Daily Crypto NewsEDITION #222, 25 May 2021

The art of somersaulting

Hey #Moni Maker 🔏

Today, in 1983, the movie “Star Wars. Episode VI. Return of the Jedi” was released in USA. Probably, the actions of the franchise take place in reality, the rebels would use the cryptocurrency while the Empire tried to hard dump it.

It's good that in our reality there are no such Darth Vaders. Oh, wait ...

Okay. There is a digest! Let’s go!

Mr. Musk, at the initiative of Michael Saylor, met with bitcoin miners. They said they would look towards renewable energy sources.

So what?

Mr. Musk! We love you very much. We are waiting for global wi-fi and so on. But please tell us, did you accidentally develop an antivirus when you were young? We had one character here...

Maestro Tony B. is back on your screen to make you a little smarter. By the way, you can always fly into our chat and ask Tony questions by tagging him @Tony_Crusoe, if you suddenly don't understand something from the post. Well, you should also follow his Twitter. In such incomprehensible times, a landmark is needed. And that's Tony's channel!

All models are wrong, some are useful. Part X: MVRV Z

Indicator Overview

MVRV Z-Score uses blockchain analysis to identify periods where Bitcoin is extremely over or undervalued relative to its 'fair value'.

It uses three metrics:

1) Market Value (blue line): The current price of Bitcoin multiplied by the number of coins in circulation. This is like market cap in traditional markets i.e. share price multiplied by number of shares.

2) Realised Value (orange line): Rather than taking the current price of Bitcoin, Realised Value takes the price of each Bitcoin when it was last moved i.e. the last time it was sent from one wallet to another wallet. It then adds up all those individual prices and takes an average of them. It then multiplies that average price by the total number of coins in circulation.

In doing so, it strips out the short term market sentiment that we have within the Market Value metric. It can therefore be seen as a more 'true' long term measure of Bitcoin value which Market Value moves above and below depending on the market sentiment at the time.

3) Z-score (red line): A standard deviation test that pulls out the extremes in the data between market value and realised value.

How It Can Be Used

The MVRV Z-score has historically been very effective in identifying periods where market value is moving unusually high above realised value. These periods are highlighted by the z-score (red line) entering the pink box and indicates the top of market cycles. It has been able to pick the market high of each cycle to within two weeks.

It also shows when market value is far below realised value, highlighted by z-score entering the green box. Buying Bitcoin during these periods has historically produced outsized returns.

Interactive chart: lookintobitcoin.com

A leaked report from Wall Street giant Goldman Sachs GS +0.3% has given ethereum, the second-largest cryptocurrency with a market capitalization of around $250 billion compared to bitcoin's $660 billion, a "high chance" of overtaking bitcoin as a "dominant" store of value—calling it the "Amazon AMZN 0.0% of information."

"Given the importance of real uses in determining the store of value, ether has a high chance of overtaking bitcoin as a dominant store of value," analysts at Goldman Sachs wrote, according to leaked sections of the report shared on Twitter.

And you...buy Bitcoin! 😉 (it's a good time!)