Did you see that coming? Because I did not see that coming.
Last time we talked I was in absolute disbelief that bitcoin had smashed through its 2017 all-time high, posting a new record at US$23k.
Well, if that was absolute disbelief, then you can imagine my response to the last three weeks of price action, which culminated not only in the bitcoin price crossing $50,000 (briefly making it the seventh most valuable asset in the world), but the entire cryptocurrency market cap reaching one TRILLION American dollars. With a T. Trillion.
And if you can’t imagine, well, here’s an artist’s impression.
Merry Christmas, ya filthy animals
Thing is, it’s not even like I’m looking at what happened and thinking “classic bitcoin, pumping for no reason”. Every day of the festive period it seemed like we got a new, even more bullish piece of news, as if we were living through some frankly erotic crypto fantasy version of the 12 Days of Christmas.
You had giant (and not in any way high-risk) insurers and investment funds announcing their new hundred million dollar stakes in bitcoin. Hedge fund One River Digital conducted one of the single biggest transactions crypto has ever seen. MicroStrategy bought another US$650 million dollars worth of bitcoin using investors’ money; Morgan Stanley now owns 10% of the company. And all throughout bitcoin kept on flowing off exchanges and into cold storage, indicating that these new investors were here for the long haul.
Right now, companies, funds and ultra-high net worth individuals account for around 6% of the entire bitcoin supply. It was 2% a few months ago.
And the alts?
Look, things did look a little dark when the SEC sued Ripple for being an unregistered security and American exchanges started dropping it like it was one of Donald Trump’s social media accounts. But then Ethereum blasted back over US$1000 and alts of every stripe followed. The boom was overdue, but it certainly wasn’t hindered by the US Treasury OCC announcing that banks were now allowed to hold, use and transact with stablecoins and blockchain-based systems.
A few days later, the entire market crescendoed, crossing the US$1 trillion benchmark and making crypto roughly as valuable as Apple or Amazon. Which is really quite impressive for a total scam lol.
Best come correct
Of course, things have stumbled since then. As euphoria overtook the market, most coins shed 20-30% of their value in 24 hours. These sorts of corrections can be horrifying to watch, but are both necessary and, in this case, frankly overdue. As a general rule, assets of bitcoin’s size and liquidity shouldn’t double in a fortnight.
But even after the drop, bitcoin was still trading around 75% higher than it was before Christmas. And if you’re looking at those sorts of gains, the temptation to sell out can be almost overwhelming. It all just seems so unlikely that the price could ever go any higher. Best lock in what you’ve got and count yourself lucky.
Well, here’s something to consider. If you invested $1 in bitcoin in July 2010, you’d have $800,000 now. All you needed was a little patience. Or another way to put it: the bitcoin price now is roughly equivalent to bitcoin hitting $2000 in 2017 after first crossing the 2013 all-time high. And, well, it did another 10x from there.
There will come a time when selling makes sense, but with institutional money flooding in, coins heading into cold storage and a retail wave that isn’t anywhere near where it was in 2017, we reckon the crypto story is just getting started.
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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