On Thursday (January 14), prominent on-chain crypto analyst Willy Woo explained the real reason for the current Bitcoin rally that took the BTC price to almost $42,000 last Friday (January 8).
At the beginning of December 2020, with Bitcoin trading around the $18,900 level, Woo said that his previous Bitcoin price target — $200,000 per BTC by the end of 2021 — seemed “conservative” and that it was quite possible for the Bitcoin price to reach $300,000 by that time.
Woo said that he is more bullish on Bitcoin in 2021 than ever before for two reasons:
- The current “re-accumulation phase coincides with spot market inventory depletion roughly 2x longer and deeper than the last cycle.”
- In the current cycle, USD gain in market cap per dollar invested “has significantly increased over past cycles.”
Well, yesterday, Woo took to Twitter again to point out the realization that there are roughly 47 million millionaires in the world and only around 4.1 million BTC is purchasable has resulted in FOMO in high net worth individuals, which he believes is the real reason that Bitcoin has doubled in price since breaking its all-time high last month.
Woo talked more on this subject during his interview with crypto journalist and podcast host/producer Laura Shin for episode #207 of the highly recommended “Unchained” podcast — which was released on January 12.
Shin started the interview by asking Woo why Bitcoin had more than doubled in the last month.
“I think it’s a really a validation of Bitcoin by the institutions. You know, we’ve had all manner of hedge fund managers say that Bitcoin is a valid investment at this time…
“There’s a lot of interest now not from high net worth individuals, and I’m hearing through the grapevine that there are so many of these people that have looked it… and now they need allocation…
“Everything I’m seeing on-chain as we sort of decompose who is buying what quantities, you know, what’s the nature of these buyers, we’re seeing that there is a planet worth pulling large purchases and they’re long-term buyers.
“I work a lot with Glassnode, which decomposes a lot of this on-chain data, and one of their latest metrics is this measurement of where the coins are moving to…
“Are they moving towards participants that are long-term holders or more liquid participants who tend to hold it, trade it, you know, buy and sell with the swings, and what we’re seeing now is this unprecedented swing to these holders that are holding these bitcoins and they don’t tend to sell so regularly…
“And so as these coins are being bought and locked up by these holders… you’ve got like all of these investors that are wanting to buy one million dollar bullets of investment into Bitcoin and not competing…as the price is raising, now chasing it, and so it’s not letting the price settle… so, the price sort of runs, and it gets to a point where it’s a little bit too too frothy, it sort of settles for a few days, and then it launches again.“
Woo also talked about his “Top Cap” price prediction model for Bitcoin:
“Essentially the Top Cap model is a model that uses the theory of mean reversion. And in simple language, what that means is that it’s a theory that the price of an asset always reverts to the long-term average of the entire history of the data set…
“We don’t know how it [Bitcoin] will trade through the next 12 months. But you can gauge it from historical sort of movements of Bitcoin price and make a guess of where the arc is going…
“If we don’t arc upwards and we assume the top of the bull market is around December this year… we’re going to go above $100,000, even if it doesn’t arc upwards. If we arc upwards, we’re up to $200,000 to $300,000… conservatively, I mean… Given the size of this rally, it’s going to push it higher.”
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
XRP Lawsuit: On Ex-SEC Chair Jay Clayton’s Sudden U-Turn After Suing Ripple
Ripple’s Boss, Brad Garlinghouse, on Monday, left a few remarks via his Twitter handle on a Wall Street Journal’s post co-written by former US-SEC, chairperson, Jay Clayton.
The post which was co-written by Brent MacIntosh, the former Undersecretary of the US Treasuries for International Affairs, sought to preach the all-to-familiar stance of most crypto companies: ‘Crypto needs regulation, but it doesn’t need new rules.’
Garlinghouse spelled out surprise over Clayton’s turncoat comments that the US government has no concrete and adequate regulatory framework for the crypto industry. He further added:
“Cryptos, like nearly any new innovative technology, can be used for good or bad purposes. The problem is that US companies seeking to be compliant and use this tech for good are left in limbo (or for Ripple, worse!) because of a lack of a clear, predictable framework.”
Jay Clayton, in his last days at the SEC, pulled a shocking stunt on the crypto community, suing Ripple for what it believes is the undocumented sales of large-scale XRP digital assets to unidentified customers.
The bane of the case which was first announced in December last year is in determining if XRP – the digital currency of Ripple – is an investment contract or just another type of asset existing in digital forms. Assets bought and sold do not lie under the jurisdiction of the SEC, but investment contracts (also known as securities) are well within their powers to investigate, using the Howley test as a yardstick.
When compared to Bitcoin and ETH…
XRP, unlike fully decentralized Bitcoin, takes the shape of a centralized digital currency. This is because Bitcoin is still being mined by different people across the world, but Ripple pre-mined billions of XRP coins.
How The Case is turning out
The latest in the seven-month-old lawsuit is a winning streak for Ripple. Judge Sarah Netburn denied the SEC’s plea to examine all records of Ripple’s conversation with lawyers and expert advisers to determine if it knew what class of asset XRP is, and what violations of the SEC’s laws it may have knowingly violated. This signified a sigh of relief for the company which has called the lawsuit a hindrance to its growth and plans to go public.
Clayton further expressed that the foundational frameworks of the US laws suffice to build upon for crypto regulations, but the government has to be careful not to commit under-regulation or over-regulation.
Ethereum Co-Founder Anthony Di Iorio Bets Big on the Future of Cardano and Polkadot
Anthony Di Iorio, a Canadian entrepreneur and the co-founder of leading smart contract platform Ethereum, said that he believes in the potential of Cardano (ADA) and Polkadot (DOT).
In an interview with crypto proponent Anthony Pompliano, Di Iorio, who is also the CEO and founder of Canadian blockchain startup Decentral and crypto wallet Jaxx, revealed that he has a diversified investment portfolio featuring several top projects, including Cardano and Polkadot.
A Big Fan of Cardano and Polkadot
“Now I’ve kind of fallen back to just simplicity. I’m in a number of different projects, but the majority of my stuff is in the top projects. I’m a big fan of Polkadot, I’m a big fan of Cardano.”
Di Iorio went on to narrate why he was so sure of the future of these two projects. He had joined the Ethereum development team earlier in 2012 when he met Vitalik Buterin at a Bitcoin conference.
He has formed strong relationships with other co-founders of Ethereum, including Vitalik Buterin, Cardano’s founder Charles Hoskinson, and Polkadot’s current CEO Gavin Wood.
Di Iorio admitted that while he worked with these men, he knew that they were goal-oriented and would help push these projects further.
“Big fan of Charles, let’s say that. You know, taking some different approaches in the way that they’re doing things, much more on the academic side of what he’s done and bringing stuff forward. Real big fan of Gavin Wood… Knowing those guys from the days back at Ethereum – and knowing their drive and knowing their competitiveness and their smarts – I was able to see those projects for the last few years and know that they were gonna get to where they’ve gotten up to.”
Not Getting Lost in DeFi
Despite all the recent hype about DeFi, Di lorio pointed out that he is keeping his investments simple and investing in larger projects.
“Most of my stuff is in the top few things, Ether, Bitcoin, Cardano, Polkadot. I like Cosmos as well. And there’s a few others, but I’m not getting lost in all the DeFi stuff. I just think there’s not enough time, not enough energy. It’s a full-time gig to be running a lot of that stuff and keeping on top of stuff, so I’ve simplified my life quite a bit over the past few years.”
Featured image courtesy of Business Insider
What you should know if your bank is exposed to Bitcoin
On one hand, El Salvador recently became the first nation to officially declare Bitcoin as its legal tender, and on the other, several nations have recently opined that their indigenous banks face a ‘threat’ from the world’s largest crypto-asset. Nevertheless, the rise in the adoption of cryptocurrencies has been accompanied by regulators taking the fast-growing market seriously.
Banks will now face “the toughest” capital requirements for their holdings in Bitcoin and other crypto-assets under global regulators’ plans to brush off the insecurity offered by the “volatile” crypto-market.
Using money laundering, reputational challenges, and massive price swings as the base of their proposal, the Basel Committee on Banking and Supervision is in the news after it explicitly stated that the banking industry faced “increased risks” and “financial stability concerns” from crypto-assets.
Accordingly, they have now placed Bitcoin in the “highest risk” category. The aforementioned committee comprises a host of nations and global institutions as its members.
The Basel Committee isn’t alone, however, with a Bank of International Settlements exec recently commenting that El Salvador’s Bitcoin policy is an “interesting experiment.”
*BITCOIN PUT IN HIGHEST RISK CATEGORY IN BANK CAPITAL PROPOSAL
— *Walter Bloomberg (@DeItaone) June 10, 2021
What’s more, the panel proposed a 1250% risk weight be applied to a bank’s exposure to Bitcoin and certain other cryptocurrencies. Bloomberg’s estimates highlighted,
“In practice that means a bank may need to hold a dollar in capital for each dollar worth of Bitcoin, based on an 8% minimum capital requirement.”
However, stablecoins and other tokens tied to real-world assets are set for lower capital requirements. The report further highlighted,
“The capital will be sufficient to absorb a full write-off of the crypto asset exposures without exposing depositors and other senior creditors of the banks to a loss.”
The proposal did not specify any specific timeline, and hence, the implementation of these rules can take a couple of years. The proposal is, however, open to public comment before it comes into effect. It should also be noted that the committee said that the initial policies were “likely to change” several times as the market “evolves.”
Even though banks like HSBC have been cautious about stepping into crypto-trading, a few big names, like Standard Chartered Plc have announced their entry into the space.
As for Bitcoin, it fell by over 3.7% in the last 24 hours to trade at $35,418 at press time.
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