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Issue #398: UTXO analysis, nearing a bottom?

Issue #398: UTXO analysis, nearing a bottom?

Jan 15, 2019
Marty's Ƀent

Issue #398: UTXO analysis, nearing a bottom?

Mmmmmmm, you smell that, freaks? That's the smell of some high-quality UTXO analysis from our friends at Delphi Digital. In this particular analysis, the Delphi team dives into historical trends within the UTXO set to try to discern where we may see a bottom in this bear market. It's fascinating to see human nature played out in the form of HODL waves compared to price charts. In the future, our ancestors may look at this data to try to discern who we were exactly, the nature of our actions, and our (mis)understanding of Bitcoin.

Take a dive into Bitcoin's UTXO set.

According to their analysis, the Delphi team believes we're in the midst of an accumulation phase similar to the end of 2014, which may mean we're near a bottom of this bear market. Obviously, take all of this with a grain of salt, past performance is not indicative of future results, blah blah blah. If their inferences are correct, it seems as though we should bottom out at some point in April of this year, followed by a prolonged period of accumulation. Though, I'm a strong believer in the idea that Bitcoin can pump at any time if the surrounding macro conditions are perfect enough.

All in all, a great read for any of you freaks looking to get more familiar with the nature of UTXOs, how we track them over time, and what the destroying of bitcoin days tells us about market cycles and human nature.

Very good point

Let's not make this mistake again.

Our friend Hasu makes a very good point in the thread above. We can't make the same mistakes we did in the past by assuming the current state of things in and on top of Bitcoin are indicative of future conditions. There was a time when we marketed Bitcoin at the protocol layer as fast and cheap. Both turned out to be untrue as time moved on, more people began to use the network, and demand for block space drove fees up significantly, rendering that narrative DOA.

While the Lightning Network is in its infancy, we must restrain ourselves from making the same false promises. I myself am guilty of this at times. It's always nice to have the angel on your shoulder. In this case, our cycloptic friend Hasu acts as that voice of reason urging us to look at history and tame our expectations accordingly. Understanding the simple concept of "nothing is free in life" should be a good premise from which to approach things. It would be foolish of us to expect the current condition of the Lightning Network fee market to last in perpetuity. There will be demand for efficient payment routers and users will pay a premium (in fees) to utilize them.

As an aside, I'm also a strong believer that more people need to come to grips with the concept that "life isn't fair". A lot of confusion out there because too many people assume it is or should be. Accept the reality of being born on a rock flying through space, and act accordingly.

Final thought...

Making coffee at home on the reg for the last 4-5months has aged me significantly. There's something about prepping the coffee pot the night before that has me feeling old inside.


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