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GM to all 64,531 of you. Crypto Nutshell #298 crashin’ in... 💥 🥜

We’re the crypto newsletter that’s more captivating than a group of investors betting against the housing market in the midst of the 2008 financial crisis... 🏠💰

What we’ve cooked up for you today…

• 🤨 What’s up with the Bitcoin ETFs?

• 🤔 Is the halving priced in?

• 🤑 Bitcoin’s profitability

• 💰 And more…

MARKET WATCH ⚖️

Only the top 20 coins measured by market cap feature in this section

WHAT’S UP WITH THE BITCOIN ETFs? 🤨

BREAKING: Why Bitcoin ETFs with ‘zero flows’ don’t mean what you think

For the 3 three days the Bitcoin ETFs have recorded net outflows.

That’s due to 2 obvious reasons:

• Continued outflows from Grayscale

• Low inflows for all other issuers (besides BlackRock)

Yesterday was a net outflow day of $58 million.

Here’s the breakdown:

1. BlackRock - IBIT: $25.8 million 🥇 

2. VanEck - HODL: $3.6 million 🥈 

3. Franklin Templeton - EZBC: $1.8 million 🥈 

On Monday and Tuesday, the majority of issuers recorded flows of exactly zero.

Although that sounds bad, ETF analyst James Seyffart explained that this is perfectly normal.

In the US, there are ~3,500 ETFs.

Yesterday?

2,903 of them had flows of exactly zero…

Flows of zero are nothing to worry about.

ETFs are pretty complex.

Seyffart explains that for inflows or outflows to be recorded, there has a to be a significant mismatch between supply and demand.

So the takeaway here is to not panic when you see a zero inflow day for the ETFs.

This doesn’t mean they’ve failed…

It’s just the norm for ETFs in general.

Plus, BlackRock’s streak of daily inflows is now up to 65.

(The 14th longest inflow streak of any ETF ever…)

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IS THE HALVING PRICED IN? 🤔

Efficient market theory would have you believe that the Bitcoin halving is already priced in.

But, in a recent investor memo, Matt Hougan explained why this isn’t the case.

So far, Bitcoin has experienced 3 halvings.

All three of them have resulted in positive price action in the following year:

• 2012: +8,839%

• 2016: +285%

• 2020: +548%

To understand why the Bitcoin halving isn’t priced in, first we need to understand market dynamics.

Matt explains that in any market, there are two types of sellers:

• Forced sellers - Bitcoin miners that have to sell to cover costs

• Willing sellers - Everyone else

Forced sellers are price insensitive. Whereas willing sellers will sell at varying price points.

Some will sell at today’s prices, some will hold out for $100,000 and others are waiting until $1,000,000+. (these prices can also change based on market sentiment)

Let’s break this down with an example.

Currently, Miners produce ~900 new Bitcoin per day.

Imagine a new group of investors come into the market.

And on average, they want to purchase +1,000 BTC per day.

These investors can acquire 90% of their BTC from forced sellers (Miners) and 10% from willing sellers.

But…

After the halving, miners will only produce ~450 new Bitcoin per day.

Now, with the same demand, these investors can only acquire 45% of their BTC from forced sellers. The remaining 55% must come from willing sellers.

Cutting the amount of forced sellers in half is a HUGE deal.

Matt believes the market has severely underestimated the long-term demand for Bitcoin:

One of those reasons being:

Only 2 days to go… 🧨

BITCOIN’S PROFITABILITY 🤑

Today we’ll be taking a look at the Adjusted Spent Output Profit Ratio (aSOPR).

Although this metric may sound a little confusing, really it’s quite simple.

It tracks the sale of every coin and determines whether it was in profit or not.

This is done by comparing the fiat value of a coin when it is first purchased to the fiat value when it is sold.

• aSOPR >1: on average, coins are being sold at a profit 🐂

• aSOPR < 1: on average, coins are being sold at a loss 🐻

• aSOPR = 1: on average, coins are being sold at breakeven 😐

But the neat thing about aSOPR is that coin volume is not considered in the calculation.

This means that whales can’t heavily skew this data by locking in huge profits or losses. Think coins being sold from 2013, etc.

All we’re looking at here is if the transaction was in profit or loss. A simple yes or no.

Today, aSOPR is at 1.043. (although it has fallen recently due to Bitcoin recent price action.)

Ok that’s great but what does this number mean?

Well, it indicates that on average, Bitcoiners have been realising profits.

aSOPR above 1.0 is a tell tale indicator of a bull market. (this metric flashes blue when aSOPR is above 1.0)

Profits are being realised on chain and demand is sufficient in absorbing these sales.

Also notice how aSOPR hasn’t yet reached levels seen during previous market tops?

We’ve still got a long way to go…

And as long as we’re above 1.0, we’re all good. 😎

CRACKING CRYPTO 🥜

Polkadot eyes $8.8 million sponsorship deal with Lionel Messi's Inter Miami. Blockchain network Polkadot's community proposes $8.8 million sponsorship deal with Lionel Messi’s Inter Miami.

Bitcoin supply to run out on exchanges in 9 months. BTC supply on exchanges will run out in nine months after the upcoming Bitcoin halving and continued accumulation by Bitcoin ETFs.

Coinbase and Grayscale unveil new TV spots in time for bitcoin halving. New crypto ads by Coinbase and Grayscale target viewers of the NBA and NHL playoffs as the new BTC supply is set to slow.

Analyst Who Called Bitcoin's Pre-Halving Rally to $70K Turns Bearish. Markus Thielen, founder of 10x Research, has de-risked his portfolio in the wake of rising Treasury yields.

WHAT WE’RE READING 📚

Want to get even smarter? Check these out.

p.s. all completely FREE

• Bitcoin Breakdown (link) - Weekly Bitcoin recap

• The Hustle (link) - Get Smarter on Business and Tech

• Crypto Pragmatist (link) - Actionable alpha in 5 minutes

• The Business Academy (link) - Unique investment opportunities

• Wild Golf (link) - Twice weekly Golf insights & tips

CAN YOU CRACK THIS NUT? ✍️

Select your answer below and you’ll be redirected to the results page. (answer explanation can be found after “Meme Corner”)

MEME CORNER 😂

Because what would the crypto world be without its share of memes?

Trivia Answer: C) IBIT 🥳 

BlackRock’s Bitcoin ETF trades with the ticker $IBIT.

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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.