Understanding Bitcoin from a different perspective #9

 

Dec 31/2020;

Bitcoin nudges $30,000 as the year comes to a close (it peaked at $29,300 on December 31 and closed at $28,992).It's almost exactly what Bitcoin pundit PlanB predicted all along (albeit somewhat short of the $31,000 he forecasted for December 2020). It did, however, reveal that the Stock-to-Flow model he employs is surprisingly accurate in many cases. It treats Bitcoin as if it were a traditional commodity like gold, comparing its current supply volume to its rate of production, implying that halvings are significant events, even though they may appear to be an anticlimax at first.PlanB, on the other hand, is even more upbeat about the future. On December 31, he forecasted that the average Bitcoin price would reach $288,000 between now and the next halving (anticipated in 2024).

Jan 08/2021;

Bitcoin continues its bull run, breaking above the $30,000 barrier on January 2 and $40,000 five days later, before hitting a high of $42,000 on January 8. In the first week of the year, that's a 40% increase.It's looking good, and the banks are on board: on January 5, JP Morgan predicted that Bitcoin might reach $146,000 if it began to replace gold in investment portfolios.

Then, in a single day, about $200 billion was wiped from the market. Bitcoin drops roughly 17%, hitting a low of $30,261 on January 11 before finishing at $35,455.58.The Financial Conduct Authority (FCA) in the UK warned that persons investing in cryptoassets "should be prepared to lose all of their money." Unsurprisingly, this deflated the market like a lead balloon, with Bitcoin alone losing $125 billion in market value in less than 24 hours. The FCA has previously taken a stand against crypto, prohibiting the sale of crypto-derivatives to retail customers in the UK, back in October 2020.

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Worth noting at this point in time, i was actively trading bitcoin and was generally educating myself on the cryptoverse.Wow how time flies.

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Since Bitcoin surpassed $40,000 at the beginning of January, it's been a rollercoaster ride, with the currency fluctuating wildly. Since then, it's dropped by a quarter of its value, momentarily falling below $30,000 on January 22 and again on January 27.On January 25, FCA Chief Andrew Bailey, the UK's financial regulator, told an online Davos panel that "Bitcoin's days were short" and that, while digital innovation in the payments sector was here to stay, cryptocurrencies in their current form were unlikely to survive.

In yet another instance of Elon Musk's incredible internet influence, he adds the #bitcoin hashtag to his Twitter profile, and the price skyrockets, gaining about 11% in a single day and continuing with a further 10% increase the next day.Twitter CEO Jack Dorsey followed suit, provoking a barrage of "what do these folks know that we don't?" Tweets.

Feb 08/2021;

Tesla revealed in an SEC filing on Monday, January 8, that it has invested $1.5 billion in Bitcoin (BTCUSD) as part of a new investment policy that would provide the business "greater freedom to diversify and maximize returns on cash that is not required to maintain adequate operating liquidity." In other words, they're well-heeled .Tesla may invest in other alternative reserve assets such as digital assets, gold bullion, and gold exchange-traded funds under the new policy, but Bitcoin was its first big bet, and boy did it pay off. The price surged more than 10% in the first 30 minutes after the announcement at 12 p.m., and by 1 p.m., it was up 16 percent.

Tesla also confirmed plans to take bitcoin as a means of payment for its products in the near future (on a limited scale at first), which the company told the SEC it "may or may not liquidate upon receipt."So, Tesla (and, by extension, Musk) may become one of the world's largest Bitcoin holders. Alternatively, if it decides to liquidate its receipts, it may gain significant control over the Bitcoin price. In any case, the move is expected to have a significant impact on the crypto market — which, considering Musk's previous crypto remarks, is most likely an unintended side effect.

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This, in my opinion, was the end of the bull market. Let me refresh your memory: Institutions investing in bitcoin is bad for price because it introduces a lot of volatility. What does this mean for you and me as retail investors? To begin, you most likely purchased bitcoin using leverage in order to potentially quadruple your money. A break in price range of $30k-40k will very certainly result in a liquidation. In either direction the trend goes.

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Bitcoin has had a phenomenal year, and today is the cherry on top as the price breaks $50,000 for the first time. Musk's tweets appear to be having the desired effect.The price has already risen about 75% since the beginning of the year, and the bull market is showing no signs of slowing as investors return to the currency. On February 16, Bitcoin (BTC) reached a high of $50,602.53 on the Bitstamp platform, and it has only continued to rise since then, reaching $51,721.15 the next day. 

Ethereum (ETHUSD) is up 38 percent against the dollar in the first half of February, and Ripple (XRPUSD) is up 9%. Although Doge Coin appears to be descending from its Musk-induced high, the crypto market as a whole is flying this year, with Bitcoin leading the way.

March 04/2021;

PayPal is launching a new crypto-focused business unit that will take the company's crypto efforts "beyond buy, sell, and hold." Prices dropped by about 4%.Dan Schulman, PayPal's CEO, revealed the company's plans to go deeper into the crypto-currency realm in order to stay ahead of the competition in the present financial technology era. The new business section will be led by a board of specialists from the tech, crypto, and regulation industries, and will include some transfers from the core tech staff. Smart contracts will be tested, as well as Ethereum and other blockchains, as ways to improve payments and other transactions.

The French government is auctioning off €28 million in cryptocurrency booty, the majority of which was taken in the aftermath of the GateHub attack in 2019.The auction was the first of its sort in France, and it was split into two transactions on behalf of the French Agency for the Recovery and Management of Seized and Confiscated Assets. The first sale included 437 lots ranging from 0.11 to 2 Bitcoins, and the second included 41 lots ranging from 5 to 20 Bitcoins.

The government selected this time to sell, according to Yves Benaim, founder of the 2B4CH Swiss think tank for currencies. He said that the French ministry is technically permitted to sell something that has been seized if they believe the value will decrease. "It's intriguing that they're selling it now, presumably on the assumption that the price would fall and that it was just a bubble. Bitcoins are already worth around €50,000 each, and it's worth noting that they're starting the auction at 40% to 50% off the market price, suggesting that some individuals will be interested in purchasing merely to be able to sell them ""Immediately."

Morgan Stanley (MS) has become the first major U.S. bank to provide its clients access to Bitcoin funds, putting the cryptocurrency back on track for its sixth month of gains and increasing prices by 3.54 percent.The investment banking behemoth formally instructed its wealth managers to provide access to Bitcoin funds, but only to its wealthiest clients and only up to 2.5 percent of their total net worth. Nonetheless, this is a significant step toward more institutional investment in digital assets, and it may help Bitcoin gain legitimacy as an investment-grade asset class.

Cryptocurrencies are becoming a more widely acknowledged component of the financial landscape, with more institutions adopting them. This year, Deutsche Bank (DB) joined the debate. It stated in a note that it believed Bitcoin was here to stay, but that the volatility was as well. Sure, ignoring a $1 trillion market cap would be foolish, but insufficient liquidity remains a major roadblock to bitcoin becoming its own asset class based on valuations alone.Not everyone is enthusiastic about the cryptocurrency. In March, Bank of America (BAC) issued a negative outlook, arguing that the stock was neither an inflation hedge nor a good alternative for those concerned about climate change.

Elon Musk, in typical meme fashion, announced on Twitter that, following the purchase of $1.5 billion in bitcoin last month, Tesla would now accept bitcoin as payment for its vehicles, further integrating the crypto currency into the financial system. Prices have risen by 1%.

After Visa announced that its payments network will allow the use of the cryptocurrency USD Coin, a stablecoin backed by the US dollar, to settle transactions, Bitcoin gained 3.24 percent.

The move boosted the entire crypto ecosystem, and Bitcoin flourished as a result. It's the latest in a long line of businesses to make room for cryptocurrencies, with Tesla announcing just last week that it will now take Bitcoin as payment for its new cars. As blockchain technology becomes more widely recognized throughout established financial systems, large financial institutions such as BlackRock and Mastercard are embracing the use of digital currency.

April 13/2021;

Bitcoin prices have soared 6.24 percent to a new high of over $63,000 in anticipation of Coinbase going public.Coinbase is the largest crypto platform in the United States, with about 56 million verified users as Bitcoin and other cryptocurrencies gain in popularity. On the strength of the IPO forecast, Bitcoin surpassed its prior high from March — and it wasn't the only currency bouncing around. Over the last two days, Ethereum has gained 10% while XRP has gained over 25%.

Bitcoin is down more than 12% this week on reports that  President Joe Biden may double the capital gains tax on the wealthy.Bitcoin suffered its worst week in almost two months,  sending crypto equities into a tailspin. On April 23, Biden indicated that he would propose raising the maximum long-term capital gains rate from 20% to 39.6% for anyone earning more than $1 million in income. After the idea was announced, over $200 billion was wiped off the bitcoin market in Friday's trade, as investors worried that it would hurt investment in digital assets.

May 02/2021;

Bitcoin version 0.21.1 is released, which incorporates the taproot soft fork settings - one of Bitcoin's most significant updates to date.The activation of the taproot soft fork is the first step toward the full upgrade, which has been years in the planning and will make Bitcoin multi-signature transactions cheaper, easier to deploy, and more private. The privacy and scalability upgrade will be one of Bitcoin's most significant improvements ever.

Because of Bitcoin's decentralized nature, it can't be changed unilaterally; instead, major changes to the code require the cooperation of the whole user base. The actual implementation of the improvements requires collaboration among all stakeholders, therefore selecting how to deploy the update has taken months rather than the upgrade itself, which has been planned for a long time now

Pieter Wuille, a Bitcoin Core contributor, is the brains behind the Taproot upgrade, and he's finally ready to share the code with others. On May 1, the network's difficulty plummeted by 12.6 percent, the highest downward correction of the year and the largest negative difficulty adjustment in  a decade.

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Really speak volumes on those protocols who can change their code overnight without the consent of their user base.

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May 12/2022;

Crypto is crushed beneath the weight of Tesla's decision to stop accepting Bitcoin payments due to the environmental implications. Bitcoin has lost 13% of its value. Ouch.Elon Musk has provoked yet another uproar in the crypto world by tweeting that Tesla will stop buying cars with Bitcoin and selling any Bitcoin on its balance sheet, citing concerns about the expanding usage of fossil fuels in crypto mining.

It's a significant shift from Tesla's (and Musk's) pro-BTC posture over the last year, and the reversal isn't likely to please Bitcoin speculators. It's a lot more complicated than that, but Bitcoin is formed by incredibly high-powered computers competing against each other to solve tough math problems. The process consumes a lot of energy and relies heavily on power generated from fossil fuels like coal. 

The announcement comes less than two months after Tesla purchased $1.5 billion in Bitcoin and began taking the digital currency as payment for its vehicles, causing Bitcoin values to skyrocket by about 20%. According to Tesla's most recent earnings, the BTC purchase has already resulted in a "positive impact" of at least $100 million for the company.

Written by neotrader,