Bitcoin Eyes a $60k Month End Close

“The road to serfdom consists of working exponentially harder to earn a currency that is growing exponentially weaker.” — Michael Saylor

There are so many important things happening for Bitcoin these days that it’s still shocking to me that the meme coins are still a thing. Fair enough, I mean I’m excited for folks sticking it to the man by getting filthy rich off a “dog coin.”

Aside from this astonishing trade, I personally know a bunch of people that made meaningful money off the $SHIB move this week. After asking why they invested in the first place I pretty much got similar answers. It was either that they felt that $SHIB would be the on-ramp for retail to enter crypto (retail investors) or that it was simply a momentum trade (more sophisticated active traders). Funnily enough, the less sophisticated retail investors have drastically outperformed the experienced momentum traders on this play because they held on instead of selling too early. We’ll see how that plays out in due time — my guess is that it won’t be pretty and there will be a lot of folks holding the proverbial bag at the end of the day.

The smartest investors I know have been rolling their altcoin gains into BTC. I’m excited to see how this dynamic plays out over the course of this bull run.

So why is $SHIB possibly the gateway drug to crypto for new crypto investors? I think it has a lot to do with the fact that Bitcoin and to a lesser extent, Ethereum, seem more “expensive” than these other tokens. If crypto is crypto to you and you can get only a small fraction of one thing vs. millions of another, then clearly it makes sense to go with the latter. We can’t expect that folks entering this space for the first time have spent any meaningful amount of time learning about Bitcoin or crypto — I’d put my money on the fact that most don’t even know that they can buy less than one BTC.

It is time to start quoting bitcoin/fiat pairs in sats (Satoshis) across wallets and exchanges. 1 BTC = 100,000,000 sats.

What we saw at the desk — by Dan Wright

The weekend was mainly overshadowed with profit taking from last week’s record on BTC and ETH, which was to be expected. This continued earlier in the week until the buyers started to take over again. That huge sucking noise you heard on Wednesday? That was SHIB grabbing all the volume in the market. While every asset was down that day SHIB grabbed the headlines and made a 65% run. Congrats to all those that took profits. ETH/USD made a new all time high this morning touching $4,407 on the spot market with plenty of momentum. BTC/USD is now stabilizing on the weekly chart and holding support above 61k heading into next month.

Bitcoin: an institutional asset class & a medium of exchange

I was in Santa Monica for dinner this week with a company building out the infrastructure for the lightning network in El Salvador and man did I learn a lot. I, for one, didn’t even know the term “milisats” existed. One sat (Satoshi) is divisible by 1000 milisats on the lightning network. Bitcoin truly is infinitely divisible.

Let’s not get ahead of ourselves for now — the lightning network is just hitting an inflection point, but we’re still at the very beginning of the curve.

Bitcoin has been labeled as too slow of a technology to make it as a payment network. For microtransactions, this is mostly true as Bitcoin can handle 7 transactions per second. Visa for example, can manage roughly 1,700 transactions per second. Any changes at the protocol level would undermine Bitcoin’s biggest value proposition — security. Thankfully, with the introduction of a second layer (L2) built on top of Bitcoin, the lightning network allows for millions of transactions per second — crushing the critiques.

The lightning network is growing…rapidly.

The chart above shows the exponential growth in BTC capacity on the Lightning Network this year.

Since late 2020, the use of the Lightning Network has grown parabolically. It only makes sense as we’ve seen massive headlines this year that have completely revolutionized the way we think about Bitcoin.

• Bitcoin becoming legal tender in El Salvador — Firstly, let me just say, the fact that it was only LAST MONTH that El Salvador made Bitcoin legal tender is mind blowing — it feels like that happened so long ago… Anyway, as of October 1st, President, Nayib Bukele, stated that 2.7 million Salvadorans have been onboarded to the Chivo wallet. Without even considering the other lightning wallets being used in the country, 2.7 million Salvadorans now have access to pay through the Lightning Network on their mobile phones.
• Paxful’s Lightning Network integration — with a user base of 7 million, leading peer-to-peer digital asset marketplace, Paxful announced its Lightning Network integration on September 14th. Paxful has been instrumental in building out the infrastructure to “bank the unbanked” in Africa. According to surveys, 32% of Nigerians have adopted bitcoin and 50% of the country’s population is 18 or under. The unbanked do not need to wait for the countries or banks to get onboard like El Salvador — with lightning fast and extremely cheap peer-to-peer payments, Bitcoin can be instrumental in changing the way people save and do commerce in developing countries.
• Twitter launches a tipping service — with Lightning integration, Twitter has enabled 186 million users to send small tips to each other by utilizing the Lightning Network. The feature is part of a broader push to increase the options for Twitter users with large followings to monetize their content. Just like that, Twitter has possibly disintermediated predatory services like Western Union.

I say all this because I think that it is important that we understand the relationship between the way retail investors view Bitcoin and the Lightning Network.

Buying a full Bitcoin is expensive and unaffordable for most. However, if we start denominating Bitcoin in sats, perhaps we can can close the education gap a little bit. It will happen eventually. If the wallstreetbets crowd understood Bitcoin, namely it’s absolute scarce supply, I think they’d be more inclined to diversify their dog coin profits into the best money in the world. Instead buying 0.001634 BTC for $100, you can buy 163,354 sats instead.

In case you missed it…

• Another pension fund in the mix https://www.theblockcrypto.com/linked/121887/korea-teachers-credit-union-is-planning-to-invest-in-bitcoin
• Australia securities regulator moves toward BTC ETF https://www.coindesk.com/policy/2021/10/29/australias-securities-regulator-issues-criteria-for-crypto-asset-etps/
• Mastercard can soon offer crypto services https://www.cnbc.com/2021/10/25/mastercard-says-any-bank-or-merchant-on-its-vast-network-can-soon-offer-crypto-services.html
• Facebook rebrands to Meta to advance its efforts to build the metaverse https://www.nytimes.com/2021/10/28/technology/facebook-meta-name-change.html
• India likely to regulate crypto, not ban it. https://www.coindesk.com/policy/2021/10/28/india-likely-to-regulate-crypto-not-ban-it-in-upcoming-budget-report/
• US Bitcoin ETF wars heat up https://www.coindesk.com/markets/2021/10/27/its-bito-vs-gbtc-vs-btc-as-bitcoin-etf-wars-heat-up/

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