No matter how much you polish a turd, at the end of the day, it’s still a turd. What I mean by this is that an investment or asset you’re considering should be excellent down to its fundamentals.

This is why we will cover BTC's most important fundamental aspects and see why it’s not a turd.

Here’s what we’re covering:

• Circulating Supply & Issuance

• Supply Last Active +1 Year Ago

• # of Active Addresses & Non-Zero Balance

• Mean Hash Rate & Mining Difficulty

• Balance on Exchange & % on Exchanges

1. Circulating Supply & Issuance

The phrase you’ll likely hear most when talking about BTC is…

While they’re not wrong, let’s discuss why this is and what data we can look at to verify this claim.

‘Circulating Supply’ gives us a peak into how many BTC have been mined already, and just in case you forgot, there are only 21 million that will ever exist.

We’ve already mined about 19.3 million of them, so let’s do the math.

Talk about a scarce asset.

Not only is there a limited amount of BTC to share with everyone, but every 4 years the amount of BTC issued every day is cut in half.

Reference the photo above; each red number is how many are produced daily.

Also, note that BTC's price rockets in price after each halving (Indicated by a grey vertical line).

The next halving for BTC is predicted to be on Wednesday, Apr 17, 2024.

These charts are necessary because they make BTC valuable, among other factors. This shows you not only the limited amount of BTC left to be mined but also the fact that every 4 years, you are getting 50% issued every day.

2. Supply Last Active +1 Year Ago

The term HODL comes from people with diamond hands who have decided not to do anything with their BTC and just let it sit there for over a year.

That’s some real patience, to sit there and watch your bag fluctuate in price without doing anything.

There are 2 reasons this is important

1. BTC is already hard to come by these days, but now 67% of that supply is locked away in someone’s wallet, either waiting to be sold or lost forever

2. With BTC being deflationary and extremely rare, most of its supply may never be active for YEARS, which only means one thing…

3. # of Active Addresses & Non-Zero Balances

These indicators prove that people aren’t just talking the talk but actually walking the walk.

Imagine if people talked so highly of BTC, but everyone was too scared to buy some or never owned any.

One principle can sum up how important both these charts are… ‘Metcalfe’s Law’

Metcalfe’s Law:

While this law refers to the telephone industry, the same applies to BTC’s network.

Here’s a picture to really drive the point home!

The more people using BTC makes it more valuable; both those charts above show that BTC is gaining new users DAILY by the thousands!

4. Mean Hash Rate & Mining Difficulty

So, one thing that makes BTC more valuable than other assets is that it can’t just be made out of thin air…

**cough** US Dollar **cough** 

BTC needs to be mined for it to exist; for the sake of your brain and mine, I won’t dive into the complexity of how mining works.

You can watch the video I linked HERE to learn more if you're truly curious.

Mean Hash Rate:

The higher, the safer!

Mining Difficulty:

The harder it is to mine BTC, the more secure the network is, and we’re at All-Time Highs!

5. Balance on Exchanges & % on Exchanges

There’s one beautiful difference between BTC and just about any other asset that makes it stand out.

‘Self-Custody’

Ask yourself if you own fiat (US Dollar), precious metals, stocks, bonds, etc. Where are you keeping these assets?

Usually, you trust an institution to hold your money for you and hope they don’t lose your money, and we’ve seen how that’s worked out recently. Now, you could physically hold cash or gold yourself, but when you reach the tens or hundreds of thousands of dollars, that becomes impractical.

But with BTC, you have the option to keep all of your BTC in cold storage, which means it cannot be hacked on the internet; it gives you complete control and responsibility over your assets, and no matter how much you have in value, it can all fit onto a hardware wallet the size of a USB drive.

Both charts can serve as a good indicator of what might be happening in the coming days.

Here’s a straightforward way to think about it

Please don’t take that example as gospel, but it might signify something happening soon. If you have a few million dollars in BTC, you would only want to leave it on an exchange if you plan on transferring or selling it. If you don’t plan on doing either, your safest approach is to keep it on cold storage, which means removing it from exchanges.

Takeaways

Looking at these indicators/charts more as tools rather than guarantees is essential. Nobody knows what will happen in the markets because there are just too many factors to consider, and you can never predict human psychology.

The main goal is to give yourself a slight edge in these markets; casinos have a 2-3% edge over the participants, making hundreds of millions of dollars in profit annually.

Think like a casino, not a gambler.

- Krystian

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.