Reading time 4m15s
Good morning, and welcome to Tokengraph! Today, we’re bringing you a breakdown of Pompliano’s latest video, featuring Will Clemente, an incredible analyst and the founder of Reflexivity Research. They talk all things BTC, and at this pivotal point in the crypto market balance, you don’t want to miss what these guys have to say.
In today’s breakdown:
Bitcoin Halving Is Approaching
Transaction Fees Are Skyrocketing
The Ordinals Craze
In this latest video, Pompliano welcomed Will, a cryptocurrency analyst and CEO of Reflexivity Research, who shed light on several key ongoing events within the Bitcoin ecosystem.
We’ll start with a bullet point rundown, and then go deeper into the topics from there:
Bitcoin transactions have reached an all-time high, driven primarily by the rise of Ordinals, on-chain inscriptions attached to individual Satoshis.
The increased transaction fees and demand on the network create a favorable environment for the adoption of layer-two solutions like the Lightning Network.
Ordinals have generated over $7.6 million in transaction fees for the Bitcoin network and have been compared to Ethereum's NFTs and have.
Bitcoin's hash rate has also hit a new all-time high due to increased transactional activity, incentivizing miners with higher transaction fees.
Will's research on Bitcoin's four-year halving cycles indicates that the impact of supply halving diminishes over time due to the increasing pool of circulating supply.
Will Clemente (@WClementeIII) breaks down bitcoin's hash-rate, transaction volume, number of users, and the macro economic backdrop.
This quick interview is packed with information. https://t.co/wJsYUiJusG
— Pomp 🌪 (@APompliano)
May 8, 2023
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Bitcoin Transactions on the Rise
Bitcoin transactions have seen a huge spike recently, reaching unheard-of levels. Will attributed this surge not only to Bitcoin's perceived status as a safe haven asset but primarily to the rise of "Ordinals,” which we’ve covered extensively here. They’re on-chain inscriptions that apply a number to every single Satoshi (the smallest unit of a Bitcoin).
#Bitcoin transaction fees https://t.co/MpZQ6304Ro
— Benjamin Cowen (@intocryptoverse)
May 8, 2023
Ordinals have seen an explosion in popularity, generating substantial transaction fees for the Bitcoin network. The fact that they allow users to inscribe data like text and images onto individual Satoshis has led to increased demand for block space, which is what’s driving transaction prices so high. Will and Pomp drew parallels to NFTs on Ethereum, giving a speculative investing angle to this activity.
BREAKING: #Bitcoin block 788695 contained transaction fees greater than the block subsidy.
6.7 BTC transaction fees + 6.25 BTC subsidy
This is a the first time in history this has ever occurred due to competitively high block space demand. https://t.co/J7IcwzIVKE
— Joe Burnett (🔑)³ (@IIICapital)
May 7, 2023
The Wizard Meme and Hash Rate Increase
The "wizard" meme that has taken over Twitter is one of the most popular Ordinals projects, initiated by UDI and Eric Wall. This has sparked a lot of debate and conversation in the Bitcoin community, not only because of intense differences in opinion about the purpose of Bitcoin and its compatibility with NFTs, but also because the Wizards collection’s art is purposefully low effort.
I AM BECOME WIZARD
DESTROYER OF GATEKEEPERS https://t.co/fsVHNpVaKn
— Taproot Wizards (@TaprootWizards)
May 7, 2023
Another significant development is the increase in Bitcoin's hash rate (the amount of computational mining power the network has in total). The rise in Ordinals, leading to more transactional activity, has resulted in higher transaction fees, incentivizing miners to contribute more computational power to the network.
Bitcoin's hash rate is relentless.
Not only is it pushing to new record highs -- this is also the largest 5-day increase ever. https://t.co/CCEbRK4YhZ
— Will Clemente (@WClementeIII)
May 2, 2023
This increased demand has filled the Bitcoin mempool (backlog of transactions) to the brim, reaching its fullest point since the FTX collapse. It's an interesting setup for the adoption of Bitcoin's layer-two solutions, like the Lightning Network, to handle the high transaction fees.
#Bitcoin Hash Rate hits an new ATH!💥 https://t.co/1gfAOTNszx
— Crypto Rover (@rovercrc)
May 7, 2023
The Four-Year Halving Cycle
Next, Will shared about the Reflexivity Research team’s in-depth analysis of Bitcoin's four-year halving cycles. The study covered macroeconomic factors, Bitcoin-native factors, behavioral dynamics, and miner behavior.
BREAKING: The next #Bitcoin halving is now officially less than 1 year away 🚀 https://t.co/tH08THjJtv
— Bitcoin Magazine (@BitcoinMagazine)
Apr 30, 2023
The findings suggest that the impact of Bitcoin's supply halving has a diminishing effect over time due to the ever-growing pool of circulating supply.
Another significant insight was that the market's profitability, gauged through on-chain metrics, plays a crucial role in the cyclicality of Bitcoin. During periods of unrealized profit, there's a high likelihood of individuals realizing some of that profit. Conversely, bear markets marked by realized losses often lead to capitulation, historically indicating the bottom of the cycle.
The next #Bitcoin halving is in less than a year.
My base case: the 2024 halving could send Bitcoin's price 4-8x higher.
Here's what you need to know... (Thread 👇) https://t.co/lUAHSrFnGh
— Jesse Myers (Croesus 🔴) (@Croesus_BTC)
May 8, 2023
It was also noted that miners' influence on the market has been diminishing over time due to decreasing revenue from supply issuance and declining balances.
Lastly, Pomp and Will discussed the correlation between Bitcoin and the Institute of Supply Management (ISM), a survey of manufacturing economic data. It’s clear that Bitcoin currently showing a decoupling trend from this index, which tells us that BTC is possibly maturing as an asset and stepping into its own.
bitcoin getting closer to the halving (April 2024).
did you notice that halvings (dark blue) are usually on S2F model line (grey) ... https://t.co/oWPv13dHie
— PlanB (@100trillionUSD)
May 4, 2023
This episode provided tons of invaluable insights into the current state of the Bitcoin network and market dynamics. We highly recommend you check out more of both Pompliano’s and Will’s content if you’re looking to learn more!
How much money in Bitcoin has been irretrievably lost because of forgotten keys or purchases?
A. 4M BTC
B. 2M BTC
C. 500K BTC
B. 300K BTC
Scroll down to the bottom to see if you're right!
Web3 Resource of the Day
Cathie Wood - Why Bitcoin Is Becoming The Go-To Investment For Everyone | Video from Savvy Finance
CEO of Ark Invest Cathy Woods has been calling Bitcoin a “flight to safety asset” for a long time now, and just earlier this year, we saw that the market believes that sentiment as well. Banks were crashing, but Bitcoin’s price wasn’t just stable — it was increasing. Check out this video from Savvy Finance that highlights Woods’ thoughts from a recent interview and adds new insights of his own, covering commodity prices, investor confidence, institutional adoption, and more.
❓ Trivia Answer
Research estimates that as of 2022, 4 million BTC had been lost forever — equating to over $110B at Bitcoin’s current price.
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DISCLAIMER: This is not financial advice. This newsletter is strictly educational and is not investment advice to buy or sell any assets or to make any financial decisions. Do your own research.