A crazy week

Crypto President, a healthy reset, judgement, Setting Sun, and chart crime of the week.

📚️ PDF ⏳️ 6 min 📖 7


So it heats up. As we mentioned last week, Trump had intimated his support for cryptocurrency generally. He has now taken this to the next level and his campaign is accepting contributions in digital currency.

If the Democrats do not follow suit and decide to take the view that cryptocurrency is by default “Trumpian”, then that would be profoundly negative. 

However, that does not appear to be happening. Early this week Wall Street firms hoping to launch Ethereum ETFs were asked to urgently update their submissions in a pattern closely following the bitcoin process. This morning (late Thursday US), the Van Eck Ethereum ETF was approved. The products have gone from a near zero chance of quick approval to approved in the space of five days.

It just looks a bit like this; there are large groups in America that care about cryptocurrency. If you are actively against them, they will not vote for you. Everybody else doesn’t care at all. The group that actually wants to outlaw digital assets altogether is also very small and is largely vested interest driven (Jamie Dimon et al.). So, taking a position against the sector is on balance a net vote loser. Given the election is going to be close it really doesn’t pay to take on something with so little upside.

The pendulum therefore swings our way. If that were not enough, the man behind Operation Chokepoint 2.0 resigned this week. You might recall that the USG attempted to de-bank the crypto industry early in 2023 which resulted (some would say directly) in the collapse of Silicon Valley Bank which provided services to much of the industry. The whole regulatory attack on the sector was coordinated by the FDIC Chairman Martin Gruenburg. His slew of ‘regulatory activity’ is laid out in this thread.

Following an investigation by a law firm, full details of which can be found here, the Chairman has now resigned.

I don’t want to dance on his grave but I don’t believe the actions of 2023 were taken in good faith. The attacks on the industry were needless, destructive and helped nobody.

It was just a wild week in America. I’m sure the timing of Trump, the ETH ETF and the FDIC report are all a coincidence because you couldn’t make it up.


SOPR: the spent output profit ratio. This metric measures the level of profit in transactions by dividing the value of outputs (bitcoin being spent) at the current price versus the price when those outputs were first created (i.e the last time they were spent.

In essence a SOPR of greater than 1 occurs when profits are being taken and people are moving bitcoin at prices higher than they acquired them and vice versa. Capitulations are marked by deeply negative SOPR. 

Why is it interesting? Well two months ago Willy predicted a hiatus around the time of the halving where the price would consolidate, which it has. SOPR has now returned to 1 or thereabouts, indicating a fairly neutral market which is still taking inflows of new capital.

The significance of this was laid bare to me over the weekend when someone casually remarked to me what “a tough few months crypto has had”. I suppose it has, but really, we are sitting right on the previous all-time high of $67,000 from late 2021. A lot of people are underwhelmed by the halving and so have sold out and taken their short term profit, they sold to BlackRock, who aren’t selling. We can see from the 10Fs around the world that steady institutional accumulation of bitcoin has only just begun.

Here we are then, boring consolidation, ETFs buying 2000 BTC every day and miners producing 450.

Dr Wright

The verdict in the Craig Wright case was already known back in February. The Australian man who claimed to be Satoshi Nakomoto was dismissed by the judge as clearly not. Only this week did we receive the full written judgement which turned out to be a total evisceration of Wright.

The best bits of the judge’s brutality are summarised in this FT article. I will lay out my personal favourite.

Oh dear. 

Anyway, there were some other highly satisfactory moments in the judgement including this one regarding one of the longest serving bitcoin core developers, Dr Peter Wuille. Dr Wuille is a quiet guy that has contributed to bitcoin over a very long period of time. His knowledge is detailed, his memory is excellent.

It is just fitting that one of the people who has contributed the most, brought an end to a very ugly saga caused by someone who not only contributed nothing but caused a huge amount of damage to the ecosystem. 

Wright claims he will appeal, but he has a habit of throwing his lawyers under a bus. As you will read in the judgement he actually submitted a forged email to the court that purported to be from his previous lawyers. Under those circumstances, I wonder who it will be that represents him? And indeed, who will pay for it?

The Setting Sun

I found this chart shocking. Japan isn’t really doing that badly. Still a wealthy country with huge manufacturing capability and yet its share of global GDP has dropped from 17.8% to 3.8% in 30 years. 

That seems remarkable but in fact when you consider the scale and value of China and India’s growth in that period, it is less surprising. 

The core reason is their declining population. Tragically, they simply do not have enough children. There might be lots of reasons for that but one of them is surely the price of property in Japan in the late 1980s and 1990s. There was a time when the land on which the Imperial Palace in Tokyo sits was valued at more than the state of California.

Nobody could afford a house, let alone one large enough to fill with children. The birth rate now sits just under 1.4 births per woman and the country is slowly dying.

I wonder then in Australia when everyone cheers for property prices going up. Currently the birth rate is 1.8 births per woman, well below the replacement rate of 2.1. People will say it’s far more complex than property prices and they might be right, but those prices are a function of the same monetary disease.


TThe ECB’s financial stability report is out. Tucked away in a corner is the global asset performance index showing “crypto-assets” up 64%. The ECB chart though is rather misleading. Their X axis ends at 30% where in fact the performance of the asset class is double that.

If we show the actual chart (thanks to Andy at the Bitcoin Advisor for this one) and substitute just bitcoin you can see the full extent of the difference. I wouldn’t really have a problem with it if they were even handed about it when asset prices fall but they are not.

Of course the chart is presented in Euros, which means the Euro’s performance is masked. If we did the whole thing in dollars the Euro would be at the bottom, it wouldn’t show on the ECB’s chart though because their selected x axis has no negative numbers.

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