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*Ninepoint Digital Asset Group, is a division of Ninepoint Partners LP.
(7 Day Change as of Feb 2, 2023 1:45PM ET)
Bitcoin Price: $23,818  3.22%
DeFi Total-Value-Locked: $49.98B
Ethereum Price: $1,676  4.48%
Crypto Market Cap: $1.09T
Bitcoin Range: $22,733 - $24,262
BITC.U Close: $6.98 (as at Feb 01, 2023)
Ethereum Range: $1,535 - $1,715
BITC.U NAV: $6.95
Bitcoin Dominance: 44.05%  (0.76%)
BITC.U Premium: 0.43%

Bitcoin Sentiment Check! 11 Consecutive Days Above Fear in Bitcoin Fear and Greed Index

The Bitcoin Fear and Greed Index, a measure of the sentiment of the cryptocurrency market, is currently in the "Greed" zone with a score of 61. This is the highest level since the bull run of November 2021, as Bitcoin clocked its 11th consecutive day outside the "Fear" zone, the longest streak since March 2022. The recent price surge has brought 64% of Bitcoin investors back into profit, according to data from IntoTheBlock. However, opinions are divided on whether the rally is a bull trap or a sign of a real bull run, with some experts calling for caution and others suggesting a short-term price surge toward $25,000.

Ripple Takes the Lead in Montenegro’s Crypto Pilot Project

Montenegro's central bank and fintech company, Ripple, has partnered to launch a pilot project to create the country's first digital currency or stablecoin. The project was announced by Montenegrin Prime Minister Dritan Abazović, who met with Ripple CEO Brad Garlinghouse and VP James Wallis during the World Economic Forum in Davos. Currently, Montenegro uses the euro instead of its own national currency. The exact details of the digital currency are still unclear, but the country has been working towards becoming part of the cryptocurrency industry and has gained a reputation for its acceptance of crypto. Ripple has been involved in various CBDC projects and is a founding member of the Digital Dollar Project and the Digital Euro Association.

BlockFi’s $1.2 Billion Ties to FTX and Alameda Research

BlockFi's leaked financial documents reveal $1.2 billion in assets and loans tied to FTX and Alameda Research. The uncensored reports were uploaded by mistake as part of a presentation by M3 Partners, who advises the creditor committee. The redacted documents had related to the creditor committee's objection to BlockFi paying $12.3 million in retention payments to key employees. Despite attempting to separate itself from FTX and Alameda, BlockFi remains financially linked to the two firms, with a $400 million line of credit extended by FTX US set to expire in June 2027. BlockFi filed for Chapter 11 bankruptcy in November, blaming the collapse of FTX for its financial troubles.

Institutions Not Giving Up on Crypto: The Future of Digital Assets

US institutions account for 85% of Bitcoin purchases, a "very positive sign," according to Matrixport's head of research and strategy, Markus Thielen. The data, shared in a recent report, suggests that institutions are still invested in crypto and that the industry might be entering a new "crypto bull market now." Thielen added that institutions typically begin by investing in Bitcoin before moving on to other cryptocurrencies and that we can expect layer 1 and other altcoins to outperform Bitcoin soon. The report also cites Ether and Aptos as assets that appear to be performing well with institutional investors, a positive sign for Bitcoin as institutional adoption continues.

Tesla Holds on to Bitcoin Despite Market Turmoil

Tesla held onto its Bitcoin investments in Q4 2022 despite market turbulence, as shown in their recent financial results report. Despite price declines, Tesla held its estimated 9,720 Bitcoin and recorded $5.7 billion in profits from $24.3 billion in Q4 revenues. Despite the November and December market turmoil, Tesla did not buy or sell any of its Bitcoin holdings for consecutive quarters. The company's financials show it holds $184 million in digital assets as of December 31, 2022. Despite the market fluctuations, Tesla's CEO Elon Musk and the company appear to remain bullish on Bitcoin, as evidenced by their decision to hold onto the digital asset despite the price decline.

Securities Analysis and Token Valuation: Back to the Future!

By Alex Tapscott

The first-ever stock market popped up spontaneously in Amsterdam in 1602, as a venue to trade shares in the newly incorporated Dutch East India Company, one of the first of a novel breed of organization known as the Joint-stock company. Joint stock companies in England and Netherlands were a big innovation at the time: they pooled risk and pursued large undertakings like transatlantic voyages, which had a high likelihood of failure. In the early 1800s, companies took another great leap forward with the invention of the limited liability company which made it easier to pool large amounts of capital to pursue huge industrial undertakings like building a railroad. The LLC is now widely regarded as a foundational innovation to modern capitalism, along with the steam engine and railroad locomotive. In 1926, The Economist wrote that the “nameless person” who invented the concept of limited liability deserved “a place of honour with Watt, Stephenson, and other pioneers of the industrial revolution.”i

Despite the long and illustrious history of the corporation, securities analysis - how we determine the worth and thus the suitability of the shares of a company or some other asset as an investment - is relatively modern. Benjamin Graham and David Dodd wrote their pioneering book Security Analysis, the sacred text of value investing, only in 1934.

Good Companies Are Not Always Good Investments

Graham Dodd took a while to catch on. The 1960s was a decade when many Wall Street talking heads were parroting the virtues of “The Nifty Fifty,” a group of the biggest and best run companies in the world, such as Kodak, The Walt Disney Company, JCPenney, and IBM. These businesses dominated their respective industries at a time when the American economy was the envy of the whole world. Why wouldn’t they make good investments? Investors were told to buy these stocks at any price, valuation be damned, and as a result they traded for a while at 50x their earnings, vs. a historical average of 19x!ii

Eventually, the Nifty Fifty valuations came back to earth. The Arab Oil embargo of 1973 helped pop the bubble in stocks with the Dow Jones falling 45%.iii Market participants learned one of Graham and Dodd’s core lessons the hard way: a good company does not always make a good investment. You need to also pay attention to its valuation. This is something Graham-Dodd disciple Warren Buffet has always understood, which is why he’s been able to compound the book value of Berkshire Hathaway by 20% per year compared with 10% for the S&P500.

Today, investing is a far more crowded field, with many sophisticated actors, and securities analysis is big business, practiced by Wall Street’s largest and most profitable firms. Trillions of dollars a day in trades occur based on recommendations from analysts who update their valuation and price targets based on new information that comes in a steady deluge.

Digital Capital and Securities Analysis

But what happens when companies give way to new kinds of digitally native organizations? For starters, today’s practitioners will need to do some homework to not become redundant. They are a clever bunch so that does not worry us. More pressing is that we need an entirely new framework for valuing these new kinds of organizations, enterprises and protocols. After all, if chartered companies were foundational to the mercantile age, and limited liability corporations to the industrial age, then user-owned networks – protocols, application-specific blockchains, layer-2 networks and so-forth, may come to define the next era of the digital age. The early era of Web3 bears this out: most of the leading DeFi protocols, for example, are organized as internet-native decentralized autonomous organizations (or DAOs).

Buffet was the vanguard of a new group that made outsized risk-adjusted returns (known in industry jargon as Alpha) from identifying mispriced assets. Today, similarly, there is an opportunity to make outsized returns in digital assets from identifying value. But how?

If you’re interested in learning more about valuing digital assets, check out our two most recent episodes of DeFi Decoded, and stay tuned for more research from the Ninepoint Digital Asset Group.

DeFi Decoded: How Should We Value Digital Assets
DeFi Decoded: Ethereum Goes Ultra-Sound. Is ETH the New Digital Gold?

Will Algorithmic Stablecoins Ever Work? With Sasha Ivanov of Waves
Join Alex Tapscott and Andrew Young as they decode the world of DeFi and Web3 with special guest Sasha Ivanov, Waves Ecosystem Founder. Today’s topic: algorithmic stablecoins. Will they ever work? Waves is a global open-source platform for decentralized applications launched in 2016, based on proof-of-stake consensus and a community-driven technology stack. Ivanov has announced plans to launch a new stablecoin after their current USDN algorithmic stablecoin in the Waves ecosystem depegged, angering many in the Waves ecosystem. Tune in to the 80 th DeFi Decoded episode to hear Alex, Andrew, and Sasha discuss all things stablecoins and learn more about Waves. 

Source: glassnode

#1: Bitcoin Market Strength: Forecasted by Indicator Triggers
This Glassnode dashboard, “Recovering from a Bitcoin Bear,” provides a comprehensive market analysis for investors; it uses 8 key indicators, including pricing, supply, network utilization and profitability, to evaluate the current trend of the cryptocurrency market. The recent light blue signal as of January 13 th suggests that 5 of the 8 indicators have been triggered, forecasting a period of market strength.
Source: glassnode
#2: The Realized Price and 200D-SMA Price Threshold Signal: Triggered
The first green flash since December 2021 on the Glassnode graph signals positive news for investors. Both key indicators, the 200-day standard moving average (SMA), a technical indicator that tracks the average price of Bitcoin over the last 200 days, and the Realized Price have been surpassed by the current spot price, indicating a bullish signal. This green flash, combining technical and on-chain analysis, shows that the average Bitcoin investor is now holding an unrealized profit and under less financial stress. The 36% year-to-date increase in Bitcoin's price and the 20% increase since the green flash confirm this bullish sentiment.

Source: glassnode

#3: The Revenue From Fees Multiple Signal: Not Triggered (But Trending in the Right Direction)
The Glassnode graph "Signals: Revenue From Fees Multiple" displays the absence of a yellow flash, signifying low demand for transaction activity. This is a crucial indicator for the overall health of the crypto market. Nevertheless, the Z-Score has risen by more than 35% in the past year and currently stands at -0.60. This upward trend suggests a bullish outlook for the market if the improvement continues and the Z-Score reaches a positive value.

Source: glassnode

#4: The Realized P/L Ratio in Profit (30D-SMA) Signal: Triggered
The recent blue flash on Glassnode's “Signals: Realized P/L Ratio in Profit (30D-SMA)” graph is a positive sign for the crypto market. It indicates that the market is making more USD profits than losses, and healthy demand is absorbing profit-taking. The Realized P/L Ratio considers total profits and losses, with larger transactors having a more significant impact. The 30D-SMA gives a slower but more credible signal of a sustained recovery as it analyses market activity over a medium term. The blue flash suggests a positive market outlook if the momentum can continue.  

Source: glassnode

#5: The Supply in Profit Trend Signal: Triggered
The sustained red flash on the "Signals: Supply in Profit Trend" graph by Glassnode is a positive sign for investors. It indicates that the market trend is positive, and the average spent output is realizing a profit, meaning that, on average, people who bought Bitcoin are now selling it for a higher price and profiting. The 90-day exponential moving average (EMA) volume of Bitcoin supply acquired at lower prices has increased, reflecting a trend of investor profits. This indicates that a significant portion of the investor cost basis has transitioned from unrealized to realized gains, signalling this to be a bullish indicator.