I think it is EXTREMELY interesting and possibly important that this is what the mempool looks like:



Seems both good and bad.

Just like the rise to 60k+ the fall back to here (and further?) is NOT because of retail.  So why IS it happening?  Who is doing the selling, and where?  I think Torques post above is relevant.  Some ideas:

-This is absolute proof of rehypothication.  Coins are not even being traded on chain in significant amounts.
-Retail may or may not be buying or selling.  But they are NOT taking custody.
-The businesses BUILT on paper bitcoin are dying in SPITE of the above.

Thing is those people are using the tried and true fiat system tricks to churn value out of the system.  But bitcoin is different than the fiat system so they are getting ruined by it one by one.  This hurts the entire ecosystem, really.  But it is 100% necessary.

This is what I hope we end up seeing:

1.  People trusting scammers with their bitcoin will lose it.
2.  Then More and more people will begin to take custody of their bitcoin, or at least trust a custodian that is not lying.  
3.  The scammy paper trading services will get liquidated.
4.  GOTO 1

This is a vicious cycle with a virtuous end effect.

OK.  It is time for a Saturday long post.  All you OGs can skip over this.  Because it is stuff you already know.  In fact I am not sure there is ANYONE here that NEEDS to read it.  Oh wait, I do.  Sometimes it is good to go over the basics.

First of all... we have some sacred math we hold to like religious totems... this cAPSLOCK guy, for example has held a belief that Bitcoin has never gone lower than it's previous top in the next cycle, and yet, is that really true?

We like to say "No one who has held bitcoin for more than 4 years has lost money."  That's sort of the same thing, right  Is that one true?  Does it really matter?  The basic gist of the idea has held.  Bitcoin is super volatile and goes up and down wildly.

Some status quo economists have declared that bitcoin cannot be used as a currency because of this volatility.  And to be honest, I think the jury is still firmly out on that one.  To be fair I imagine there are a lot of Salvadorians, who would rather be holding their wealth in the USD version of their currency rather than BTC.  And Jack Mallers, perhaps because of his boyish charm, rarely gets called out by even the most hardened maxis for basically using BTC as a USD stablecoin, and perverting the purity that the maxis have been preaching for years.

I think part of the reason for this is he sees what Bitcoin is better than ... well just about anyone.  Saylor sees this too, but it makes maxis mad that they cannot fight the idea because it goes against the doctrine we have all preached for so long.

Mallers sees bitcoin as a payment network, but one built entirely on an open, trust minimized, global system that is ruled by the immutable laws of mathematics.  And what he has done is hack the original idea to use Bitcoin as a way to move value from anywhere to anywhere.  Users of strike don't even have to know it's Bitcoin underneath.  And Strike IS introducing trust in this transaction. If I send you $20 from my studio in Dallas TX, to you on vacation in the Swiss alps to buy you a magnum of Belgian beer what happens is Strike takes the money from my account, turns it into Bitcoin, sends it to Switserland, turns it into Francs and deposits it into the your account.  Basically this is Venmo, or Cash App, but interestingly the trusted third party in this case is Strike.  What is different is the network Strike is using can be used by literally ANYONE on Earth with a cellphone and some data.  Users trust Strike in return for the convenience of the service, and not having to think about LND, CL, or BITCOIND.  But not only can I send a lightning payment from my node to your strike wallet, but I can do the opposite, AND if I want to take ALL the trust out of the equation you and I can both just use Muun.

Very few people call out Mallers for basically introducing trust and banks into the Bitcoin network.  And I think I know why.

Because their arguments are stupid.

Sorry, let me say that a better way.  It is often said that Bitcoin is for enemies.  It is also often said that Silk Road was an early battle test in production for Bitcoin.  Because if criminals can use it then it works, and works without interference.  I have often said that the revolution with Bitcoin is not that you HAVE use it in a trust minimized way, but that you CAN.  Mallers is using the Bitcoin network in a trust minimized way to offer a business that includes some trust that users might want to use.  He gets all the benefits of the open, inclusive monetary network, and passes some of that on to you as a customer.

But no one said you have to use Strike.  I don't  For a host of reasons.  But the point is it is impossible to build an open source ungoverned monetary network, and then tell people "you can't use it that way".  See what I mean?  It does not ruin Bitcoin that Mallers has figured out a way to sell something useful to people with it.  As long as you can make a transaction on the base layer.  As long as you can spin up a lightning node, or run a neutrino light wallet on your phone, or even a Liquid server  then it is still working as intended.

But Mallers sees a value in the network that has... deep breath here... NOTHING TO DO WITH THE PRICE OF BITCOIN.  His service will work 1BTC = 20 houses or 1BTC = stick of gum.  As long as we can put enough digits after the decimal point we will be able to denominate the value of anything.  Instead of printing more money to supply the need for commerce (the current system of the world) we just divide up this perfectly scarce asset further.

I remember when that light bulb went on for me: One hidden beauty of Bitcoin is that even though  we cant change how much of it there is, we CAN keep dividing it up into more and more pieces.  Some idiots have even pointed and called that inflation.  Yes.  Cut my pizza into 35 pieces please, because I want more!  So in a way we CAN make "more Bitcoin". to satisfy the needs of a growing population, and more and more use of the asset.

Humans change how they value things.  And we are evidently f*%king while we do that because there are just a hair under 8 BILLION of us now.  The way the current system works is it keeps making more money so more people can have money and we will all have enough to use it.  And an advantage to this system is what I mentioned up above.  The planners can control the rate of creation to keep the price of milk fairly stable. Oh, and take their entirely reasonable cut for themselves and their friends.

Well... yeah.  Problems there.

And that has been the argument against hard money for longer than bitcoin has been around.  Without those valves the price will go up and down wildly.  Velocity will decrease because people are incentivized to hold it. And so on...  Therefore, Bitcoin cannot be money.

That argument has merit.  Bitcoin DOES go up and down wildly.  Hello? 19k?  But the conclusion that it cannot be used as money because of this?  Or that people won't spend it for ... reasons?  That has yet to be seen.  When the Federal Reserve bank took us off the gold standard we entered an imperfect, but good enough experiment of Keynesian economics.  When Satoshi spun up Bitcoin he launched a completely perfect Austrian system.  The fact that it exists is enough to see if the experiment will work.  Never more than 21mm. But 2,100,000,000,000,000,000 (2.1E＋18) millisatoshis.  Enough for every human alive to have more than 250,000,000 mSats.

The cost of the security of that unchanging number is price volatility.  Period.  No way around it.  We are giving up that feature of the Keynesian fiat system with this experiment.  This is particularly true in the bootstrapping phase.  But it will ALWAYS be somewhat true.  Because we will keep making more people, and other things will keep changing.

So, back to Mallers.  He saw a way that Bitcoin could work and no one have to worry about that volatility.  We have always known that the various advantages of alt coins would eventually be absorbed by King Daddy.  And Mallers basically rendered Ripple useless in one fell swoop.  And with the introduction of protocols like Taro and OmniBOLT we will see the ability for stablecoins to be issued on and transacted across the lightning network.

We purists are frightened by this.  I get it... I am not sure I want to issue token on any part of the Bitcoin network.  Though, it has been done before (Omni and Counterparty) and there are reasons we want this, as humans.  It IS going to happen whether we like it or not.  And it might not work, but it sure looks like it will.

Thing is you will not be FORCED to use it, but there are reasons many would WANT to.

Now back to the price.

What happens as Strike grows, and Cash App starts to do some of the same things by using the legacy system less and less, and doing value movement of lightning network more and more.  What happens when other countries start using the lightning network whether or not it is legal tender.  Africans can see why this is better than mPesa.  Well as more people are using it more people will need it.

And we will need more of it.

But wait, cAPS.  We can't HAVE more of it, right?  Right.  Not in the physical sense.  But 10 satoshis weighs exactly the same as1000 satoshis, or 1 mSat.  The math does the work for us.  We don't need a federal reserve printing more because people NEED more and because we want to keep prices stable.  We will just keep cutting the pieces smaller and smaller.

And instead of leeching value out of the pockets of the poor into the pockets of the people behind the charade, Everyone gets more value for what they hold as the system grows.

Eventually all the folks using the 2nd and 3rd layers systems will realize that it is good for them to hold some of the underlying asset themselves.

So here is the point of all those letters up there:

If Bitcoin continues to work, it MUST become more valuable.  Period.

Hang in there OGs.     We are gonna be just fine.

This place sure gets weird when Bitcoin is going down.   And since most of the people here have been through a bear or 2 it's even weirder than weird.

Not for or against using the Ledger...

But in the past I found this tool to produce the same keys (and compatible 25 word seed) from the BIP39 24 word set:  https://github.com/Coinomi/bip39-coinomi/releases

Have not tested it in ages against a Ledger, but it certainly worked in the past.

A Central American country is using it as a major form of payment.

I have quit posting my screenshots of my progress indicator as not to junk up the thread... but boy it got slow in that last 10% like a Windows 95 progress bar.  The way we were going before I had expected we would be synced early yesterday.  But at this point I am just hoping it will be sometime today. 96.91%

If you have a wallet (Electrum for example, but several others) that can freeze UTXOs than you have nothing to worry about with these dust satoshis.  I find it fun to freeze them as I realize I am creating wasted value for the attacker.

You are welcome to critisize my ignorance, but that is all that is on display here.  Following any bitcoin transaction is deceptively complex, particularly multi-sig transactions.  And the lightning implementations are complex, there is no doubt about that.

All of the trouble I am currently in is on ME, not the lightning network.  And I am learning that there are great safety devices built into both implementations I am using.

I am sharing my experiences here in spite of the fact it makes me look like a moron, but I do not agree with you that this reflects some kind of limitation with lightning.

Also, I think we have known from the beginning that building good UX/UI on top of these complex systems is an absolute necessity, and it is far from done yet.

Right.  I have been doing lots of researching using 1ml and ambross... And I am not 100% sure that importing a HD wallet into Electrum shows an accurate representation of your funds as far as all of the choreography of channel closures go.  Most of my methods are hackery and I admit the way HTLCs are handled in lightning is kind of "black box" to me.  I get the overall gist, but know nothing of the intricacies of how they work.  I can see the most recent channel closures of my node.  This , for example is part of a recent channel closure where it looks to me, I am due part of the balance:

https://blockstream.info/tx/077c0bc0dcb2cbebc1773a1c8d169df6b1e1ce8bb85288312cb2ce01b675334b

What I see are three addresses involved in the closure... one with 100k sats (roughly) to a single sig sort of bitcoin address, and two others with ~500k sats each that have gone to longer multisig addresses.  I do not have enough data to know who was supposed to get what.  And I do not know why there is that third single sig address... maybe part of a reserve, not sure.

Most of this hackery and research has just been ways to try to peek into what is happening to my channels while my node is down and I do not have a full local copy of the blockchain yet.  But I am currently at 89.19%, and though it has seemed to be slower over the last 24 hours, I expect that SOME point today I will have the whole thing, and can hold my breath and start to see what I can see for reals.

LOL here we go...

Wednesday  BITCOIN IS ILLEGAL IN RUSSIA
Friday  BITCOIN TO BE USED FOR INTERNATIONAL TRADE BY RUSSIA
Tuesday  BITCOIN BANNED BY WESTERN NATIONS
Thursday BITCOIN BEING ACCUMULATED IN DARK POOLS BY WESTERN NATIONS

Bitcoin SHOULD act as a hedge because of what it is exactly.

But that requires people to think of it more accurately.  People do not see it as a mathematically perfect asset with an exact known issuance and a hard cap.  It is hard for people to see that because it has never actually existed before.

Also, the casino nature of the "crypto" market, leads to great volitility and the association of Bitcoin as a "tech product" has it firmly in step with the Nasdaq chart at times.

One other thing.  For better or worse Satoshi invented an asset that has no controllers or mechanisms to damp the value spikes and dips.  When a poorly designed DeFi scam uses bitcoin as it's reserve asset, and eventually goes broke, then they have to sell those bitcoin into the market.  And there is no governance that can add or remove BTC from the system so the shocks are felt as they truly are, rather than having the illusion of stability.

Eventually we will see people start to use Bitcoin as a safe haven... a base asset.  Will that be during THIS crash?  Or the next one in 8-20 years (or whatever... who knows?)?  That, I think, is the tricky bit...

If that is how you read it.  But I liked my version better.  Also, I am not really making short term price predictions.  What I am saying is we have not seen the mother of all bull markets yet.  Although we will never see % gains like were realized between 2010-2014 again we WILL see, in the overall scale of things, a massive rise in the price... some day.

Again, I think we will see the bitcoin adoption curve reflected in the price of the asset.  And that that curve will, like most others, have a middle section where adoption is happening the fastest.  I think we might even see an exaggerated adoption curve because of the nature of this technology.

So far one of the most accurate models that can be backfitted to the bitcoin price is a parabolic curved range with a decreasing slope on both the lower and upper bounds.  This makes sense for many reasons.  One of the most obvious is as Bitcoin goes up in value it takes progressively more to raise the price which is slowing both the volatility and price rise of the asset.


(credit @davethewave on twitter)

This model eventually breaks, in my opinion, as the adoption of bitcoin as a reserve asset causes the downward slope to be temporarily overcome.  This has no relevance to the short term price, or if we are near the bottom of a bear market, or what price Bitcoin will be next month.



I think we are somewhere near the blue circle as far as adoption goes...

But an ETF is a fundamentally different instrument compared to a futures contract.

I think there is a LOT of pressure to approve one of these things.  But I also think there is even more pressure to try to kill Bitcoin which happens to be very vulnerable at the moment.  So it's really hard for me to say...

One thing about the US government is sometimes one hand does not know what the other one is doing... but I would think the SEC and the FED are pretty tightly intertwined.

I would think if it DOES get approved we will see some whipsaw action at first, and then later a bit of buying pressure steady and constant.  It will most certainly make the price begin to bias more towards the up.   If it is denied again it will look pretty fishy, and in a way be the predictor of the death rattle of the USD.

It will be interesting to see.

I think in the end it will be difficult to come up with an argument it was not prudent.  Nothing is certain, but that's about as close as it gets I think.

I think this is possible, but on the low side.  I think we have more chance of wicking to 17.5 before running back up to 21k fairly quickly... and this week is a hot time for it to possibly happen.  That would keep the WMA integrity, but really be a good vomity capitulation.

Also it agrees with the fibs drawn from covid low to ATH:


(forgiver linear chart.  Easier to see there...)

And that level is the only place (sadly) south of 20k where there was any volume to be some support... but not even much there... :/
Of course I HOPE we are already bottomed, but it is not LOOKING like it, market activity wise.  I want to get see where the long/short is at, because I do believe if there are a lot of longs then there is some real incentive to get that wick down.

Just to be the contrarian... this is exactly what has happened multiple times with the 200WMA and just about ALL Bitcoinner TA folks are pointing to this as the most concrete indicator we ever use.  Members of this thread (including you) have suggested exactly this would happen since BEFORE the last ATH was reached.

We could expect in a worst case scenario we wick under the line and close the week close to it and start back up from there...

But max pain would come with a different outcome.

I think it is also interesting to think that the whole world is looking at this right now.  I would GUESS that institutional and pro investors are very close to backing up the truck here or already are.  We should see a HUGE bullish defense of ~20k.  But the people who hate bitcoin may also want to try to move the market into territory that would appear very negative.  If you want to kick it while it's down THIS would be the time to send out the FUD (ILLEGAL IN RUSSIA!!!) or try to manipulate again with leveraged positions on retail exchanges.

Bitcoin is no longer magical internet money for geeks.  It is a reliable worldwide reserve asset (in adolescence).

We have been to the 200WMA before... but never exactly like this.  Is it different this time?  I honestly hope not.  I would love to see it do what so many expect.

But so many expect it...

Thanks for the help watching my pot boil... looks like by lunch tomorrow I should be looking at a full blockchain.




I am tempted to make sure lnd and lightningd are NOT running before I hit the sack tonight.  I think I would rather turn those on then just see them pop on randomly and trigger a cascade of justice transactions.  I know the result could be the same... but I want to :

1.  Perform whatever on-chain analysis I can first.
2.  Make a solid eyes-open decision.
3.  Be the master of my fate... if I am gonna lose value I want to have done it by my own act of will!

At this point I still do not know if either node will come back.  I have noodled around with the hsm_secret for ages looking at addresses derived from it, and they all come up blank.  I have even used the Xprivs I get with hsm_tool etc.  I just hope that CL uses some wacky derivation or salted something-or-another and I am just looking at the wrong addresses.  I hope what I believe is right.  That the database backup was encrypted with hsm_secret, and since it was able to be restored then I have the right one.

Same thing with the LND node.  I have a wallet in electrum based on a AZEED based seed that shows the on chain balance at the time the node crashed (by the way LND does seed words and derivation TOTALLY NOT the same way as Bip39 so if you need to know about it let me know... took me a while to figure it out) .  And since then SEVERAL channels have been closed unilaterally by my partners, yet no value has ended up in that wallet.  I am hoping that the node has to do something to complete those multisig contracts?  Or the funds are still not unlocked?  The LND node, sadly has no chance of being restored... I just want to see all the funds go back.

God help me.  (Seriously God... I owe ya already, but I am asking again)

I think it's quite good analysis.  Have always enjoyed your TA.

I do see a lot of people talking about the 200 MA.  When the timeframe is not specified do we naturally assume Weekly?  If not, I would only suggest specifying that.  And in Bitcoin I think I might use the 208.34 Week moving average.  But symmetry is my thang.

I still believe in the "supercycle".  Just want to say it here to prove how delusional I am.  But I really do.  I think we are very close to a point where money begins to flee to the stability of Bitcoin, when a critical mass of people will see that even when the price is oscillating people who store wealth in BTC will, over a medium sized window of time, protect their value at the price of (lessening) volatility.

And at some point we tip over into a race into the asset.

The hard part is what does "very close to a point" mean in a global sized, human lifetime duration event?  I don't know... in retrospect from today "really close" will easily be somewhere between 6 months and 10-20 years.  Very short periods of time if we are looking back on when it happened.

For example I think we are probably going to enter a worldwide depression that will at LEAST last 10 years, if not a quarter century.  And it may just be Bitcoin that shortens that macro cycle.

My bet is STILL on the sooner side...  I think within 1 bitcoin cycle.  A deterministic Poisson distribution just like finding blocks.  Always 10m out?  Always 4 years out.

Supercycle.  Sooner rather than later.  Feel free to remind me if I am wrong and we are still just creeping up in 4 year spurts 25 years from now... because you know I will be dancing around when I am right (and that should ONLY take about 4!)!

You are seeing 2 levels deep.  It goes deeper.