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- 🥜 Warning: Bitcoin death cross is here... ☠️
🥜 Warning: Bitcoin death cross is here... ☠️
PLUS: Bitcoin FASB accounting changes
GM. Crypto Nutshell dropping in! 🫶 🥜
The crypto newsletter more exhilarating than joining a group of misfits to steal from a casino... 🎲🔐
Today, we’ll discuss:
Major Bitcoin accounting regulation updates 🧾
Bitcoin death cross days away ☠️
Bitcoin pricing signals 🚦
And more…
MARKET WATCH ⚖️
Prices as at 8:35am ET
Only the top 20 coins measured by market cap feature in this section
BITCOIN ACCOUNTING REGULATION📝
JUST IN: FASB votes in favour of fair value accounting for Bitcoin
The accounting regulations for Bitcoin has changed!
“But why would I care at all about accounting regulations?” we hear you say 🤔
Well, the old way was absolutely terrible and reflected on Bitcoin poorly. Let’s take a look.
The old way:
Accounted for Bitcoin as an intangible asset
If Bitcoin’s price went down, companies had to take an impairment loss on their books even if they didn’t sell
If Bitcoin’s price went up, companies didn’t receive any benefit on their books, they couldn’t mark their Bitcoin at true value, unless they sold
The new way:
Every quarter companies will report the unrealized gains or losses on their books
If Bitcoin’s price goes up, companies can record the gains on their books without having to sell
This may not seem like much but it’s actually a MASSIVE breakthrough for Bitcoin. Companies being able to report digital assets at current market value is a huge step forward for corporate adoption. 🤑
This makes Bitcoin way more attractive as an investment for larger companies such as Apple or Microsoft. The old accounting principles would have significantly impacted the reported financial figures for these companies.
We’ll use MicroStrategy as an example for how wild the old accounting principles really were:
In Q1 2022 MicroStrategy reported a ~131M net loss
This was despite having strong core-business performances
MicroStrategy’s Bitcoin stash reported a ~170M impairment loss
Prohibited from marking up digital assets to true value even after the price recovered
MicroStrategy would have generated a ~39M net profit not factoring in the Bitcoin impairment loss
Full deep dive into MicroStrategy Bitcoin accounting.
Full article on FASB Bitcoin Accounting changes
BITCOIN DEATH CROSS DAYS AWAY ☠️
A death cross sounds terrifying. Should you be scared?
Let’s take a look.
If you haven’t heard the term before: a death cross = the 50 week moving average falling below the 200 week moving average.
The opposite also occurs: a golden cross = the 50 week moving average moves above the 200 week moving average.
You can see this visually below:
🟢 Golden cross that happened back in February.
🔴 Death cross that is about to occur in the next few days.
The crypto community loves to make a huge deal out of death & golden crosses and for somewhat of a valid reason.
Historically, a death cross is followed by a sharp price dip. The inverse is also true, a golden cross is generally followed by a sharp rise in price.
Yesterday, analyst Benjamin Cowen broke down why the death cross is actually BULLISH in the short term. 🐂
If you don’t know Cowen he:
Has a PHD in Nuclear Engineering
Founder of Into The Cryptoverse
Has millions of followers due to his in-depth blockchain analysis
In his breakdown, Cowen explained that historically, price action will actually do the opposite of what the name implies.
When a golden cross occurs, in the short term, the price historically dumps before the trend continues and the price puts in a new high. 📈
When a death cross occurs, in the short term the price historically pumps before the trend continues and the price puts in a new low. 📉
Ben also made this fantastic point:
“There are always going to be exceptions to the rule. Just because we typically see a pump into a death cross and a dump into a golden cross, followed by a continuation of the trend… That does not mean that it always has to play out like that.”
Just because something usually plays out historically doesn’t guarantee it will also happen in the future. That’s investing 101. 🔮
Bottom line: Should you be worried about the death cross?
If you are a short term trader? Yes, probably.
If you are a long term investor? No.
BITCOIN PRICING SIGNAL 📊
Today we’ll introduce you to one of the models from Glassnodes Recovering from a Bitcoin Bear dashboard.
Important to know:
🟠Realized price: average price of Bitcoin supply based on the value that each coin last moved at
🔵200-day SMA: average price of Bitcoin over 200 days
How to interpret:
Current price above 200-day SMA: since the 200-day SMA is so popular it tends to carry some weight on investor psychology when it is strongly broken. Often thought of as a bull/bear market signal
Current price above Realized price: Signals that the average Bitcoin investor is now holding an unrealized profit
This metric will display a green bar when both of the above are true. A pretty neat combination of on-chain and technical analysis
As of today:
Current price is BELOW the 200-day SMA 📉
Current price: $26,215
200-day SMA: $27,598
Current price is ABOVE the Realized price 📈
Realized price: $20,268
Takeaway: So only 1 of these metrics is true and the current price is only just below the 200-day SMA. Despite the dampened sentiment, things really aren’t that bad when you break it down like this.
However it’s important to keep an eye on this metric. If the price starts to really deviate from the 200-day SMA then there’s something to worry about…
CRACKING CRYPTO 🥜
CAN YOU CRACK THIS NUT? ✍️
Did you read yesterday’s edition?
What was the percentage of the Bitcoin supply that hasn’t moved in more than 10 years?
A) 12.47%
B) 14.95%
C) 8.38%
D) 10.19%
Find out the answer at the bottom of “Meme Corner” below 😀
MEME CORNER 😂
Because what would the crypto world be without its share of memes?
Trivia Answer: B) 14.95% 🥳
Yep that’s right, ~14.95% of the Bitcoin supply hasn’t moved in more than 10 years. It’s safe to assume that a decent proportion of these coins have been ‘lost’. Or they’re just in the hands of the HODL champions. 🤔
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DISCLAIMER: The content of this newsletter is not financial advice. This newsletter is strictly educational and is not investment advice. Please be careful and do your own research.
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