Cryptocurrency update: Bitcoin continues to slide
Bitcoin continues its downward trajectory as it continues to travel away from its recent all-time highs.
Bitcoin starts week on a downward trajectory
Bitcoin eh? Just last week we were talking about the token heading for a new all-time high after an important network upgrade. Things look quite different after the weekend.
As of Monday morning, Bitcoin was continuing to slide away from the $60,000 level. The price drop had been triggered last week with Friday showing lows of $55,574. Monday trading sees the coin’s small gains wiped out with it down -1.26% on the day. BTC is currently trading for around $57,229.
So, why the drop this week? There are a couple of factors are play here.
Firstly, trading activity might be lower across the board, regardless of asset, this week. It’s Thanksgiving on Thursday 25th November, which means US markets will be closed. Less coin volume will be changing hands at this stage.
But traders will also be taking a close look at the week’s US PCE data which comes on Wednesday. Personal consumption expenditures are the Fed’s favourite inflation metric. As many traders and investors are using BTC to hedge against inflation, the report is key for understanding their next moves. Activity may be slow until the PCE report lands.
Traders are also waiting to see who wins the race to be the Fed’s new Chair. Will President Biden stick with current Chairman Jerome Powell? Or will he go for Bully’s special price Fed Governor Lael Brainard?
Both of them hold pretty similar positions on crypto – that is the need for close regulation so digital finance doesn’t overwhelm the current financial system – but the nuances are so close there’s not really much in it. Some crypto analysts believe that not much will change, regardless if either Powell or Brainard sit in the Fed’s top seat.
The Bitcoin Fear & Greed index is now sitting at neutral – despite BTC losing 20% off its all-time high this week.
Looking at other coins, Ethereum is down some 3.62% this morning, Litecoin is down 4.58%, and Cardano is 2.34%. This is kind of to be expected. Whenever Bitcoin falls it tends to bring down the other popular coins down with it. It’s not a great day for crypto bulls it seems.
Australia’s crypto investors are “on their own”
On Monday, Australian regulators said they were working with lawmakers to develop rules for digital currencies, but for now investors are “on their own”.
“Consumers should approach investing in crypto with great caution,” newly minted Australian Securities and Investments Commission (ASIC) chair Joe Longo told an Australian Financial Review Conference. “At present many crypto-assets are probably not ‘financial products. For the most part, for now at least, investors are on their own.”
It’s the same rhetoric we’ve heard from many securities and exchange regulators and central bank figures over the past year: crypto has big potential but it has enormous potential for losses and traders and investors must proceed with caution.
ASIC is now ploughing ahead with lawmaker collaboration to create a regulatory environment for crypto. One proposal involves changing laws to allow decentralised autonomous organisations (DAOs), which are governed by artificial intelligence rather than a board of directors, and a licensing regime for crypto exchanges.
“Crypto is on our doorstep, here and now, and being driven by extraordinary consumer and investor demand. The implications for consumers are potentially huge,” Longo said.
Interestingly, Australia is ahead of the curve in some aspects of cryptocurrency. The Commonwealth Bank of Australia become the developed world’s first mainstream bank to provide a retail crypto trading platform earlier in the month.
El Salvador’s volcano-powered cryptocurrency city
In Bond villain lair news, El Salvador is prepping construction of a Bitcoin City powered by a volcano.
Bitcoin City will sit at the foot of the Conchagua volcano near the Coast of Fonseca in Southeast El Salvador. The idea is to harness Conchagua’s geothermal power to fuel the city’s electrical needs. Bitcoin mining is particularly energy intensive – last year, it used more energy than the entirety of Sweden – so why not go green and use that mass energy to fire up the mining rigs?
The Salvadorian government, headed by Bitcoin evangelist Nayib Bukele, will be acquiring the land and infrastructure in a bid to lure investors. According to Bukele, Bitcoin City will be funded by $1bn in BTC-backed bonds.
“In Bitcoin City, we will have mining, agriculture, culture, and sports. When we are no longer there, this will last, and everyone will be able to see the city,” Bukele said.
The city is also attempting to be a no-oncome tax zone. The plan is to get rid of income, property, procurement, and city taxes. Project originators hope VAT will be enough to cover the expenses that come with running a large urban area.
It all seems a bit pie in the sky, but El Salvador is unique in the world of crypto. It’s the only country in the world where Bitcoin is legal tender, for example. Much of the impetus for its crypto push comes directly from the top. As mentioned earlier, President Bukele is a crypto nut.
As it stands, El Salvador owns around 1120 Bitcoin tokens.