28 May  2024 · Block Height 845580 · Bitcoin Price $68K

Welcome back to the Blockspace Newsletter!

With maybe the best week in crypto political news in history behind us, all eyes are on Raoul Pal’s “Banana Zone.” Are we once again Raoul’s exit liquidity? Where does the meme end and reality begin?

Quick Hits

• Trump promises to "Free Ross Ulbricht on Day 1” if he is elected

• It’s early, but the next difficulty adjustment could be a big leg up

• Northern Data buys 300MW site in Texas

• Riot Platforms pursues takeover bid of rival miner BitFarms

• Crypto sees $1.05 billion in flows last week, per CoinShares

Chart of the Week

Links we liked

Tweet: Explaining Braidpool, an alternative to conventional mining pools

Tweet: Hashprice contour from Pennyether

Paper: Illuminating Ethereum’s Orderflow Landscape

Video: Why there’s no ZK in Bitcoin

Is everything about to go Bananas?

The “Banana Zone” is a term coined by smooth-talking Raoul Pal for a potential scenario where the macro liquidity cycle coincides with a seasonal crypto summer and everything goes bananas. It’s now crossed the social media Rubicon and is being memed by crypto twitter. While by now most of us see through Raoul’s smooth-talking and let the boomers be his shitcoin exit liquidity — the banana narrative has legs. We are apes, after all.

Veteran multi-cyclers know the telltale signs of the surreal mania moments: SBF & Tom Brady TikTok, the Mountain Dew ASIC Miner, the Kodak Blockchain (yes, the photography company). We don’t dispute the existence of the Banana Zone, but rather like battle-hardened veterans remain skeptical of those who predict they know when it will happen.

It feels like it could happen. We just had the best political week for crypto ever. On the heels of what felt like the worst month for Bitcoin & overall crypto news, last week had so many political wins it’s difficult to remember them all. A congressional supermajority just passed SAB 121 and Biden is not expected to veto. Then FIT21 passed the House which is a significant win for regulatory clarity on crypto. Bipartisan consensus in Washington was unexpectedly and decidedly pro-crypto this past week. Oh, then there was Trump with campaign promises (heavy asterisk here) to “build a crypto army” and “Free Ross” — both dubious claims but incredibly meaningful for discourse on crypto at the national level.

God, we hate it. But it’s just too perfect not to appreciate. Not to be outdone by the Rainbow and Power Law Charts, Raoul Pal presents a truly novel way of looking at crypto’s cyclicality: by seasons. Sprinkle in a little “Macro Summer” and Liquidity Growth and you have a perfectly cooked narrative to serve up to those hungry Real Vision subscribers.

The thing is that predicting the next 6+ months to be “bananas” intuitively feels right. We are seeing record Bitcoin ETF inflows, an unexpected ETH ETF approval, and a sudden massive shift in the regulatory environment that feels strangely pro-degens. It’s also an election year so markets have to go up.

Let’s break out one more chart just for old times’ sake.

Perhaps you haven’t seen this one — Blockspace readers are a mix of NFT degens, Bitcoin miners, and seasoned crypto wizards. I get the impression that these bullposts are mostly circulated in left-curve Bitcoin DCA bull conversations.

If you’re a new entrant to crypto, make sure to practice caution and be careful about overexuberance. The Banana Zone giveth and taketh.

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