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ETF hopes power Bitcoin over $59,000
With the news Bitcoin exchange traded funds could be about to land in the US, BTC intensifies its upswing.
Bitcoin bounces on positive SEC noise
Reports from Bloomberg indicate that the SEC would be in favour of approving at least some Bitcoin ETFs.
The SEC is reviewing 40 Bitcoin exchange traded funds right now. It is believed that the commission will approve at least some of these. That would make any new ETFs the first of their kind in the United States.
The news filled crypto traders with renewed confidence this morning, sending BTC prices soaring. Prices nudged the $60,000 mark with highs of $59,931 registered on Thursday. At the time of writing, BTC was trading for $59,395.
Bitcoin Futures passed $60,000 this morning before falling back to around $59,650. Both BTC and futures are up over 3% on the day.
If the SEC approves a Bitcoin ETF it will be the first of its kind in the US. Previously, commissions in places like Brazil, Canada, and Europe had given the green light to crypto exchange traded funds.
So, who is making the applications? Bloomberg mentioned ProShares and Invesco and two frontrunners who may see their applications approved next week.
Valkyrie, VanEck and Galaxy Digital Funds have all made ETF applications this year too.
The Bloomberg report said that ProShares and Invesco’s proposals are based on futures contracts. They were reportedly filed under mutual fund rules that SEC Chair Gary Gensler has said provide “significant investor protections”.
Gensler helped boost Bitcoin prices last week when it was reported that he said the SEC had no plans to launch a crypto ban. His comments came in the wake of a move by the People’s Bank of China that made digital token transactions illegal in China.
That said, Gensler had previously stated he believes that the crypto market could encourage price manipulation and expose millions of investors to significant risk.
However, this time Gensler and the SEC’s actions appear to have instilled high confidence in crypto traders.
Other tokens have been brought up by the Bitcoin surge. This is a regular occurrence. When Bitcoin is up, certain coins tend to perform well, and vice versa. Ethereum, for example, reached $3,855 after Bloomberg’s report was published.
Eight consecutive weeks of inflows for the crypto market
Data from digital asset managers CoinShare said cryptocurrency products attracted $226.2m in investments for the week ending October 8th. Fittingly, that marked the eighth consecutive week for inflows across the digital token sector.
Across that eight weeks, the total invested came to $638m. The overall figure for the year-to-date is $6.3bn.
Big business, but, with the global digital currency sector worth over $2 trillion, we knew that already.
No prizes for guessing which coin attracted the most attention. Yep, it was bitcoin. CoinShare says the world’s most popular token attracted $225m during the review period. Unlike other cryptocurrencies, Bitcoin has only had four consecutive weeks of sustained inbound investment.
Ethereum saw minor outflows totalling $14 million. While still the world’s second most valuable token by capex, ETH continues to lose ground to the Bitcoin behemoth. Altcoins such as Solana and Cardano posted inflows of $12.5 million and $3 million.
Litecoin, Ripple and Polkadot all posted outflows.
Cryptocurrency update: Bitcoin bounds upwards
Bitcoin continues its big comeback by reaching five-month highs in trading this morning.
Buoyant Bitcoin clears $57,000
The Bitcoin rally looks like it’s got some teeth.
The token reached its highest levels since May on Monday morning after clearing the $57,000 mark. Prices have subsequently pulled back, leaving BTC at around $56,500, but the coin is still up around 4.75% on the day.
This comes after Bitcoin notched 14% gains across last week. For the last two consecutive weeks, BTC has made double-digit gains.
Things are bullish in Bitcoin town.
For now, Bitcoin appears to be more resilient against potential macro trends that usually send the token’s price on a wild spiral. For example, China’s continued crypto crackdown does not seem to have blunted Bitcoin’s edge at all.
Other revelations like the Soros Foundation announcing it had started investing in Bitcoin have helped. These include US SEC Chairman Gary Gensler coming out and saying the Securities and Exchange Commission has no plans to pull a Beijing and ban Bitcoin transactions in the US.
Even the anti-crypto comments JPMorgan CEO Jamie Dimon made last week were not enough to knock BTC of its stride.
However, regulatory reform is probably on its way. Certainly, the perceived threat digital token traders have felt regarding tighter regulation has caused price wobbles in the past. Will a White House executive order waylay Bitcoin’s progress? Reports indicate that reform could be closer than it looks.
Is the White House planning a crypto regulation surprise?
Reports from Washington suggest the Biden administration is working on an executive order that could lead to wider crypto industry regulation.
According to White House insiders speaking to Bloomberg, the order would see the creation of federal agencies tasked with making recommendations on Bitcoin and Crypto. It would also touch on financial regulation, economic innovation, and national security.
A new crypto Czar could even be appointed if the order goes through.
That said, there is no hard or fast date attached to this measure. A White House spokesperson told Bloomberg that, regardless of the order making it into law, the US’ crypto strategy will be made public. It’s just a question of when.
Pressure has been building on US financial authorities to make some sort of noise regarding crypto. The market has been burning white-hot for the past couple of years, and with markets caps zig-zagging between $1.5 and $2 trillion given BTC’s performance, it’s clear something has to budge.
Treasury Secretary Janet Yellen has been agitating for a regulatory framework for digital currency regulation for some time now. Elizabeth Warren is also one of the influential voices calling for more to be done.
We don’t know when regulation will be stepped up in the US – but if these reports are accurate then we may see some sort of framework or regulatory tightening in the near future.
Blockchain firm ConsenSys announces funding round
ConsenSys, a blockchain firm specialising in Ethereum-based projects, is in talks for a new funding round. The Brooklyn-based business is hoping this fresh cash injection would take its value up to $3bn.
If it does reach this valuation, then ConsenSys would be a good case study in just how much blockchain and digital finance systems have expanded over the past 18 months.
In April, the business acquired $65m from the likes of JPMorgan and Mastercard in April. According to reports, ConsenSys is looking to raise $250m in its current funding round. Golden Tree Asset Management and Arca are alleged to be holding talks with ConsenSys.
ConsenSys mostly operates on the Ethereum platform, which is fuelled by the token of the same name.
Its projects have been used in several major Decentralised Finance (DeFi) operations. The most prominent of these is MetaMask – an important gateway for the DeFi ecosystem. More than $9bn has been facilitated by MetaMask via its token swap feature across its lifetime so far.
Bitcoin signals fight back after clearing $55,000
Bitcoin staged an impressive rally yesterday, gaining more than 10% in trading. What’s behind this latest BTC surge? We take a look.
BTC reaches $55,000
It was good news for Bitcoin traders last night when the world’s most popular cryptocurrency cleared $55,000 for the first time since May.
The token bounced on the news that billionaire George Soros’ hedge fund confirmed it is trading BTC.
Bitcoin reached a five-month high of $55,499 last night. It has fallen back to around $54,680, but bulls believe it’s only a matter of time before BTC reaches a new all-time high. Its highest levels were reached in April 2021, when Bitcoin broke above $64,000 for the first time.
Whenever Bitcoin moves it usually takes other tokens with it. This is true today. Ether, for instance, is trading up nearly 1% at $3,594, while Cardano is showing similar growth of 1.10%. Cardano is now trading for $2.26.
It appears the China crypto crackdown has not had the effect that bears were bracing for. Beijing has ruled all cryptocurrency transactions as illegal and is doing its utmost to stamp out mining and trading operations across China.
However, it seems Bitcoin is showing new levels of resilience to potentially damaging external factors.
Extra support for Bitcoin
In addition to the Soros Fund’s Bitcoin backing, a number of other institutions, organisations, and even a country potentially, are helping support the token.
For instance, Reuters reports that the Bank of America Corp published its first research coverage focused on cryptocurrencies and other digital assets on Monday. Additionally, US Bancorp has launched a new crypto-focussed service for private fund managers in the US and Cayman Islands.
“Investor interest in cryptocurrency and demand from our fund services clients have grown strongly over the last few years,” said Gunjan Kedia, Vice Chair of US Bank Wealth Management and Investment Services in a news release. “Our fund and institutional custody clients have accelerated their plans to offer cryptocurrency.”
We’ve also had reports from the SEC that it doesn’t plan to ban cryptos at all. Chairman Gary Gensler was grilled by the Senate on Tuesday if the Securities and Exchange Commission would be mirroring China’s recent harsh actions. The answer was an emphatic no. It’s really for Congress to decide, according to Gensler.
Federal Reserve Chairman Jerome Powell recently also said the Fed has no intention of implementing a crypto ban either.
Regulation will likely be the name of the game. We just don’t know when it’s going to land, but for now digital token trading and investing is still A-OK in the US of A.
Bitcoin might even become currency in Brazil if comments made by Federal Deputy Aureo Riberio on Tuesday are anything to go by.
Riberio said in an interview with local media Brazilians could soon be able to use Bitcoin to buy houses, cars, and even fast food. Bill 2.303/15, which regulates cryptocurrencies, might approve the legal use of the asset, similar to El Salvador.
Not everyone is convinced by digital tokens
This new wave of digital finance fever has been tempered somewhat by a few important dissenting voices.
At the start of the week, we saw one of South Africa’s top hedge fund managers, Jean-Pierre Verster of Protea Capital Management, compare Bitcoin to a Ponzi scheme.
Now, JPMorgan CEO Jamie Dimon has spoken out against Bitcoin.
Dimon was interviewed on HBO’s Axios on Monday when he was asked if BTC is the “fool’s gold of the future?”.
The JPMorgan Boss replied: “It’s got no intrinsic value, and regulators are going to regulate the hell out of it.”
Dimon went on to say: “You can call it a security or an asset or something like that, but if people are using it for tax avoidance and sex trafficking and ransomware, it’s going to be regulated, whether you like it or not. So, it’s not a moral statement. It’s a factual statement.”
Several prominent finance figures have made their anti-Bitcoin stance very clear. Christine Largarde of the European Central Bank and Bank of England Governor Andrew Bailey have all spoken out against digital tokens.
Even Jerome Powell, who as mentioned above said the Fed has no plans to ban crypto transactions in the US any time soon, has mirrored Dimon’s comments in the past.
Despite its CEO’s feelings, JPMorgan currently offers six crypto funds for its customers.
Bitcoin battered by POBC crypto punch
Bitcoin has taken a major body blow after the latest Chinese crypto crackdown was announced this morning.
People’s Bank of China rules crypto transactions are illegal
Volatility and Bitcoin: name a more iconic duo.
With the token starting the day in the green, traders were hoping to see a reversal to the bearish patterns and price action seen in September so far.
A fresh ruling from the People’s Bank of China put paid to that.
China’s central bank has said that all cryptocurrency transactions in the country are illegal and must be banned. As anti-crypto signals go, they don’t come much tougher than that.
A statement by the POBC said that all cryptocurrencies, including Bitcoin, Tether and Ether, are not fiat currency, thus they should not be circulated on the market.
The ban includes services provided by offshore and international exchanges to domestic Chinese citizens.
China’s crackdown on digital currencies has been rumbling along across the year, but this is the most overt statement yet.
The nation already moved to ban crypto mining earlier in the year. China’s economic planning agency said efforts to completely root mining out are underway, which could pose big problems for the global BTC supply.
Additionally, the POBC is stepping up its monitoring of cryptocurrency transactions, including speculative investing.
“Financial institutions and non-bank payment institutions cannot offer services to activities and operations related to virtual currencies,” the bank said
Bitcoin, as well as other tokens such as Ethereum, have been sent reeling by this news. Associated stocks such as Coinbase and MicroStrategy have also begun to slide on the PBOC’s comments.
BTC had been trading over $45,000 prior to the bank’s proclamation. At the time of writing, it had lost 5% as it spirals back into the red. Bitcoin is now being traded for around $42,500 but will likely slide further as the day progresses.
Some analysts were expecting higher prices towards the weekend with talk of $47,000. Now, it looks like BTC is going to continue to trend downwards into next week.
Looking at crypto boards just shows red. Ethereum is down nearly 10% and so is Litecoin. Polkadot has dropped over 11% while Ripple has also dropped by 8%.
Consternation over another market drop has never been far away from the Bitcoin sector after it tumbled from all-time highs of over $65,000 earlier in the year.
Arcane’s Fear & Greed index, which measures general market attitudes regarding BTC performance, was flashing bearish signals at the start of the week and this has continued.
On a scale of 0-100, with 0 being extreme fear and 100 being extreme greed, BTC registered a 27 rating on Tuesday, suggesting fears the market may bottom out are coming to fruition.
Realistically, this move should have probably been spotted earlier. As mentioned above, China has not exactly been subtle in its government-led distaste for decentralised finance. This is a nation where pretty much everything passes through government control after all.
But just when things were looking good for BTC, it’s down once more. It only goes to show just how volatile cryptocurrency trading is and how susceptible the market is to external pressures.
Perhaps wider global regulation may cause stabilisation across the board, but for now, cryptocurrencies are probably going to continue to pitch on volatile seas.
Cryptocurrency update: Is the BTC bull market back on?
After making strong gains across the past couple of weeks, crypto analysts are suggesting the Bitcoin bull market is back.
Analyst says crypto bull market could make a return
Bloomberg’s Mike McGlone has stated he believes bitcoin will hit $100,000 this year in a “refreshed” crypto bull market.
McGlone, a commodity strategist, predicts the massive price, despite the May broad crypto sell-off tanking BTC prices. In terms of other coins, Ethereum was McGlone’s other top pick, predicting $5,000 being the path of least resistance.
In September’s Bloomberg Crypto Outlook, McGlone said: “Crypto-assets appear in a revived and refreshed bull market with the 2H benefit of a steep discount from previous highs at the start.”
“We see Ethereum on course toward $5,000 and $100,000 for bitcoin. Portfolios of some combination of gold and bonds appear increasingly naked without some Bitcoin and Ethereum joining the mix,” McGlone continued.
Diminishing supply but a higher level of adoption for practical use may be behind the ETH support. Ethereum’s status as the primary denominator for non-fungible tokens (NFTs), which are dramatically rising in popularity, could also help put prices on an upward trajectory.
The London Fork, a change to the Ethereum blockchain protocol, caused significant coin burn and a drop in overall ETH supply when it went live last month.
Looking to Bitcoin, McGlone believes the $100,000 price is “highly probable, especially after last year’s supply cut. Post-halving years have seen the greatest appreciation, and 4x in 2021 would be quite tame for the No. 1 crypto compared with 55x in 2013 and 15x in 2017.”
Anything can happen in the world of cryptocurrencies. Volatility is the watchword. It will be interesting to see if this most bullish of predictions comes true – especially when we’ve seen the brutal market effects a sustained sell-off can bring.
At the time of writing, Bitcoin futures were trading at $51,812.91 and were up 3.15% on the day.
Ethereum was trading for $3905.05.
Bitcoin price pump El Salvador movement gains traction on Social Media
Twitter and Reddit users are organising plans to support El Salvador’s adoption of BTC as legal tender by buying small amounts of Bitcoin.
By buying up to $30 worth at a time, the users hope this will bring attention to El Salvador’s controversial plan.
On September 7th, El Salvador brings BTC fully into its economy as legal tender. ATM machines have been installed around the country to allow Salvadorans to exchange US dollars for Bitcoin. The government has also a $150m fund to back nationwide conversion efforts.
The $30 amount comes from the fact Salvadorans will be able to download the government’s digital wallet, enter their ID number and receive $30 in Bitcoin going forward.
The whole thing smacks of the recent Gamestop/memestocks market manipulation tactics employed by the more vociferous members of the online trading community. The fact that thousands of online traders could start snapping up more BTC at one time could create ripples that end up with higher BTC/USD conversion rates. That may drain El Salvador’s conversion fund at a rapid rate, and semi-scuppering the launch.
Additionally, the citizens of El Salvador are not particularly keen on the introduction of BTC into their currency system anyway.
A poll by the local Central American University showed that of 1,281 people surveyed, at least 67.9% of 1,281 people disagree or strongly disagree with the use of Bitcoin as a legal tender.
South Korea introduces its first blockchain mutual fund
KB Asset Management, an investment-focussed branch of KB Financial Group, has launched South Korea’s first mutual fund for blockchain technologies.
The KB Global Digital Chain Economy fund will invest in three main areas:
- Hardware – This includes investment in businesses specialising in the physical products needed to run blockchain servers and/or crypto mining, Companies like NVIDIA, AMD, and Intel are just some of those mentioned by KB Asset Management.
- Software – Under this umbrella are software suppliers involved in sustaining and creating blockchains, such as IBM, Amazon Web Services and China’s Baidu.
- Users – The third segment covers companies that have integrated blockchain into their businesses. According to KB, this means it will invest in businesses such as PayPal, Square, NTT Data and Tencent amongst others.
US firms are KB’s primary investment target. A smaller allocation of funds will be put towards companies operating in Japan, Europe, and China.
KB Asset Management had more than $90 billion under management as of February, according to Korea Financial Investment Association data.
Cryptocurrency update: Institutions ride correction into Bitcoin
More institutional investors entered the crypto world last March, helping support a sector some are still reluctant to back.
Wood suggests Bitcoin correction tempted institutions into crypto
Founder and CEO of ARK Investment Management Cathie Wood has said March’s cryptocurrency market correction was a buy signal for institutional investors.
Referencing on-chain analysis undertaken by ARK researchers and data from crypto research firm Chainalysis, Wood said institutions moved money into Bitcoin during this time.
According to Chainalysis, large institutional trading transactions, i.e., those transactions above $10 million, accounted for over 60% of decentralised finance (DeFi) market movements in Q2 2021. In Q3 2020, the share was more like 20%.
Institutions now hold close to $70bn in Bitcoin, according to research from Buy Bitcoin Worldwide. $40.1bn of that total is controlled by BTC asset managers. Of thee, Greyscale is the largest digital asset manager, holding around $31bn in the world’s most popular cryptocurrency.
Greyscale itself is an important vehicle for institutional-level investors looking for crypto exposure. It’s also interesting that Cathie Wood flagged how such investors made a move into digital tokens in March. She was very likely one of them. Wood’s own ARK Investment Management is the largest shareholder in the Greyscale Bitcoin Trust with a $350 million stake of 9 million shares.
Bitcoin itself broke above $50,000 for the first time in months last week. At the time of writing, it was trading for around $47,412, down some 2.76% on the day. The coin is eyeing support at $49,000.
We’ve seen plenty of institutional-level support from moneyed investors for BTC and other tokens across the past year. However, some are not so convinced of cryptocurrency’s validity as an investment vehicle.
Paulson goes hard on Bitcoin
Billionaire investor John Paulson has fired a few harsh words Bitcoin’s way.
Paulson, who gained notoriety as a subprime shorter back in 2008, has stated that cryptocurrency’s inherent volatility would put him off from “even shorting it”.
Speaking in an interview with Bloomberg, Paulson said Bitcoin and digital tokens are not an ideal store of value since they are a “limited supply of nothing”, and hold “no intrinsic value”.
Paulson went even further. The investor said he would not recommend investing in digital tokens to anyone.
“Cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless,” Paulson told Bloomberg. “Once the exuberance wears off, or liquidity dries up, they will go to zero.”
So, what does Paulson recommend investors put their cash into? The old standby gold. The talk of Bitcoin becoming the new “digital gold” has been floating around the markets for a while now, but many investors still prefer gold as a store of wealth over its upstart rival.
Some investors prefer the physical nature of gold, plus its inherent value, as making it a stable value store over cryptocurrencies.
Expecting increasing inflation to result in the metal appreciating thanks to it being regarded as a safe haven asset, Paulson heavily supports gold.
On-chain metrics could spell the return of BTC & ETH bull run
Despite Poulson’s protestations, there is a growing belief that Bitcoin and Ethereum could be about to stage another bull market surge.
Glassnode, a crypto and blockchain analytics firm, has said there is a tremendous crossover with today’s on-chain metrics and those seen in mid-to-late 2020 when cryptocurrencies began a fresh surge.
“As the Bitcoin and wider cryptocurrency market rallies higher, a remarkable on-chain divergence continues to form across both Bitcoin and Ethereum,” Glassnode’s latest Week-on-Chain report states.
“On-chain activity on both chains has remained quiet relative to bull market highs, even as price momentum continues upwards, and bullish trends in supply dynamics remain in play.”
Indicators that a new bull run is on the way are currently observable, including higher network participation and record transaction values.
Active entities on the Bitcoin blockchain are particularly noteworthy. Despite prices being near $50,000, these are still one-third below all-time highs but growing rapidly.
“It is notable that current activity on both chains is similar to the stable pre-bull accumulation range established in mid to late 2020,” Glassnode said.
“Whilst the divergence between price and on-chain activity is historically abnormal for a full-scale bull market, it is not an uncommon signature for the pre-bull, and pre-supply-squeeze dynamic,” the report continues. “These periods often accompany the end of bear market accumulation where the investors who remain, are the strong hands, those with the highest conviction.”
Cryptocurrency update: global crypto userbase soars
The first half of 2021 sees record numbers of people engaging with cryptocurrency markets.
Global cryptocurrency users skyrockets in H1
The number of people actively using and trading digital tokens exploded in the first half of 2021 according to data from Crypto.com.
Data was taken from 24 digital asset exchanges, including Binance, Bitfinex, and Gemini.
Up to June 30th, 220,000,000 people – more than the population of Brazil – have had some level of interaction with cryptocurrencies this year. In January, the figure was closer to 106 million.
Crypto.com states its Bitcoin that’s driven the largest number of new users.
“We can see that January, February, and April were exceptionally strong months, driven by Bitcoin’s stellar performance,” Crypto.com said in a statement. “However, May was also extraordinary, given Bitcoin and Ethereum’s price plunge.
“Notably, it only took four months to double the global crypto population from 100 million to 200 million. By comparison, it took nine months to reach 100 million from 65 million since we began tracking these numbers.”
Institutional support also drove up the numbers.
“Bitcoin led growth from January to April, as heavyweight institutions like PayPal, MicroStrategy, Visa, and Mastercard announced plans to support crypto,” said Crypto.com Similarly, Ethereum saw significant growth in May and June as institutional investors continued to favour the token.”
In terms of altcoins, i.e., not mainstream tokens like BTC or Ether, it was perennial meme favourites Dogecoin and spin-off Shiba that helped attract more retail clients.
Bitcoin drops off on US infrastructure bill uncertainty
If you’re a keen crypto market follower, you’ll probably know that Bitcoin has had a bit of a struggle recently.
Falling away from record highs seen earlier in the year, the token has struggled to gain meaningful momentum. It climbed above $42,000 on Saturday, but as of now has fallen back below the $40,000 mark.
One of the key reasons for this is uncertainty around the new proposed $1 trillion US infrastructure bill currently being debated.
Provisions within the bill call for about $28bn to be generated from taxing cryptocurrency transactions. Bitcoin, being the most popular crypto for US and global traders, hasn’t responded well to this proposed idea. In fact, traders have got cold feet regarding Biden’s plans.
The definition of the word “broker” for tax purposes is what’s riling up BTC traders. In the amended bipartisan bill, people who provide digital asset transfers would be treated as a broker, thus be susceptible to greater information reporting and taxation requirements.
“Any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person” is now included in the definition, according to the bill.
This has caused a lot of doubt, fear, and uncertainty around the whole US BTC sector.
Other factors at play include China’s central bank aping the CCP’s tough crypto stance. The People’s Bank of China has said it will continue to crack down on digital asset trading throughout China, citing financial risks to the Chinese economy.
Bitcoin has now slumped 5.5% from its Saturday high.
Ether whales move over $500m in hours
Whales holding onto large Ether caches moved over half a billion dollars’ worth into new wallets last week.
Research from blockchain tracker Whale Alert revealed multiple transactions had taken place on Friday. 236,419 ETH tokens, worth approximately $$557,777,068, was moved in one ten-hour window.
Here’s the breakdown of key transactions:
- 36,168 ETH worth $89.1 million transferred from unknown wallet to unknown wallet.
- 36,168 ETH worth $88.4 million transferred from unknown wallet to unknown wallet.
- 33,000 ETH worth $79.8 million transferred from unknown wallet to unknown wallet.
- 25,119 ETH worth $59 million transferred from unknown wallet to unknown wallet.
- 5,891 ETH worth $13.9 million transferred from unknown wallet to Gemini.
- 33,000 ETH worth $77.5 million transferred from unknown wallet to unknown wallet.
- 6,487 ETH worth $15.1 million transferred from OKEx wallet to unknown wallet.
- 6,309 ETH worth $14.7 million transferred from unknown wallet to Binance.
Interestingly, ETH is trading down. Bitcoin falling tends to bring all of the other key tokens down with it, and Ether is no exception. The above tells us that there’s significant behind-the-scenes interest in ETH, as well as the scale of coins held by moneyed investors. Could these be institutional? It’s hard to say.
Cryptocurrency update: Bitcoin on the rebound?
Bitcoin makes some big strides in trading today. Are we looking at a BTC bounce back?
Bitcoin gains 35%, starts week in the green
What a torrid couple of weeks it’s been for Bitcoin. The world’s most popular cryptocurrency has been battered recently, with prices falling below $30,000 for the first time since last year.
Now, it looks like BTC is preparing to bounce back. As of Monday, the crypto had gained 35% in early trading, reaching over $39,000. This was the first time Bitcoin had breached that level since June 16th – but still some $26,000 off the currency’s all-time highs.
At the time of writing, Bitcoin had retreated to around $38,355.
Datamish data shows a short squeeze appears to have driven prices higher in the short-term. Those taking short positions have apparently had to sell as price action turned positive. Why is currently unknown.
Datamish is an independent service that tracks Bitcoin long and short positions.
One of the key reasons why Bitcoin may have rekindled its fighting spirit is the news Amazon is planning to accept BTC as payment, potentially by the end of 2021.
According to reports from City A.M., the online retail colossus is exploring how cryptos can be fully integrated into the Amazon ecosystem. Bitcoin would be the launch point, with Ethereum, Cardona and Bitcoin Cash potentially being acceptable payment for Amazon transactions going forward.
Either way, the bulls will be happy with this price action – but let’s not get too hasty. This is cryptocurrency after all. We’ve seen volatility that would sink any other asset become normal in the world of crypto trading. Anything can change at any minute.
While the outlook is currently good, there are some global stories and opinions that could knock BTC off its current upward course.
Bitcoin mogul suggests Chinese crypto trading could soon be a thing of the past
According to Bobby Lee, one of China’s first Bitcoin trading pioneers, cryptocurrencies could face an outright trading ban if the Chinese crypto crackdown intensifies.
Lee, the former owner of BTC China, the nation’s first Bitcoin exchange, is speaking from experience. He was forced to sell BTC China in 2017 following the first of the Chinese government’s crypto clampdowns.
Chinese authorities have been ruthless in their pursuit of crypto market regulation in 2021. So far, we’ve seen outright bans on crypto mining within China, and tougher restrictions on retail trading and institutional banking services.
According to Lee, the next logical step for China’s government to take is an outright ban on crypto trading.
“The next thing they could do, the final straw, would be something like banning cryptocurrency altogether,” Lee said in an interview with Fortune. “I put it at the odds of 50-50.”
Lee did not mention how this would be enforced from a practical standpoint.
China’s authoritarian stance on crypto trading has been the catalyst for BTC prices crashes in 2021. When China announced its mining ban back in May, Bitcoin prices were in free fall. While this has opened up mining operations in other countries, China was responsible for the vast bulk of BTC token mining.
The global hash rate, the rate at which new BTC tokens are created, as fallen dramatically since the ban.
Will Lee’s prediction ring true? It’s hard to say. Control is the Chinese government’s modus operandi. There are many exchanges, including Binance, still operational in Chinese jurisdictions. If the nation is really serious about clamping down on crypto trading, these could fall next.
Keep an eye on China. Its actions will likely define BTC price movements going forward.
Man Group chief likens cryptocurrency trading to Dutch tulip bubble
Luke Ellis of Man Group has claimed that cryptocurrencies hold “no inherent worth’, comparing the current situation to the 17th Dutch tulip bubble.
Man Group is the world’s largest listed hedge fund, controlling assets worth $127bn for clients worldwide.
According to Ellis, cryptocurrencies are mainly popular with traders because of their price swings, rather than any practical application. Much of the actual trading is done by market participants who doubt crypto’s ultimate utility.
“If you look at cryptocurrencies as a whole, it is a pure trading instrument. There is no inherent worth in it whatsoever. It is a tulip bulb,” Ellis said. Ellis also described crypto tokens as “things to trade because they go up and down a bunch”.
Tulip bulb refers to the Dutch tulip trading bubble. In the 17th century, prices of tulip flowers skyrocketed before massively collapsing, leaving hundreds of tulip traders and speculators bankrupt.
Could the same be happening with cryptos?
We’ve seen similar rhetoric from a number of institutional sources recently. Governor Andrew Bailey of the Bank of England, for instance, has warned cryptocurrency traders may stand to lose all their money due to the product’s inherent volatility.
But some tokens have an actual practical use. Ether is used as payments for transactions on the Ethereum blockchain. The Ethereum blockchain is rapidly expanding in scope and is thought to be the leading network for the decentralised finance sector. We’ve also seen the rise of non-fungible tokens (NFTs); artworks and media held digitally and bought exclusively with cryptocurrencies.
Bitcoin, however, may have gained too much value to be used as an actual means of exchange. But when you have countries like El Salvador enshrining it as legal tender, it may still yet serve a purpose beyond simply being a tradeable project.
Digital currency is such a young asset that bubbles may likely occur during these development stages. However, this just requires extra vigilance on the part of traders and investors. Volatility is never far away – and all bubbles have to burst eventually.
Cryptocurrency update: Whales master the Bitcoin sea
Whales are causing a big splash in the world of Bitcoin, increasing their holdings, possibly turning a bearish market into a bullish one.
Whales increase their Bitcoin holdings
The number of BTC tokens held by whales has increased by 80,000 last week, according to Glassnode data.
Whales are clusters of IP addresses controlled by a single network participant holding a minimum of 1,000 BTC. As of Friday 2nd July, whales controlled 4.2m Bitcoin tokens split between 1,922 entities.
Commentators say increased whale interest is good for the Bitcoin market, which has struggled throughout June. Whale numbers are at a current all-time high. It was these entities that helped power BTC from $10,000 at the start of the year to nearly $60,000 in February.
While the BTC market did break above $64,000 in April, this was mainly during a sell-off period for whales. Since then, BTC has struggled to break out of the $34,000 range. By early May, according to Glassnode, whales’ collective stash had fallen to 4.17m Bitcoin tokens.
If more large entities are picking up BTC tokens during its current market downturn, then this could help power prices upwards. Although if this is the case, then we may be looking at a similar cycle to what we saw earlier in the year: whales buy, price shoots up; whales sell, price declines.
What this does indicate is that small-scale investors do not have the muscle to course correct BTC. It appears only institutional-level investors, with institutional-level capital, are able to buy in bulk in order to trigger bull runs.
When the whales began to sell following April’s peak, for example, prices plummeted. At its lowest, BTC was trading for below $30,000 – something that hadn’t happened since 2020.
The market will be taking whales renewed interest as a sign the good times could be returning. It will be hoping the bottom has been reached. However, there are numerous factors had play outside of large-scale investors’ interest that can have a big effect on Bitcoin prices, both positively and negatively.
Bitcoin hash rate difficulty dramatically drops
The Bitcoin hash rate has recorded its highest ever drop in difficulty.
According to BTC.com, the difficulty rate has dropped 28% as China ramps up its crackdown on cryptocurrency mining operations.
The hash rate refers to the rate at which new Bitcoin tokens are generated when computational algorithms are solved on the BTC blockchain. Mining difficulty refers to the amount of power needed to validate Bitcoin transactions. The network adjusts difficulty levels every two weeks in response to competition amongst miners.
The drop in difficulty suggests a lower level of competition of miners using the Bitcoin network.
It’s thought the drop in difficulty rate added $1,000 to the BTC price in early hours trading on Monday 5th June. Transaction fees on the blockchain network have also fallen.
China was responsible for 65% of the global Bitcoin hash rate. That has fallen away dramatically since the new outright ban on digital assets the Chinese government has imposed. Mining operators have either had to relocate or sell their mining rigs to foreign cryptocurrency farms.
A difficulty correction is due in another two weeks, by when we’ll get a clearer picture of how the Chinese mining ban has affected Bitcoin mining operations.
Ethereum reaches big Bitcoin-beating milestone
Ethereum is used to playing second fiddle to Bitcoin, but the world’s second-most popular cryptocurrency recently overtook its larger cousin in one key metric.
On July 3rd, Ethereum registered the highest number of single-address users on its network at over 750,000 – 50,000 more than Bitcoin. This data comes from cryptocurrency analytics firm Santiment.
In fact, Bitcoin’s total number of single user addresses has dropped 38% over the past three months, reports Bitinfocharts.
What’s bearish for Bitcoin could prove bullish for Ethereum.
ETH is up 1000% year-on-year and has outperformed Bitcoin in terms of price action threefold in 2021. Long awaited upgrades to the Ethereum blockchain, increasing experimentation in decentralised finance (DeFi) by banks and institutions, plus the non-fungible token (NFT) craze have all lead to a spike in Ethereum network use.
Ethereum’s utility could make it the cryptocurrency of choice if the world moves towards decentralised finance models. To use the Ethereum blockchain network, users must pay transaction fees using ETH tokens. That gives it a more practical use of Bitcoin, whose massive price now all but precludes the token being used as a currency in everyday payments.
ETH prices may increase if its user base continues to expand.
Cryptocurrency update: China’s hard-line crypto stance gets harder
Crypto took a battering over the weekend as China stepped up its anti-mining squeeze. With Bitcoin gains wiped out, how will the market react?
China crypto crackdown continues
Chinese authorities continue to hammer domestic Bitcoin miners.
HashCow and BTC.TOP are the two latest miners to suspend or scale back operations after Beijing stepped up its anti-mining sentiment. Exchange Huobi said on Monday it will no longer be accepting new users from mainland China. The exchange will now be focussing on overseas customers.
This is seismic for the world of crypto mining as China accounts for 70% of global token supply.
It’s thought part of the reason for the move against miners is partly driven by environmental concerns. The two provinces where the bulk of Chinese mining takes place – Inner Mongolia Autonomous Region (IMAR) and the Xinjiang Uygur Autonomous Region (XUAR) – draw energy from coal-fired power stations. With China pledging to slash greenhouse gas emissions by 2060, it’s doing what it can to clean up its act. At least, that’s how it appears on the surface.
The reality is likely Beijing wanting to exert more control over cryptocurrencies. A statement made on Friday by the State Council said the move would “crackdown on Bitcoin mining and trading behaviour, and resolutely prevent the transmission of individual risks to the social field.” This latest move is a way for China’s government to exert its considerable influence over a new, rapidly evolving economic sector.
As you can expect, the consequences for crypto markets have been massive to say the least. Token prices have plummeted.
Miners, who typically don’t hedge all their minted digital tokens into fiat straight away, are thought to be divesting themselves of their stakes. A broader sell-off is underway, which has caused a freefall in crypto asset prices.
May has not been kind to digital currencies. Rumours of tighter crypto exchange regulations and capital gains tax hike proposals in the US gave investors jitters at the start of the month. Tesla turning its back on BTC payments caused further wobbles. China’s hard-line stance was enough to trigger the freefall.
BTC & ETH start on the long road to recovery
Crypto market bellwether crypto BTC took the heaviest body blows following the China news. BTC is trading just shy of 50% lower than April’s $64,000 all-time high at around $36,500.
At the bottom of the trough, prices had slumped to $31,107. Essentially, all gains made since February have been wiped out. Volatility in digital currency markets is nothing new, but BTC will have a long way to go before it reaches new all-time highs. Recovery, as we can see from the price action above, has started but it remains to be seen just how quickly it can regain traction.
Ether, which had only 17-days ago broken the $4,000 barrier for the first time, fell 17.4%, with its lowest level registered at $1,868.79. Since then, the token, used on the Ethereum blockchain, has climbed back to $2252.50. Even with the price hit, ETH is up over 159% year-to-date.
Musk defends the doge
Dogecoin, the memecoin beloved of Elon Musk and thousands of internet traders, gets support from the enigmatic billionaire.
Musk reiterated his position in response to an investor implying the Tesla CEO has an impressive Dogecoin holding.
Yeah, I haven’t & won’t sell any Doge
— Elon Musk (@elonmusk) May 20, 2021
Elon and his Twitter escapades are very familiar for crypto market investors and observers. Seemingly his every tweet has the power to create major price movements. And, despite all the volatility at hand, and Tesla u-turning on BTC acceptance, Musk is doubling down on crypto, although framing himself as some sort of crypto martyr.
The true battle is between fiat & crypto. On balance, I support the latter.
— Elon Musk (@elonmusk) May 22, 2021
Dogecoin has gained 3.4% as of Monday 24th May following the weekend’s bloodbath.