The bitcoin network experienced its 384th difficulty adjustment early yesterday and it was a big one with difficulty jumping 10.26%. Hitting a new difficulty all time high of 37,590,453,655,497 as hashrate hit a fresh historical high of 275 EH/s. This came as bitcoin experienced a 22% rally in price over the preceding week. The increase in price caused hashprice to rise from $0.062 to $0.078, making any miner who was plugged in during the rally more profitable. Hashprice has receded since yesterday's upward difficulty adjustment and is currently sitting at $0.072. All-in-all it's been a pretty good week for bitcoin fundamentals.

The question that many people are asking right now is, "what has caused the price to rip seemingly out of nowhere?" Unfortunately for you freaks, I don't have an answer. However, there are some theories out there. One that I've come across that seems plausible is a reconnection with a correlation to gold that may have been temporarily broken by the FTX blow up.

It's possible that as the dust has settled the market began to realize that FTX and bitcoin aren't the same thing. The network has operated as advertised throughout all of the chaos, is still standing, and is significantly underpriced if you believe it should be trading similarly to gold, which has been rallying in the face of global economic tremors emenating from Japanese bond markets, global real estate markets, and the market for automobiles, among other signs.

Another theory is that people have been waiting for the beginning of the year to begin accumulating. 2022 was a brutal year for all markets and if investors wanted to lock in losses for tax purposes it wouldn't make sense to begin buying bitcoin before January 1st lest they risk running up the price, which would have hurt their chances to lock in optimal losses on their tax returns.

Lastly, we could be witnessing a large actor or a number of large actors in the public markets begin to accumulate bitcoin on their balance sheets. Many companies have cash rich balance sheets and few areas outside of bonds to allocate to in hopes for meaningful returns as an economic crisis seems to be upon us.

At the end of the day, all of these are just theories. The reality of the situation is that there are currently more buyers than sellers. Your guess is as good as mine as to who those buyers are. But it's always interesting to think through these possibilities.

Regardless of who is buying and why, bitcoin is doing what it does best; enabling peer-to-peer censorship resistant transactions while enforcing a strict monetary policy. Bitcoin is reliable and in a world of increasing chaos that reliability is a godsend. I am of the opinion that the world is not properly pricing that reliability at the moment.

Clip of the day...

Not a clip but a whole rip. James O'Beirne walks me through his latest proposal, OP_VAULT, and gives a sobering breakdown on the state of bitcoin development. Subscribe to the TFTC Clips channel to get high-signal-bite-sized pieces of content.

Final thought...

Late Sunday nights by the fire lead to rough Monday mornings.