Skybridge Capital Believes Bitcoin Is Trading 70% Below Fair Value

August 8, 2022

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In a week rocked by hacking attempts, cryptocurrency markets remained stable. Trading within a tight range, Bitcoin continued to hover above the 200-week moving average as the blockchain’s mining difficulty increased for the first time in 2 months.

To accompany steady bullish advances, the founder of investment firm, Skybridge Capital, shared the company’s belief that Bitcoin is currently trading 70% below the coin’s predicted fair value.

Elsewhere, Solana users tried to make sense of a Slope mobile wallet exploit, Michael Saylor transitioned from CEO to Chairman of Microstrategy to focus entirely on Bitcoin, and the Ethereum Name Service recorded its best month yet.

Skybridge Capital founder believes Bitcoin far below fair value of $40K
Bitcoin’s mining difficulty rises for the first time in 2 months
Solana-based Slope mobile wallet suffers $4 million+ hack
Michael Saylor transitions from Microstrategy CEO to Chairman
Ethereum Name Service (ENS) registrations skyrocket in July

Skybridge founder believes Bitcoin is far below ‘fair value’ of $40K

During an interview with MarketWatch, the founder and managing partner of Skybridge Capital, Anthony Scaramucci, declared that the company believed Bitcoin’s fair value stood at $40,000 and concluded that the price of the digital asset was far below where it should be.

At the time of writing, Bitcoin is trading at $23,000, which is 70% below the predicted fair value price.

According to Scaramucci, the company does not think the coin will slip much lower. “We believe that the leverage has been blown out of the system. I don’t think it’s going below the low that was reached for this cycle, which would be at around $17,500.”

He continued, “according to our fair market value metrics based on adoption, wallet size, use cases, growth of wallets, we think the fair market value for bitcoin right now is about $40,000.”

In addition to the prediction for Bitcoin, the investment firm executive predicted that the current fair value for Ethereum stands at $2,800, which would suggest that ETH is also trading at vastly oversold prices.

Bitcoin price remained steady for much of the week trading within a tight range between $22,500 and $24,500. The world’s leading cryptocurrency remained above the pivotal 200-week moving average.

Bitcoin 200-week moving average heatmap.

Bitcoin’s mining difficulty rises for the first time in 2 months

The difficulty of Bitcoin’s mining algorithm, which dictates how difficult it is for miners to add new blocks to the blockchain, has increased for the first time in 57 days. The increase follows 3 subsequent adjustments where Bitcoin mining difficulty was reduced as a result of a drop in mining power.

When Satoshi Nakamoto first created Bitcoin in 2009, the pseudonymous character implemented a rule stating that every 2,016 blocks (approx. every 2 weeks) mining difficulty are automatically adjusted.

The automatic adjustment to mining difficulty was added to ensure that the block time of 10 minutes remained constant regardless of changes to mining power. As mining power increases, the mining difficulty increases to account for the extra mining power and vice versa.

According to statistics from BTC.com, during the latest difficulty adjustment algorithm (DAA) which took place on Thursday, the difficulty was increased by 1.74%. The adjustment moved the difficulty from 27.69 trillion to 28.20 trillion, and, therefore, remains under the all-time high of 31.12 trillion.

For all Bitcoin miners supporting the network, it is now slightly more difficult to find a BTC block reward compared to two weeks ago. The Bitcoin mining power currently sits at 198.21 EH (Exahash)/s.

Bitcoin mining difficulty between 2021 and 2022.

Solana-based Slope mobile wallet suffers $4 million+ hack

On August 4th, Solana users globally were left shaken as thousands of hot wallets were compromised as part of a coordinated attack. Although the finger of blame was initially pointed toward the underlying Solana blockchain, it was later confirmed to be the result of a vulnerability associated with Slope mobile wallets.

Anxiety grew on Thursday as early reports suggested thousands of Solana users were having funds drained from a range of hot wallets including Slope and Phantom. However, a report released on Wednesday by the Solana Status Twitter account suggested that the key weakness had been identified within Slope’s mobile wallet applications.

According to the Twitter thread, “After an investigation by developers, ecosystem teams, and security auditors, it appears affected addresses were at one point created, imported, or used in Slope mobile wallet applications.” The thread continued to say, “There is no evidence the Solana protocol or its cryptography was compromised.”

Slope Finance subsequently released an official statement that acknowledged the breach. According to the statement, many of the company’s staff wallets were also drained. At the time, the vulnerability in the Slope wallet had not yet been identified.

Data collected from Dune Analytics suggests that 9,229 unique wallet addresses were affected by the hack and just over $4 million worth of cryptocurrencies were drained. SOL and USDC comprised the majority of stolen digital assets.

Assets that were hacked during the Solana exploit ranked by the total amount.

Michael Saylor transitions from CEO to Chair of Microstrategy

In an unexpected move, the serial entrepreneur and Bitcoin bull, Michael Saylor, has stepped down as CEO of Microstrategy to become the Executive Chairman. According to Saylor, the move will allow him to focus on Bitcoin.

Although some were initially worried that the move signalled a refocus away from cryptocurrencies, Saylor was quick to point out on Twitter that with his next job he intended to “focus more on Bitcoin.”

Phong Le, the company’s President is set to take the position of CEO. According to Le, the company’s strategy will not change dramatically, adding that both his and Saylor’s vision for Microstrategy has been aligned throughout Saylor’s time as CEO. Le told analysts that “I would sort of see this as a business-as-usual transition.”

Microstrategy stock jumped 15% on the day after the news was released. However, analysts suggest that the price increase was helped by a slight rally in Bitcoin.

Saylor follows in the footsteps of Bitcoin-bull, Jack Dorsey, who stepped down as CEO of Twitter earlier in 2022.

Tweet from Michael Saylor regarding his transition from CEO to Chairman

Ethereum Name Service (ENS) domains skyrocketed in July

The Ethereum Name Service, better known as ENS, recorded one of its strongest months in the company’s history last week. According to a recent tweet, in July, the company logged 378,804 ENS registrations, which equated to a turnover of 5,400 ETH (equivalent to $2.48 million at the end of July).

ENS was initially created to combat the sometimes annoying problem of long cryptocurrency wallet addresses. Wallet addresses are composed of a long string of numbers and letters. When providing wallet addresses to other people, the process can be cumbersome and mistakes can be made.

ENS combats this problem by allowing users to display long wallet addresses as simple words. The service is equivalent to the Domain Name Service that works for the Internet. Rather than typing in a number for a website, such as 104.93.1.03, users typically type in words, such as Xcoins.com. ENS allows users to do the same with blockchain addresses.

According to data from Dune Analytics, with the addition of 378,804 addresses in July, the total number of ENS names is now close to reaching 2 million. An increase in ENS names is considered bullish for the entire Ethereum-based ecosystem.