BTC Sessions - Plan B: $288K Bitcoin Nears, Raoul Pal Expects 50X, DeFi Bubble Insanity EP091

Episode Date: September 1, 2020

SUPPORT THE SHOW: LEDN offers Bitcoin backed loans – Sign up and get $50 free https://bit.ly/2YC32Q1 Get Wasabi wallet and enjoy your Bitcoin privacy https://wasabiwallet.io/ Buy a Cobo Vault to secure your Bitcoin! https://bit.ly/2GgMFlH Crypto Cloaks: Get the BEST Bitcoin swag out there https://www.cryptocloaks.com/shop/ If you value my work and would like to send me a tip, they are always appreciated! LIGHTNING tips: https://tippin.me/@BTCsessions Join my Telegram channel! https://t.me/btc_sessions SHOW RESOURCES: Stock to flow working “like clockwork” according to Plan B. $288K inevitable? https://cointelegraph.com/news/bitcoin-is-targeting-288k-stock-to-flow-price-like-clockwork-planb https://digitalik.net/btc/s2fx Fed zero rates “for years” and increased inflation https://www.cnbc.com/2020/08/31/the-fed-could-be-locked-into-zero-rates-for-five-years-or-even-longer.html Raoul Pal says BTC to outperform gold, could 50-100X https://www.btctimes.com/news/raoul-pal-bitcoin-to-outperform-gold-has-potential-to-50x Miners see 23% revenue increase for August https://www.coindesk.com/bitcoin-mining-august-revenue-increase Swiss online retailer Digitec enourages full node use, maximalism, coin mixing and great podcasts https://twitter.com/simonlutz21/status/1300822063154855936 Electrum wallet phishing scam https://decrypt.co/40253/bitcoin-holder-loses-16-million-in-btc-to-well-known-scam https://decrypt.co/40408/another-bitcoiner-claims-he-lost-430000-in-electrum-wallet-scam DeFi Bubble getting insane https://cointelegraph.com/news/defi-bubble-still-growing-fast-data-from-twitter-analyst-shows https://cointelegraph.com/news/vitalik-buterin-compares-defi-tokenomics-to-the-fed-s-money-printer Tether flippens XRP https://cointelegraph.com/news/tether-surpasses-xrp-by-market-cap-again

Wasabi wallet and fairly private. What is up, everyone? I'm Ben with the BTC sessions and this is your daily session. Before we dive in, I want to give a big shout out to sponsors of the show ledden.i. This is where you can use your Bitcoin for a variety of different services. I've been working with and using these guys for well over a year. The first thing I ever used with their Bitcoin backed loans when I was in a pinch and I needed I didn't want to sell my Bitcoin because that's taxable and I was worried about buying back in at a higher price point.

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So do check them out. These guys are awesome. Up next, Kobo Vault, new entry to the show. I did a video on this product not long ago. I was curious, I had one to play with. Fucking awesome. Honestly, it's becoming one of my... I regularly used wallets in my arsenal and I tend to use this one quite quite often.

And why? Why? So there's a lot of awesome things about it, but I want to point out a couple different things. Number one, that for me really sealed the deal is compatibility when it came to all of my favorite wallets. We've got Electrum, we've got Wasabu Wallet, we've got Blue Wallet, we've got Bitcoin Core. You've got just a plethora of options on. on top of their dedicated app that you can get and use if you so please. But I mean, given how much I love Wasabi, how much I love Blue Wallet, and I use Electrum regularly, it was a no-brainer for me to want to use this. Furthermore, they've got excellent support for multi-sig, which I've been doing a ton of videos

on, so do check that out. They also support Specter, and there's more compatibility coming down the road. And beyond that, this thing, is air gap. And so what does air gap mean? It means that your transaction is fully signed and approved offline. So you never actually plug this device into a computer. You actually sign it via QR codes back and forth. So the only information that gets sent to your computer via QR code is a pre-approved transaction by you going to a specific address, which you can audit quite easily through the QR codes if you so choose. So I highly

recommend check out Kobo Vault. Again, these guys have been working like crazy and check out my tutorial of how to use them because I think you'll really enjoy it. So thanks to kudos to kobo and kudos to kobo on such a good job, but thanks to kobo for joining the show. And finally, crypto cloaks. Have you guys heard of crypto cloaks? They are fucking awesome. A bunch of awesome bitcoinsers got together, got some 3D printers, and started making rad shit. They've got boxes for your nodes. They've got these cool little grenades, which you can put open dimes in from the coin cart store. They've got, we'll talk about the Bitcoin Honeybadger in a minute. Stickers, swag, covers for your hardware wallets, um, coasters. They've got just about

every cool little bit. Like they've got a rap, Bitcoin rabbit hole nightlife. These guys are fucking rat. You probably actually heard of them with the wave of controversy around the Heddle node or the Held shell. Dan Hedel, Dan Held, got together with them

and designed his own shell for a node, which is a beast of an node shell. It's actually quite pretty. Cool little LED lights and everything. I highly recommend you guys check these guys out over at Crypto Cloaks. This is what

I plan on getting on the shelves behind me here, the Bitcoin Honey Badger. So this is like, it's a little like a statue almost, but you can also hide things in it. So like you can hold your hardware wallets inside the larger one here. You can fit all of your hardware wallets in it depending on what you have there. But again, awesome product, awesome guys. Follow them on Twitter too because they tweet some hilarious and awesome things and they're quite active there. So do check them out.

out. I can't thank these guys enough for joining the show because I've really loved everything they've done. They sent me a while back a shell from my Ledger NanoS that drills into the desk. Thing lasted forever. So do check them out. These guys are friggin awesome. Crypto cloaks. And with that, let's dive into the show. So Bitcoin has been making some advances in the price lately. And what's interesting is it seems to be following plans. B's stock to flow model very, very well. To quote his words, like clockwork. So let's read a little bit from this Coin Telegraph article here.

So Bitcoin is heading to its $288,000 and higher price target like clockwork as fiat currency woes mount and European inflation goes negative. In a tweet on September 1st today, creator of stock to flow model, Plan B said that the BTC slash USD price had performed exactly as expected in August. Another month, another red dot. Listing the monthly closing price since May's block subsidy having, Plan B noted that each corresponded to the predictions of his stock-to-flow cross-asset model. Now, he's done a few different models based on different sets of data,

but we seem to be leaning towards this cross-asset model where every Bitcoin epoch, every four-year cut in the supply of new coins coming onto the market, may indeed correlate with a different narrative of use cases. So some of those could include a lot of people think that maybe coming up to that of gold could be next. and perhaps even things like nation states coming on and starting to buy up Bitcoin as part of their reserve. I think what we're seeing right now is we're seeing a lot of companies start to use Bitcoin as a reserve asset. And that may be the theme of this kind of Bitcoin epoch, of its issuance epoch of this four years. But we will see. Anyways, reading on here, he said, Bitcoin like clockwork, Bitcoin has now put in its fourth so-called red dot. on the Stock to Flow chart since May.

According to performance after the previous two halvings, that leaves just months before a major price surge ensues. According to the Stock to Flow cross-asset model, the current halving cycle, which like the other last four years, should produce a Bitcoin price focal point of $288,000 per coin. The top, the creator plan B, previously explained could be more than double that as it does tend to

overshoot the model asset the asset model prices so again if we pull up this is an excellent site here if I can just get to it the stock-to-flow cross-asset model you can track it live and compare it with the projected versus price end of the day and you can see based on kind of a rolling average of four hundred and 63 days and a rolling average of 10 days, we are below the stock to flow asset model as we have been in the past. The stock to flow model, if it holds up, if it actually does indeed continue to function as it has historically, then it acts as kind of like a tether to the Bitcoin price. It can fluctuate around it, but it's like an elastic band pulls it back towards the mean.

We can go below, we can overshoot, but it does tend to settle back to it. And if we look, again, as we get towards this stock to flow, if we start to follow this, then in short order we could be seeing new all-time highs in perhaps a matter of months. Now, it does tend to lag, especially as we hit some, as we hit the halving in May. It does tend to lag behind the stock-to-flow model. And it does seem to be, to me, anyways, following the previous model a little bit more tightly, but again, time will tell, and it is exciting to watch nonetheless. And there's a lot of macro things affecting this too.

So the Fed, the chair Jerome Powell, had a speech previously where he talked about how they're not really going to be worried about 2% target inflation anymore. They're just going to do whatever it takes to get inflation going. So they're not going to try and hit a ceiling and stop it there. They're just going to try and make inflation happen, which means the money printer will indeed continue to go burr quite a bit. So just a little bit here. Interest rates near zero, this by the way from CNBC, interest rates near zero likely will stay in place not for months, but years.

as the Federal Reserve seeks to re-engineer an economy characterized by low inflation and an uneven labor market. Wall Street is prepping for a return to the post-great recession days when rock-bottom short-term rates prevailed for seven years before the Fed even tried to move them higher, which, as we saw, didn't fucking work because they then had to inject capital into the overnight repo markets. It was insane. The problems that we're seeing now with the economy, were around far before the virus happened. We saw overnight repo markets injections happening as early as last September, so over a year ago, so well before there was any sort of panic around this stuff. Anyways, moving on here, Fed officials have outlined a revised policy in

which it will now target average inflation, meaning a higher tolerance for inflation above 2% before hiking interest rates from current levels. In the past, the Fed would look to cut rates when unemployment began to fall as a sign that inflation would not be far behind. In the present circumstances then, the remaining question will be how deep the Fed's commitment to inflation will run, what will be considered full unemployment, and how many years that will mean for zero interest rates. So what they're talking about when they're saying high tolerance for 2% and how they're talking about average inflation, what they're saying is if they were under that 2% inflation rate for any of the previous years, they can then average that out by

above average inflation for future years. And apparently they've been under inflation for an extended period of time. So they could definitely be seeing much higher, potentially even double-digit inflation if they are not careful. And I would not be surprised to see that. The other thing about inflation here is it is calculated by what's known as the CPI, the consumer price index. However, the CPI does not take into account important things like fuel and housing and food, all the shit that you buy on a regular basis. So when you're looking at inflation, it's nowhere near what is actually what you're feeling as an individual when you go and buy things. It's just a small set of assets that they dictate. So it's really not reflective of what the day-to-day average

Main Street consumer feels as far as inflation goes. So I don't know, the data here is just absolute garbage. Now, another person bullish on Bitcoin is Raal Paul. And he's been talking about how Bitcoin is likely to outperform gold as a potential to grow 50-fold. So just a little bit from what he was saying here is that why Bitcoin over gold? So Bitcoin has all the characteristics. By the way, this is the BTC Times, Bitcoin Times. Check them out if you haven't checked out of the Bitcoin Times. They've got some solid content that doesn't delve too much into this shit cornery.

So they've been pretty good with that so far. So happy with this publication here. Anyways, why Bitcoin over gold? Bitcoin has all of the characteristics of a safe haven asset. It is censorship resistant, portable, and scarce. Gold, too, is scarce to its limited supply. But unlike Bitcoin's monetary supply, the gold. The gold supply is not fixed.

Is there a limited amount on Earth? Yes, but other factors. The amount of circulating gold could potentially increase if a large supply of the precious metal is discovered. Although the probability of this happening is low, it exists nonetheless. Meanwhile, the fixed supply of Bitcoin at 21 million is practically unalterable given the Bitcoin network's decentralized nature. on the superior scarcity of Bitcoin and its other advantageous characteristics, the argument that

Bitcoin could outperform gold remains strong. Atop Bitcoin's fundamental strengths, the massive market capitalization gap between Bitcoin and gold is believed by many to give Bitcoin's superior growth potential in the medium term. As Tyler Winklewos wrote in a recently published essay, the gold market cap is currently estimated at $9 trillion. Considering that Bitcoin's market cap hovers around $212 billion as of August 29th, so this is a couple days back, if Bitcoin catches up to gold, which avid Bitcoin proponents believe to be entirely possible, it would happen through a 42.5-fold upside. So Ralph Paul said about this, Powell and Paul Jerome Powell, the chairman of the Fed, has shown that there is zero

tolerance for deflation, so they will do anything to stop it. And that is good news for the two hardest assets, gold and Bitcoin. Powell wants inflation. I don't think he gets true demand push inflation, but he will get fiat devaluation in conjunction with the other central banks all on the same mission. Overall, I think Bitcoin outperforms gold. Gold can go up 2x or 3x or even 5x. Well, Bitcoin can go up 50x or even 100x. And Raul famously said in the last couple of weeks here that he is irresponsibly long Bitcoin. So he's definitely well allocated. And if we look at the Bitcoin price charts today, we've seen a nice little bump over the last 24 hours. We are back, I mean, at the time of recording over 12K. So far today has only,

it hasn't quite hit 12,100. It got up to around $12,070. We'll see if this 12K threshold holds or not. We probably will be bouncing around a bunch. And who knows, it could change quite a bit by the time this actually airs. But nonetheless, exciting times for Bitcoin. I am bullish as fuck if you're not sure about that. Let's move on here. Bitcoin miners saw a 23% revenue increase in August. Not because of what you think.

We've just been talking about bullish price action. Actually because of on-chain fees. Okay. So a few points here. Zach Vohl, writer here at CoinDesk. Kudos Zach. Thanks for this article here. Bitcoin miners enjoyed a 23% increase in revenue during August, driven by higher network fees from increased on-chain transaction volume, as Bitcoin avoided a daily close below $11,000 throughout the entire month. That's pretty big. Like, Bitcoin has been on a sustained price hike above $10,000.

the second longest period in history. The only longer time was the run up to our all-time high, and we've just surpassed the previous length of time that we were above 10,000. So that's a good sign. But besides the fact, Bitcoin miners generated an estimated $368 million in revenue in August, up from $300 million in July,

and the third consecutive monthly increase in minor revenue, according to Coin Metrics data analyzed by CoinDesk. Revenues estimated, estimates assume miners sell their bitcoins immediately. Now, the network fees brought in $39 million in August, or 10.7% of total revenue, setting the highest percentage of fee-generated revenue in over 18 months. Correspondingly, average daily fees continued July's upward trend, staying above $2 for the entire month of August, according to Coin Metrics data. Now, an important note on fees, if you are worried about Bitcoin fees, there's a few things

you can do. One, get yourself a wallet that has Beck 32 addresses. This is called Native Segwit. It's the most, we'll say it's the most efficient way to utilize the Bitcoin network as far as fees are concerned. This is simply a Bitcoin wallet where the addresses start with BC1. So some of the wallets that I said work with the COBO that I mentioned, a lot of. Electrum, Wasabi Wallet, Blue Wallet, all of those have Beck 32 addresses either as an option or by default.

Okay, so get yourselves one of those and you'll be off to the races. The other thing you can do is you can do things like batching transactions. If you need to send out multiple transactions to multiple parties, you can do that in one fell swoop by designating multiple destinations all in a single transfer. This is very easy to do via blue wallet, so be sure to check them out. You can also do it in Electrum and Wasabi. So, and again, just watching for, do you really need it confirmed right away, or is it going into cold storage? Like if you're putting it on your cobo or something like that, then all you need to do is just set the bare minimum fee. A few sats, you'd be fine, especially if you're holding it for a long period of time.

So don't overpay in fees, be cautious, and start to lower. learn about how to mitigate those costs. Moving on here, this just from Twitter I found, the biggest Swiss online retailer with over $1 billion worth of revenue is explaining the importance of full nodes, warning about shit coins, and advising people to mix coins and recommending Tales from the Crypt, which is an excellent podcast, check it out,

and Stefan Lavera, another excellent podcast. That's pretty cool. So these guys are called digital tech. They basically online retailer that does a lot of tech related stuff. And they started to accept Bitcoin through a third party for payments above 200 Swiss francs. According to a recent article, they had over 1.1 million of revenue, mostly through Bitcoin and Ethereum. That second part is unfortunate since they started accepting crypto last year. So thanks Simon Lutz for the heads-up on this recent development out of Switzerland.

So cool to see. Let's move on here. This is a warning to anybody out there running old versions of Electrum Wallet. So I love Electrum Wallet, but you have to be careful what software you're running. Somebody was scammed out of $16 million who were the Bitcoin because they were running an old version of Electrum and they fell for a fishing scam. Now this scam and this kind of exploit is not new and it's been patched and new versions you won't be susceptible to this. But if you're running something old, if you haven't opened up to Electrum in a while, you're going to want to get the new version of it. Go directly to the Electrum website.

And if you get a pop-up while you're trying to execute a transaction that says download the latest version, do not click it. they won't prompt you to do so, that will likely be a fishing scam if that happens. So I'll just read a little bit here. A year-old GitHub thread dedicated to Electrum-based fishing attacks sprang to life yesterday when a user claimed to have had 1,400 Bitcoin. Oh my God. To even have 1,400 Bitcoin in the first place.

$16 million stolen after falling for an old trick. The user said, I had 1400 Bitcoin in a wallet that I had not accessed since 2017. Shit, explained the Bitcoin holder. I foolishly installed the old version of the Electrum wallet. My coins propagated. I attempted to transfer about one Bitcoin, however, was unable to proceed. A pop-up displayed stating I was required to update my security prior to being able to transfer funds.

That's a red flag. Wallets will always let you send out, even if you have an older version. If you're unsure, go to the official website, check online before doing anything. Take your time, step back, and think anytime you see something that's fishy with any wallet whatsoever. Just be careful. According to the luckless holder, the update immediately triggered a mass transfer of funds to an unknown address assumed to be the scammers. Now, this wasn't the only guy recently that got caught with his pants down with Electrum. Another Bitcoin claims he lost $430,000 in the same Electrum wallet scam.

This article also from DeCript, yet another GitHub user, has claimed he lost 36.5 Bitcoin. Again, just to have like 36 Bitcoin sitting there in the first place and then to lose it, due to an exploit in an outdated version of Electrum Wallet, adding over $430,000 to the cash of $2,171 Bitcoin. roughly 25 million. The hackers have reportedly stolen this way since 2018. $25 million they've made off with so far. As DeCrypt reported yesterday, the GitHub user claimed that he lost a whopping 1,400 Bitcoin

after accessing his electron wallet for the first time since 2017. Again, the patch since then, exploit triggered a mass transfer of funds. And this new guy said, I had a similar situation two months ago. 36.5 Bitcoin was stolen from my address. Um, he said some of the stolen Bitcoin went to Binance, but they ignore my appeals and do not return. Yeah. That's rough. Yeah, guys, be so careful.

If you ever see anything fishy, take a step back. You don't need to execute the transaction right away. Just think. And if you're unsure, look online. Double check. Just double check. Okay. Moving on, uh, defy.

Oh my God. Defy. defy bubble the defy bubble is crazy those of you not sure defy decentralized finance complex financial derivatives on top of ethereum so the defy bubble is still growing fast data from Twitter analysts shows so data from May June July and August showed defy crypto assets have surged in price on average

42.9% 56% 60.5% and 165% and 168.4% to month over month, massively, massive monthly gains for any asset class according to a chart posted on August 31st by Paribus on Twitter. However, Vitalik, the creator of Ethereum, as much as I don't like Ethereum, he's right here. He's talking about how ridiculous that is. So I'll read a little bit from Coin Telegram. Vitalik Buterin, the co-founder of Ethereum, has again taken to Twitter to warn against naive bullishness in the decentralized finance sector comparing the economics of yield farming tokens to the Federal Reserve's money printing.

Yield farming, which is providing liquidity to earn interest in the form of tokens, to break that down further, you provide Ethereum or Rap Bitcoin or something like that to be traded and utilized in other ways, and you earn interest in the form of certain types of tokens, which supposedly have value. Anyways, it's taken the crypto community by storm and sparked the defy boom. However, Vitalik highlighted the aggressive supply inflation of many governance tokens, saying that this puts downward pressure on prices of coins that are getting printed nonstop to pay the liquidity to providers. So essentially what's happening is people are depositing some form of Bitcoin or Ethereum,

and they're getting kickbacks in these tokens, again, which are supposedly worth money, but those tokens are just being minted like crazy. It's like the Fed Money printer going crazy, but like worse. He said his quote is, seriously, the sheer volume of coins that need to be printed nonstop to pay liquidity providers in these 50 to 100 percent per year yield farming regimes makes major national central banks look like they're all run by Ron Paul. Of course, Ron Paul being the end the Fed person who's a former presidential candidate that basically wants to audit and or end the Fed. And again, Boutarin is not, Vitalik is not alone his assessment of the inflationary aspects of the defy sector with Twitter user Larry PC,

likening yield farming to a giant Ponzi scheme. He replied and said, yield farming at this point is just a giant Ponzi. Someone forks a well-established project, makes minimal changes, and then gives it a funny name. Some insiders farm a large amount of coins, shill it on social media, and dump it on naive investors at massively inflated prices. Now, getting into the end of the article here, they say, not everyone is a skeptic, with investor David Lack responding, if you see those printed coins as new cryptocurrencies, then yes, it's insane. But if you see them as equity in new crypto startups or projects that generate cash flows, it's not that crazy. There will always be new startups with real potential in crypto.

And I think this is king shit take of everything. Why? This is literally the ICO boom, 2.0. If you think that all these projects that are pumping out 50 to 100% year over year annualized returns just by virtue of printing these. tokens that are supposedly going to be worth something in the future, your head is so far up your ass because it's the exact same tactic that all of these ICO founders had in 2017. Oh yeah, we're building this. They throw word salad at you of what they're trying to build, even if it doesn't make sense, it sounds overly technical, so, you know, the average investor

looks at it and goes, yeah, it sounds legit, and then they dump money into it, and whoever's left holding that bag of tokens at the end of the day gets absolutely destroyed. I'm going to call it right now. Most of these defy tokens will be worth maybe single digit percentages of what they will be at their peak. Not saying they're not going to pump in the meantime. Shit's crazy right now and I expected to be crazier in the coming year. But this is not going to be sustainable.

This is absolutely insane. I don't know, man. we'll see what happens. I expect further craziness. I expect tons of people to be puffing out their chest saying, look at all these gains I made, but I expect a lot of people to make a lot of bad moves and get very, very screwed by this stuff.

So be careful out there. And finally, I just wanted to touch on this really quick because another instance of Play Stupid Games, Get Stupid Prizes. Tether surpasses XRP or Ripple by market cap yet again. So Tether, USDT, the world's largest staple coin by market cap, is again outperforming major alt-coin XRP. On September 1st, Tether surpass XRP as the third largest cryptocurrency by market cap, becoming the second largest alt-coin after Ethereum. As a press time, USDT market cap accounts for more than $13.4 billion, according to data from

cryptoanalytic site, Coin360. XRP is now the fourth largest coin by market cap at 13 billion. The latest movement in ranking is not new to the coin market cap crypto market in 2020. Tether outstripped XRP as the third largest back in May previously. Both cryptocurrencies have significantly increased their market cap since then. As reported, Tether previously surpassed XRP at a market cap of around $8.8 billion, while XRP's market cap accounted for $8.6 at the time. So obviously they've both grown since that time.

So here it is on coin market cap. You can see Tether, things have changed a little bit. It's around 13.4 billion, whereas XRP is 13.1. Still, really, none of this should matter. What should matter is valuing your wealth in sats, because if you're dumping money into something like XRP with your sats, you're probably losing them. As we can see, like as the manias really kicked off,

People were dumping in a lot of the, especially like some of these peaks, 20,000 sats for XRP, and today it's at around 2,000. So, you know, if you were buying into the major FOMO and some of these spikes when they were yelling that it was going to flip in Ethereum and flip in Bitcoin, then there's a good chance that you lost 90% of your Bitcoin that you parked in XRP at that time. So again, be careful trying to play those stupid games and you won't get the stupid prizes that comes with it. I'm going to wrap up there, guys. Thank you so much for watching and or listening.

Please do remember to hit like, subscribe, and share. All of those things are very important and really do help the show. If you want to help in another way, you can hit up the sponsors that I mentioned down below. That was Ledden. That was Kobo Vault and that was CryptoCloaks. They're all in links down below. Check that out. And if you really loved what you saw, you can always drop me a like.

Lightning Network tip at my tipin.me page. That is t-i-p-p-in.m-me-slash at BTC sessions. And with that, I'm out. Have yourselves a wonderful evening, a wonderful rest of the day, wherever you are. And I'll see you next time for your daily session.