{"id":2717,"date":"2023-11-22T13:08:07","date_gmt":"2023-11-22T12:08:07","guid":{"rendered":"https:\/\/www.mereau-finance.com\/letter\/lettre-n31-a-mi-chemin-entre-la-capitulation-et-leuphorie-le-mirage-de-la-monnaie-fiduciaire\/"},"modified":"2023-11-22T13:08:07","modified_gmt":"2023-11-22T12:08:07","slug":"letter-n31-halfway-between-capitulation-and-euphoria-the-mirage-of-fiat-currency","status":"publish","type":"letter","link":"https:\/\/www.mereau-finance.com\/en\/letter\/lettre-n31-a-mi-chemin-entre-la-capitulation-et-leuphorie-le-mirage-de-la-monnaie-fiduciaire\/","title":{"rendered":"Letter No. 31: Halfway between capitulation and euphoria; The mirage of fiat currency."},"content":{"rendered":"

Hello everyone,<\/p>\n\n\n\n

The purpose of this letter is to inform you about the current situation of the crypto-asset market as well as recent news in this field. This letter is not investment advice, but merely a sharing of my personal point of view.<\/p>\n\n\n\n

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News<\/h3>\n\n\n\n
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According to Coinbase, \u00abbillions\u00bb will flow into the crypto ecosystem thanks to ETFs \u2013 Why?<\/a> Will millions of dollars flow into the ecosystem by the end of the year? That is the prediction of the Coinbase exchange platform, which is betting big on the approval of Bitcoin ETFs in the United States. What is it forecasting?<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

BlackRock has filed its spot Ethereum ETF application with the SEC<\/a>. BlackRock, the world's largest asset manager, is officially entering the race for spot Ethereum ETFs after filing an S-1 form with the US Securities and Exchange Commission (SEC).<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

Commerzbank: Germany's 2nd largest bank obtains a cryptocurrency license<\/a>. This week, Commerzbank obtained a license enabling it to offer cryptocurrency custody services. It thus becomes the first major German bank to obtain this type of authorization.<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

\u00abCentral bank digital currencies (CBDCs) can replace cash,\u00bb according to the IMF managing director<\/a>. Are we heading toward a cashless world? That is the conviction of Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), who took a swipe at \u00abprivate\u00bb currencies along the way. What are we to make of this?<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

PayPal praises the blockchain as a revolution in payment methods<\/a>. In a blog post about payment technologies, PayPal touted the revolutions brought to this sector by the blockchain. The company also discussed its own work on the subject.<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

eID: the digital identity proposed by the European Union that nobody wants<\/a>. The European Union's eIDAS regulation, which aims to revolutionize online interactions through the introduction of a digital identity, is closer than ever. However, this innovation raises privacy concerns, questioning the balance between efficiency and individual freedom. Are decentralized identity projects in danger?<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

Launder dirty money in crypto? Totally has-been for the FBI!<\/a> The party is over.<\/em> It was only a few years ago that it was still possible to use cryptocurrency to launder dirty money and turn your loot into bitcoins or je-ne-sais-quoi<\/em> other. But the authorities no longer hesitate to trace the blockchain in order to find and dismantle the networks that thought they were safe behind wallets offshore<\/em>. American justice does not mess around with fraudsters, and cryptocurrency is definitely no longer an invisibility cloak for criminals.<\/p>\n\n\n\n

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Fundamental Analysis<\/h3>\n\n\n\n
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Bitcoin's price over the last six years in euros and on a logarithmic scale.
Source : https:\/\/www.coingecko.com\/fr<\/a><\/figcaption><\/figure>\n\n\n\n
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At the time of writing, the price of Bitcoin is 37,310 $ (on 11\/20\/23).<\/p>\n\n\n\n

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Halfway between capitulation and euphoria:<\/span><\/strong><\/h4>\n\n\n\n
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We are probably halfway between the capitulation phase we experienced from May 2022 to March 2023 and the euphoria phase we should experience from December 2024 to May 2025.<\/p>\n\n\n\n

We can clearly see the pattern of these cycles in the Glassnode indicator below.<\/p>\n\n\n\n

This\u00a0Binary Spending Indicator (SBI)\u00a0<\/em>indicate whether long-term holder (LTH) sales are of sufficient intensity to decrease total LTH supply. This currently indicates that very little spending is being done by long-term holders, adding further evidence of the decreasing supply of Bitcoin in circulation.<\/p>\n\n\n\n

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Binary indicator of long-term holder spending
Glassnode<\/figcaption><\/figure>\n\n\n\n
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All investor cohorts are accumulating together:<\/span><\/h4>\n\n\n\n
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A distinct shift has occurred since late October of this year: investors of all portfolio sizes (10k BTC) have substantially accumulated their holdings. <\/p>\n\n\n\n

We can see these accumulations by investor cohorts in the chart below. The blue areas correspond to the buying zones.<\/p>\n\n\n\n

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Cohort trend accumulation score
Glassnode<\/figcaption><\/figure>\n\n\n\n
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Long-term adoption increases Bitcoin token distribution: <\/span><\/h4>\n\n\n\n
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As adoption continues, the growing number of small-scale holders, also known as \u00abShrimps\u00bb (meaning those holding less than 1 BTC), is increasing gradually. Other designations are also listed in the legend of the chart presented below.<\/p>\n\n\n\n

Contrary to popular belief, token dilution, or distribution, increases over time. The influx of new participants generates more energy (in the form of monthly income, for example) that they can spend to acquire new tokens.<\/p>\n\n\n\n

Substantial investors, also known as \u00abwhales,\u00bb who are generally the early arrivals, see the value of their tokens appreciate. However, they tend to decrease their total token holdings as they are forced to diversify their portfolios at a certain stage.<\/p>\n\n\n\n

The major trend to watch is clearly the decrease in the number of miners as token holders. The industry has become so large that their influence has diminished compared to the early days of the Bitcoin network.<\/a><\/p>\n\n\n\n

<\/div>\n\n\n\n
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Distribution of Bitcoin tokens by investor cohorts
Glassnode<\/figcaption><\/figure>\n\n\n\n
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Gold reveals the illusion of fiat currency (euros, dollars, etc.):<\/span><\/h4>\n\n\n\n
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The cost of houses has seen an increase for those who use government fiat currency. However, if one evaluates this cost in terms of real money, that is to say in gold, the price of a house is actually slightly lower than it was several decades ago. This is what would happen if we envisioned a situation where inflation was nonexistent for a period exceeding 50 years.<\/p>\n\n\n\n

Gold highlights the fragility of fiat currency while preserving purchasing power. While the average cost of a home in the United States increased from 73,000 $ to 514,000 $ between 1979 and today, the amount of gold required to purchase a home (268 ounces) has remained constant over that same period!<\/p>\n\n\n\n

Here is a visual representation of the situation below; this graph is very important to understand:<\/p>\n\n\n\n

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Amount in gold\/dollars needed to buy a house in the USA.
Or.fr<\/figcaption><\/figure>\n\n\n\n
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The price increase results almost exclusively<\/strong><\/span> due to the fact that we examine prices through a filter that distorts reality: fiat currencies (the euro, the dollar, etc.).<\/p>\n\n\n\n

It is as though we were constantly wearing sunglasses, day and night, throughout both the summer and winter seasons: the average light level perceived throughout the entire year thus becomes artificial and does not reflect reality.<\/p>\n\n\n\n

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Our service<\/strong><\/h3>\n\n\n\n
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We offer a discretionary portfolio management service specializing in digital assets. We provide comprehensive, end-to-end human support in this space by personalizing your portfolio allocation according to your risk profile and situation.<\/p>\n\n\n\n

With our turnkey management approach, you can take advantage of industry trends without worrying about digital asset selection, in-depth token research, volatility, arbitrage, and more. You simply need to review your monthly reports and invest regularly, adopting a long-term perspective (4 years and more).<\/p>\n\n\n\n

We do not engage in daily algorithmic trading; we focus exclusively on long-term investments in projects we know and understand. Our monthly portfolio rebalancing is accompanied by an in-depth analysis of the assets, with a particular focus on their tokenomics.<\/p>\n\n\n\n

Check out our website: https:\/\/www.mereau-finance.com\/<\/a><\/p>\n\n\n\n

For any questions, observations, or if you would like to learn more about our services, please feel free to contact us by email at tristan.g@crypto-assets-management.com<\/a> or to schedule a brief phone call afterwards this link.<\/a><\/p>\n\n\n\n

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Discovery Pack<\/strong><\/h2>\n\n\n\n
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Investment of under \u20ac20,000 <\/strong><\/p>\n\n\n\n

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