Bitcoin Market Intelligence FTW: Interview with Jan Wüstenfeld

Jan Wüstenfeld is an economist, analyst and Bitcoiner. He has made a name for himself in the Bitcoin space with analyses of various Bitcoin statistics, on-chain metrics, but also assessments of central bank approaches and bond market developments.

Jan in portrait

"I'm 32 years old and away from the Bitcoin space, I'm doing a PhD in economics at the Ruhr University in Bochum, where I'm lucky enough to be able to do some research on Bitcoin in the meantime."

Questions & Answers

1) What all do you do in Bitcoin space and what are you known for?

In the Bitcoin space, I am mostly known for my market analyses from a macroeconomic and on-chain perspective, which I share on Twitter and now also in my newsletter Bitcoin Market Intelligence.

2) How do you assess the current market situation? Did you expect the setbacks of the past weeks?

The setbacks in recent weeks were rather surprising, at least in the form in which they occurred. It was difficult to predict that FTX would implode. Overall, the market is in a difficult situation at the moment. It is therefore natural that the longer the price remains low, the more pressure will be exerted on companies that have performed poorly or even cheated. 

Even though the annual inflation rate in the U.S.A. and now in the euro zone is declining, inflation remains high. This means that central banks will continue to put the brakes on, even if they may do so somewhat more slowly than in recent months. There are also signs of a recession in the USA and other economies in 2023. While this could prompt central banks to change course in the medium term, it is not positive for the financial markets in the short term. 

I therefore still see a difficult time for Bitcoin in the coming months. The price will probably continue to move at the current price levels, with swings up and down.

3) In what statistics do you see trends or developments that you would describe as long-term positive? 

I see the development of long-term holders as particularly positive. For example, despite recent events, the percentage of Bitcoin in the network that have not been moved for at least a year is high and tending to increase over the long term (currently at around 66.5%).

I also see the development of the Lightning network and the Hashrate as very positive. Even if both have lost some momentum in recent weeks, both have developed positively in the bear market.

But apart from numbers and statistics, it is the development of the community that makes me feel very positive and of course the development of the followers of the Coinfinity Twitter account. ;-)

4) Do you feel central banks are getting their act together again, or have they got themselves into a bind? 

To be honest, I wouldn't want to be in the shoes of the central bankers right now. Especially since the financial crisis in 2008, central banks have very much maneuvered themselves into a corner. Low interest rates and bond-buying programs have not exactly led to sound budgeting by governments and companies. Now central banks are just raising interest rates to fight inflation. The central banks have already raised interest rates very sharply without anything visibly breaking, but I see problems here in the medium to long term.

States and companies that have become dependent on "cheap" money have to pay higher and higher interest rates when taking on new debt, which in the worst case will replace maturing bonds and thus increase the interest service. How long this goes well is difficult to say, but a recession is not unlikely in 2023 and thus again interest rate cuts. I see more intervention in the long term, and by that I mean more intervention than we have seen in recent years. I don't see the central banks getting their act together again. 

5) Exciting Insights. Now let's take another look at the topic: How did you get into Bitcoin? 

I first heard about Bitcoin in 2012 or 2013, but like so many, dismissed it as useless at the time. Then it really grabbed me in mid-2017, where I heard a lecture on the subject of cryptocurrencies. Then it clicked relatively quickly for me. At the time, like many others, I participated in the hype cycle. In the subsequent bear market, however, I stuck with Bitcoin because I see the real potential here to make a positive difference in the world. 

6) What would you recommend to people who haven't yet studied Bitcoin in depth?

I can only recommend everyone to look into the why that goes beyond the price. Read articles, books, and listen to podcasts on the topic. Even if you're new to bitcoin, I highly recommend going to one of the many meetups near you. The enthusiasm there is contagious. Especially now in the bear market, the exchange can be worth its weight in gold, especially if you are new to it.

7) Do you see the many opportunities for on-chain analysis as problematic in the future? 

As long as the data used for the analysis is anonymized, I don't see a problem there. First and foremost, I see an interesting data source here. However, companies that then analyze transactions for authorities and link them to individual persons are problematic. Since many users do not buy their Bitcoin peer-to-peer, but via providers that are linked to their own identity, this works relatively well.

On the one hand, it can be argued that this is good because it makes it easier to solve crimes. However, it also quickly turns us into transparent users. We don't even have to assume the worst-case scenario of a state banning Bitcoin and using the data to track citizens; all it takes is a hack or leaks of know-your-customer data that someone uses to identify attack targets or get information about competitors.

Even if we are going rather in the opposite direction right now, the network, in my ideal vision, is moving in the long term in a direction, via privacy tools etc., where on-chain data is no longer useful for analytics.

8) Where do you see Bitcoin in 10 years? 

I am very optimistic about the development of Bitcoin in the next 10 years. In 2022 alone, the German-speaking community has developed rapidly despite the bear market, new contacts have been made and new projects initiated. Much of what was created in 2022 will certainly unfold in the next year. What is happening and has happened here was already difficult to predict.

10 years into the future does not make it easier to make a forecast with such dynamic developments. Basically, I see more countries following suit and implementing Bitcoin as a legal means of payment, such as El Salvador, especially developing or emerging countries that have unstable currencies or are already dollarized. The biggest push I see here, however, is from below, that more and more people are consciously deciding in favor of Bitcoin.

Whether we will be ready in 10 years is impossible to say, but I hope that Bitcoin will act as a corrective for central banks by then. Bitcoin will probably not completely replace fiat currencies, and certainly not in 10 years, but it will increase the pressure on central bankers to pursue better monetary policies, as there is always the risk that citizens will turn away. 

9) Thank you, Jan! Where can people learn more about you and follow your work? 

As I said, you are welcome to subscribe to my newsletter, in German and in English, and follow me on Twitter if you like.

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