In the latest episode of the “Bittalk” podcast, hosts Akiba and Nicholas Gregory discuss the state of the bitcoin market in 2023.
The episode begins with Akiba asking Nicholas for his thoughts on the future of bitcoin this year. Nicholas starts by discussing a recent event involving bitcoin developer Nuke Jr., whose PGP key was compromised and led to the theft of over 200 bitcoin. This event led to a debate on the importance of securely storing one’s bitcoin, with the phrase “not your keys, not your bitcoin” being widely used. However, Nicholas also cautions against using multi-signature security measures, as they can be complex and should be thoroughly tested. Instead, he suggests diversifying one’s storage methods, such as using a combination of hardware wallets, multi-sig, and custodians, which may be a good approach.
Nicholas then brings up the topic of password managers, explicitly mentioning the security breach suffered by LastPass and the potential for customers to be targeted with phishing attacks. He recommends using open-source password managers such as Bit Warden and running them locally for added security.
The conversation shifts to a discussion of the current state of the bitcoin market. Nicholas presents several charts illustrating the use of futures contracts and the activity of buyers in different regions. One chart shows the relative richness of put versus call options, with green indicating a higher premium for put options and red indicating a higher premium for call options. Another chart shows the total amount of funds allocated in open futures contracts, with a peak in April and November 2021 and a decrease in risk in the following months. A third chart shows the use of cash margin versus crypto margin in futures contracts, with a significant increase in the use of cash margin in the latter half of 2021.
A CryptoSlate chart shows the month-over-month price changes for accumulation or distribution in the bitcoin market in Asia, Europe, and the United States, with Asia being characterized as the “smart money” and the other regions as the “dumb money.” The final chart shows the percentage of bitcoin supply held in long-term versus short-term investments in the different areas, with Asia holding a higher percentage in long-term investments and the United States and Europe have a higher percentage in short-term investments.
Nicholas concludes by stating that he expects risk to continue to decrease in the bitcoin market in 2023 and that there may be a “flight to safety” in the market, with investors moving towards stablecoins and cash margin in futures contracts.
Overall, the episode provides valuable insights into the current state of the bitcoin market and the importance of securely storing digital assets. In addition, it serves as a reminder that while bitcoin and other cryptocurrencies offer many benefits, they also come with unique risks that must be carefully managed.