BBCD Satoshi

Thursday, March 31, 2022

BBCD Satoshi Quarterly Newsletter (Issue 1: 2021 Review)

Issue 1: 2021 Review

Hello and Welcome,

This is the first issue of the Bitcoin Investing Quarterly Newsletter & Report.

This issue is a look back at 2021 to set the stage for this current year 2022 and beyond.

Contents

Introduction
2021 Macro Summary
2021 Bitcoin Results
Graph Visualisation for Investing In & Out (DCA) USD and GBP
High, Low and Median tables
Experiment for Best Day, Week Number and Time to Buy/Sell Bitcoin
Recommended Publically Available Graphs, Statistics & Metrics for Bitcoin
Selected Products and Services
Google Trends
Halving Countdown
Selected Important News from 2021
Conclusion

Introduction

The focus for this newsletter is long term investing, so our view looks on a monthly and yearly basis. “Buy Bitcoin, you’ll thank yourself in the future”.

This newsletter is a compilation of notes, research and analysis that I use for my own Bitcoin investing. Rather than keeping this closed and only for me, my thought has been to open this up for subscribers. For the time taken for the research that is where the subscription fee comes in. Hopefully you’ll find this newsletter useful and or valuable and will subscribe as a paying member.

This newsletter is for simple decision making, based on your own strategy and goals that you define for holding or selling Bitcoin. This newsletter is not about exotic investing such as margin trading, shorting, futures, options or other derivatives. Just simple spot buying and selling of Bitcoin, nothing fancy. An alternative name for the newsletter could be: “The HODL report with a bit of Buying and Selling of Bitcoin”.

In this newsletter the main fiat currency used will be the US dollar (USD) and British Pound Sterling (GBP). However, in subsequent newsletter issues the Euro (EUR) and or Japanese Yen (JPY) may be used if I am able to and also if there is any interest. Incidentally, I’ve always thought measuring Bitcoin in price of Gold per kilo would be a more accurate measure of the true value of Bitcoin, rather than in fiat currency.

2021 Macro Summary

2021 was a year that remained in COVID 19 limbo. This resulted in issues such as:

Supply chain fragility e.g. Ever Given tanker that was stuck in the Suez Canal
Semiconductor shortages
All time high stock markets
Discussion of reducing quantitative easing by central banks
Discussion of increasing interest rates
Russia and Ukraine potential conflict (as of writing, this is now a hot war)
Geopolitical tensions including China, Taiwan, USA

All the above factors play into the narrative of geopolitical, economic and financial uncertainty in the World.

This is an environment that Bitcoin was either created for, or has naturally come to embrace. Bitcoin embodies its role as the financial and monetary release valve or black hole of monetary gravity.

This enables Bitcoin to be harnessed by ordinary people to protect their money, capital and wealth.

2021 Bitcoin Results

How did Bitcoin fair in 2021 within the above macro environment?

USD ($) in 2021

Bitcoin reached a high of $69,000
Bitcoin reached a low of $27,678
The spread for the year was $41,322

USD ($) in 2021

GBP (£) in 2021

Bitcoin reached a high of £51,000
Bitcoin reached a low of £19,500
The spread for the year was £31,500

GBP (£) in 2021

Source: Data for above USD and GBP compiled from Coinbase via TradingView. Please note the figures above are accurate compared to the visual graph figures which are approximate.

Graph Visualisations for Investing In & Out:

Graph Dotted Lines Legend :

Note: The following graphs were compiled by BBCD Satoshi using data from Coinbase via TradingView. Please note the figures shown on the graphs are approximate, whereas the figures in tables are accurate.

US Dollar (USD)

Logarithmic View of USD: All time

Logarithmic View of USD: 2021

Logarithmic View of USD: Fibonacci Retracement

Logarithmic View of USD: Target for 2030

British Pound (GBP)

Logarithmic View of GBP: All time

Logarithmic View of GBP: 2021

Logarithmic View of GBP: Fibonacci Retracement

Logarithmic View of GBP: Target for 2030

USD

GBP

Experiment for Best Day, Week Number and Time to Buy/Sell Bitcoin

This is based on looking at each month in the year to see pattern(s). There can be many factors that cause these patterns.

One hypothesis could be the salary effect, whereby people paid in Bitcoin are sent their Bitcoin and then cash out into their local currency within a day or two of receiving their salary/wages.
Another hypothesis can be looking at Dollar Cost Averaging (DCA) into and out of Bitcoin. Algo Trading, Bots and also humans setting a specific day of the week, week number in the month and time in UTC to either buy or sell Bitcoin. As institutions and corporations invest in Bitcoin, the other aspect to consider will be quarters in the year when portfolios are rebalanced.
I personally think both of these hypotheses will have a bigger impact going forward. Maybe we’ll see the DCA effect clearer

GBP

I’ve limited this experiment to only GBP.
This is an experiment currently, but so far has indeed been useful for buying and selling.
On a rolling basis, only looking at 1 year of data:
In 2021 the best day, week number to Buy (at lowest point) Bitcoin was on
last week of the month
Thursday or Saturday at 4pm or 9pm
In 2021 the best day, week number to Sell (at highest point) Bitcoin was on
first week of the month on Monday, Wednesday, Friday or Sunday at 1pm

Data download:

For subscribers please click on the download area for formatted data files. These should be in CSV and Excel format.

Further project for AI and Machine Learning

Over the coming year I’m hoping to make use of machine learning and or artificial intelligence to start making predictions based on previous data. This will enable Bitcoin investors to focus on specific days of the week, week number in a month and quarter for planning ahead to optimise entry and exit for Bitcoin investments. Watch this space.

Publically Available Graphs, Statistics & Metrics for Bitcoin:

These very useful and excellent charts have been created by third parties. Please take your time to become familiar with them if you are not already. I highly recommend subscribing to the authors websites and social media posts.

Puell Multiple
Stock-to-Flow (S2F)
Bitcoin Logarithmic Growth Curves/Power Law

Puell Multiple:

Source: https://www.lookintobitcoin.com/charts/puell-multiple/

Tuesday, March 1, 2022

Zero to Hero, or why you should consider investing in Bitcoin

I've just published an article which is the basis/rationale for investing in Bitcoin. Actual article location: https://bbcdsatoshi.blogspot.com/p/rationale.html

The title is: 'Zero to Hero, or why you should put 5% of your cash/fiat into Bitcoin'.
The alternative title is the 'Purpose for BBCD Satoshi - rationale for investing in Bitcoin'.

https://bbcdsatoshi.blogspot.com/p/rationale.html

Please take a look and send your thoughts or comments to me:

https://twitter.com/bbcdsatoshi

Friday, February 25, 2022

Bitcoin specific metrics for investing

Bitcoin Specific Metrics:

There is a cottage industry that has built up for providing new statistics and charts for looking at in granular detail, valuing and predicting prices and changes with Bitcoin. These include:

200 Week Moving Average Heatmap
The Puell Multiple
Stock-to-Flow Model
Bitcoin Logarithmic Growth Curves.

(Source for details below: https://www.lookintobitcoin.com/charts/)

200 Week Moving Average Heatmap

In each of its major market cycles, Bitcoin's price historically bottoms out around the 200 week moving average. This indicator uses a colour heatmap based on the % increases of that 200 week moving average. Depending on the month-by-month % increase of the 200 week moving average, a colour is assigned to the price chart. Long term Bitcoin investors can monitor the monthly colour changes. Historically, when we see orange and red dots assigned to the price chart, this has been a good time to sell Bitcoin as the market overheats. Periods where the price dots are purple and close to the 200 week MA have historically been good times to buy. The 200WMA heatmap can be a useful tool as it shows on a historical basis whether the current price is overextending (red dots) and may need to cool down. It can also show when Bitcoin price may be good value on a historical basis. This can be when the dots on the chart are purple or blue. Over more than ten years, $BTC has spent very little time below the 200 week moving average (200WMA) which is also worth noting when thinking about price predictions for Bitcoin or a Bitcoin price forecast.

Created by and further reading: Plan B

https://twitter.com/100trillionUSD

The Puell Multiple

This metric looks at the supply side of Bitcoin's economy - bitcoin miners and their revenue. It explores market cycles from a mining revenue perspective. Bitcoin miners are sometimes referred to as compulsory sellers due to their need to cover fixed costs of mining hardware in a market where price is extremely volatile. The revenue they generate can therefore influence price over time. The Puell Multiple is calculated by dividing the daily issuance value of bitcoins (in USD) by the 365-day moving average of daily issuance value.

There are periods of time where the value of bitcoins being mined and entering the ecosystem is too great or too little relative to historical norms. Understanding these periods of time can be beneficial to the strategic Bitcoin investor. The chart above highlights periods where the value of Bitcoin's issued on a daily basis has historically been extremely low (Puell Multiple entering green box), which produced outsized returns for Bitcoin investors who bought Bitcoin here. It also shows periods where the daily issuance value was extremely high (Puell Multiple entering the red box), providing advantageous profit-taking for Bitcoin investors who sold here.

The Puell Multiple uses the upper red band on the chart to show when miner revenues in USD terms are significantly higher than historical norms (in this case the 365-day moving average). Over the majority of Bitcoins’ existence, these periods have been when the price of $BTC has also reached its major highs. So the Puell Multiple can be a useful Bitcoin forecasting tool to identify based on this metric whether price is too high and needs to drop (when the indicator is in the red zone), or whether it is too low and may need to bounce (indicator is in the green zone).

Created by and further reading: David Puell

https://twitter.com/dpuellARK

Stock-to-Flow Model

This model treats Bitcoin as being comparable to commodities such as gold, silver or platinum. These are known as 'store of value' commodities because they retain value over long time frames due to their relative scarcity. It is difficult to significantly increase their supply i.e. the process of searching for gold and then mining it is expensive and takes time. Bitcoin is similar because it is also scarce. In fact, it is the first-ever scarce digital object to exist. There are a limited number of coins in existence and it will take a lot of electricity and computing effort to mine the 3 million outstanding coins still to be mined, therefore the supply rate is consistently low.

Stock-to-flow ratios are used to evaluate the current stock of a commodity (total amount currently available) against the flow of new production (amount mined that specific year). For store of value (SoV) commodities like gold, platinum, or silver, a high ratio indicates that they are mostly not consumed in industrial applications. Instead, the majority is stored as a monetary hedge, thus driving up the stock-to-flow ratio. A higher ratio indicates that the commodity is increasingly scarce - and therefore more valuable as a store of value.

On the Stock-to-Flow Model chart price is overlaid on top of the stock-to-flow ratio line. Price continues to follow the stock-to-flow of Bitcoin over time. The theory, therefore, suggests that we can project where price may go by observing the projected stock-to-flow line, which can be calculated as we know the approximate mining schedule of future Bitcoin mining.

The coloured dots on the price line of this chart show the number of days until the next Bitcoin halving (sometimes called 'halvening') event. This is the event where the reward for mining new blocks is halved, meaning miners receive 50% fewer bitcoins for verifying transactions. Bitcoin halvings are scheduled to occur every 210,000 blocks – roughly every four years – until the maximum supply of 21 million bitcoins has been generated by the network. That makes stock-to-flow ratio (scarcity) higher so in theory price should go up. This has held true previously in Bitcoin's history.

Created by and further reading: Plan B

https://twitter.com/100trillionUSD

Bitcoin Logarithmic Growth Curves

Logarithmic analysis uses historical data to forecast and predict future prices. The Bitcoin Logarithmic growth curve takes all the historical price data of Bitcoin and uses log growth analysis to develop curves that project a potential path of future price growth.

Historically, price tends to bounce between the upper and lower bounds of the logarithmic growth curve. The reason for this is because Bitcoin moves through market cycles.

Further reading: Harold Christopher Burger, Cole Garner and Quantadelic

https://twitter.com/hcburger1

https://twitter.com/ColeGarnerBTC/media

https://twitter.com/quantadelic/media

Investing metrics, statistics and levels

Metrics, Statistics and Levels:

With traditional investing there are various measures and metrics that are used. These tools can also be used with investing for Bitcoin. These include:

MACD
RSI
Fibonacci Levels

(Source for details below: https://www.fidelity.com/learning-center/overview)

MACD

The Moving Average Convergence/Divergence indicator is a momentum oscillator primarily used to trade trends. Although it is an oscillator, it is not typically used to identify overbought or oversold conditions. It appears on the chart as two lines which oscillate without boundaries. The crossover of the two lines give trading signals similar to a two moving average system.

RSI

The Relative Strength Index (RSI), is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30. Signals can be generated by looking for divergences and failure swings. RSI can also be used to identify the general trend.

FIBONACCI LEVELS

The Fibonacci retracement tool plots percentage retracement lines based upon the mathematical relationship within the Fibonacci sequence.

Fibonacci numbers are a sequence of numbers in which each successive number is the sum of the two previous numbers: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, and so on. These retracement levels provide support and resistance levels that can be used to target price objectives.

Fibonacci retracements are displayed by first drawing a trend line between two extreme points. A series of six horizontal lines are drawn intersecting the trend line at the Fibonacci levels of 0.0%, 23.6%, 38.2%, 50%, 61.8%, and 100%.

Reviews

These reviews will help you to get you started and serve as a signpost for your Bitcoin journey. The reviews are books, exchanges and hardware wallets. These include:

Cryptonomicon

Bitcoin, The Future of Money?

Coinbase

Gemini

Kraken

Ledger

Trezor

Thursday, February 24, 2022

Useful links

Here are some useful links which include a visual block chain explorer and countdown for the bitcoin halving.

Please look at each of these recommended external links. At some point in your Bitcoin journey they will be useful to you https://bbcdsatoshi.blogspot.com/p/media.html

Wednesday, February 23, 2022

Support page

I've created a donation page with the purpose to see:

How many people reading this website are willing to donate Bitcoin?
If they are willing to donate, how much?
As an experiment to use and demonstrate Bitcoin as a use case and to be able to view and monitor transactions using the following resources:

1. Blockchair
https://blockchair.com/bitcoin/address/133gGwAyo3xT6oiC6HJXMXN4WSf43CVjLn

2. Blockchain
https://www.blockchain.com/btc/address/133gGwAyo3xT6oiC6HJXMXN4WSf43CVjLn

3. Blockstream
https://blockstream.info/address/133gGwAyo3xT6oiC6HJXMXN4WSf43CVjLn

Wednesday, February 16, 2022

Large collection of resources for learning all about Bitcoin

Here is a large collection of resources for learning all about Bitcoin. Click here

If you have any more suggestions to add to this list, please send me a message at:

https://twitter.com/bbcdsatoshi

Monday, February 14, 2022

Book Review: Bitcoin, The Future of Money? By Dominic Frisby

Review:

"This book is an excellent introduction to Bitcoin. The book discusses some key facts about Bitcoin and the history of cryptocurrency. There is also a discussion about Satoshi Nakamoto and who he/she/them/it was is or are."

Book Review Cryptonomicon by Neal Stephenson

Review:

"Reading this book was the first time I learned about cryptocurrency, way back in 2012. From then on I learned about cryptography and encryption which are key themes that run through the book. It’s a very well written book, funny, smart and though provoking. It took me a while to pronounce the book correctly, which is Kry-Pt-O-Nom-i-Kon. I have this book to thank for introducing me to Bitcoin"

Wednesday, February 9, 2022

Mantra and slogan

For the last few years my Twitter account has had a mantra and slogan as part of the profile. It sums up quite neatly why I am interested in Bitcoin. It also sums up a piece of advice I wish I could tell my self 12 years ago. The slogan is "Buy Bitcoin, you'll thank yourself in the future".

Monday, February 7, 2022

New home for BBCD Satoshi's Blog

Hello and welcome, this is the new home for the blog BBCD Satoshi. Thank you for looking!

Over the next few months we'll update material and add new pages.

In one form or another, the Blog has been running since 2018. Rather than deleting all the old posts, I've downloaded them all and uploaded them to this blog. You'll see quite a few posts going back over time.

Feel free to follow and message on Twitter:

https://twitter.com/bbcdsatoshi

Thanks once again.