspective, it's interesting to see the contrast between monetary policy with Bitcoin and traditional banks.

English Frogs on the Internet

In this section, the speaker talks about seeing frogs all over the internet.

• No bullet points as there is no relevant information for study notes.

Bitcoin and Pepe Coin

In this section, the speaker talks about the rise of meme tokens in the crypto community and how they are being used as a safe haven asset for global macroeconomic investors.

Pepe Coin

• Pepe coin is a meme token that has nothing to do with original NFTs on Bitcoin.

• It is similar to Dojo and is trying to take over the meme that has been around in the Bitcoin community for a long time.

• Binance has listed it on their exchange, but it is a high-risk asset, so be careful when investing.

• The speaker advises against shorting this thing as degeneracy can outlast rationality in markets.

Bitcoin

• The speaker admits he does not have a bag of Bitcoin but should have hedged his regional bank stocks with Pepe coin.

• He mentions that Bitcoin and crypto have been popular among investors for years.