Bitcoin's price has gone from $32,983 on Jan. 22, 2021 to $35,811 on the morning of the same day one year later. In the year between, however, the price dipped below $30,000 in July and climbed above $69,000 as recently as Nov. 10.

On a five-year basis, things look a lot better for Bitcoin investors as shares have gone from just over $1,000 in 2017 to its current price that's hovering around $35,000. That's an incredible return when you consider that during the same five-year period Amazon (AMZN) - Get Amazon.com, Inc. Reportstock went from $835.77 to $2852.86 while Tesla (TSLA) - Get Tesla Inc Reportshares jumped from $50.59 to $943.90.

That means that for long-term investors, Bitcoin has been a better investment than Amazon or Tesla, and, honestly, it's not close. The difference, of course, is that Amazon and Tesla sell stuff and that gives investors some basis for their valuations (even if they sometimes don't seem rooted in reality).

Bitcoin has no product because it's the product. Its value tracks more like a collectible than a share in a company.

Image Source: TradingView.

Bitcoin trades based on how people feel about cryptocurrency. It's not tied to a metric like sales. Instead, it's a combination of fear of missing out and how investors view the currency at any given moment.

Prices also tend to fall or rise depending on the actions of regulators. When authorities indicate that they could ban or strictly regulate Bitcoin, prices go down. But when they are warmer or less firm prices go up.

"Rises are mainly down to positive perception in the media. Some news makes a lot of people think 'bitcoin really is the future! Im gonna get some and/or buy more!,'" wrote Rhys Thomas at The Face.

Drops happen for exactly the same reason. Bitcoin, like diamonds or gold, has a finite supply though the cryptocurrency has an actual cap while precious metals and gemstones exist in unknown quantities.

Roughly 19 million bitcoins of the hard total of 21 million have been mined, which means they can be bought and sold.

"It took 12 years for the world's largest cryptocurrency by market cap to reach that goal after the first coins were mined on Jan. 9, 2009," wrote TheStreet's Tony Owusu in December. "However, it will take exponentially longer for the remaining supply to be mined due to bitcoin's halving schedule. The halving schedule is an inflationary control device where the reward for mining bitcoin is cut in half."

This process discourages mining because it raises the cost required to mine a bitcoin, which discourages people from doing it (especially when the price of the cryptocurrency has fallen).

Tristar Media/Getty/TS

The price of Bitcoin does not track based on any predictable data. It moves up or down based based on how people feel about the cryptocurrency at any given time. When buyers outnumber sellers the price goes up.

And, of course, influencers and celebrities have the ability to move the price of various cryptocurrencies. Sometimes that's for no reason at all (or because the famous person wants the price to go up or down) and sometimes for a semi-meaningful one like that a company will accept on form or crypto or another as payment.

Bitcoin, like any other cryptocurrency, collectible, and many rare items can be manipulated. In many ways, however, this works a bit like large-cap stocks versus penny stocks. Because penny stocks trade at lower volumes than large-cap stocks, they're harder to manipulate.

As the sort of king of crypto, bitcoin can't be manipulated as easily as smaller cryptocurrencies simply because it trades at much higher volumes.

Link:
Why Does Bitcoin's Price Rise and Fall? - TheStreet

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Its official: The Federal Reserve is toying with the idea of issuing a U.S. digital currency.

In a long-awaited report released Thursday, the Fed explored the costs and benefits of a government-issued digital currency, but deferred a final decision on whether to move forward. Instead, the Fed is giving the public and other stakeholders until May 20 to share their input before taking further action.

Unlike cryptocurrencies, which are typically created within the private sector and regularly see big price swings, a central bank digital currency (CBDC) would be a digital form of cash thats issued and backed by Americas central bank. However, whatever move the Fed makes next could fortify cryptocurrencies or detract from their value, according to Grant Maddox, a certified financial planner and founder of Hampton Park Financial Planning based in South Carolina. It depends on the direction our government chooses to take, he adds.

The Fed was clear in the report that it wont proceed with the issuance of a CBDC without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.

The Fed is attempting to be politically savvy as it weighs a digital dollar, says Salman Banaei, head of public policy in North America for crypto data firm Chainalysis. If the Fed had taken a clear stance on the matter, they would have gotten a lot of political pushback, says Banaei.

Hours after the reports release, Bitcoin and Ethereum dropped below historic benchmark prices for the second time this month. The prices of Bitcoin and Ethereum havent been this low since July.

There are two leading factors influencing the demand for crypto now: its value as an inflation hedge and its value as a risk asset, says Banaei. The perceived likelihood of a crypto future rises or falls based on regulatory risk too.

Heres what experts are saying about the report released this week, and what investors should make of it.

Point of view: Head of Public Policy in North America for crypto data firm Chainalysis

Reaction: What I was surprised by was how seriously the Fed took the notion of a CBDC. The crypto industry is excited to see that this is happening. A lot of the infrastructure that has been built to support the crypto industry could easily integrate the CBDC into existing providers. But the timeline for a CBDC is going to be far more extended I think its going to take two to four years before we get another major milestone.

Point of view: Host of the Unchained Podcast and author of The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze

Reaction: Its not surprising that the Fed would be exploring a central bank digital currency because blockchain technology, although its still being developed, has many advantages over our current analog systems. Plus, it could help the US dollar maintain its global reserve currency status. It already looks like China could try to leverage its digital yuan to chip away at the USDs status as the global reserve currency. Its also not surprising that the Fed is not ready to announce any decision, but are currently just soliciting feedback, because a central bank digital currency raises a lot of questions about security and privacy, plus has the potential to disrupt existing financial institutions.

Point of view: CFP and Founder of Hampton Park Financial Planning

Reaction: They are keeping up with the likes of China and others who have advanced in blockchain. A digital U.S. currency may allow for quicker payments to foreign allies, improving our geopolitical outlook. The move could improve monetary policy decisions by allowing for easier distribution. We join about 90 other countries reviewing this option. The addition could add additional complexity to our world markets and distract attention from the dollar.

Point of view: CFP and Founder of Insight Financial Strategists

Reaction: Blockchain has plenty of applications that dont have to be a currency, so there are still plenty of things to do in the private sector. I firmly believe that no self-respecting government will give up control of its currencies to a private sector entity. Governments need to retain control of the money supply and of interest rates. Like it or not, these are major tools for managing economies. The U.S. is not the only country thinking of digitizing its currency. China is on its way, too, as are a number of other countries.

While there probably arent any immediate changes crypto investors should make based on the Fed report released this week, its a good reminder that policy makers are paying attention to how perceptions of crypto are taking shape.

The Fed move means that people who were thinking of crypto as actual currency are going to get their bubble popped, says Chen. Many Bitcoin types were thinking that it is a currency and that it would replace traditional currencies. Well, not if the Fed, the European Central Bank, and other central banks have anything to say about it.

The fundamentals of cryptocurrency investing remain the same. Experts say you should stick to the big two cryptocurrencies, Bitcoin and Ethereum, and only invest what youre OK with losing or no more than 5% of your total portfolio. Always prioritize important aspects of your finances, such as saving for emergencies, paying off high-interest debt, and saving for retirement, ahead of cryptocurrency investments. As for where you buy and trade crypto, stick with a mainstream, high-volume cryptocurrency exchange, like Coinbase or Gemini, that proactively complies with evolving federal and state regulators.

Excerpt from:
Experts React to the Feds Digital Currency Report and Falling Prices for Bitcoin and Ethereum. Heres What Investors Should Know - NextAdvisor

Regulators continue to debate how to define cryptocurrencies, such as bitcoin, and whether they are securities, commodities or properties, etc., which is critical for how regulators choose to enforce those regulations.

At the recent National Association of Attorneys General Consumer Protection Conference in November 2021, Hester Peirce, commissioner of the U.S. Securities and Exchange Commission (SEC), commented on the issue, saying the view we are taking these days is that pretty much everything is a security.

While the public has closely scrutinized nebulous and sometimes contrary statements made by federal regulators regarding cryptocurrency enforcement, two recent actions against BlockFi and Celsius companies that let consumers buy, borrow and trade bitcoin make it clear that state regulators are taking coordinated action to regulate bitcoin-related investment products and exchanges offering unregistered securities.

State regulators unwillingness to sit on the sidelines and watch the feds opine on the proper regulatory regime is consistent with how states have affirmatively led the charge to regulate other emerging technologies related to Bitcoin. State regulators are not scrutinizing bitcoin itself in the recent enforcement actions, instead they are targeting the technological innovations that are spurred by Bitcoin.

These technologies being investigated often involve bitcoin and other cryptocurrencies, which adds to the inherent risk to investors and consumers investing in bitcoin. Due to the volatility of bitcoins price, legal probes into emerging technologies may affect the price of bitcoin and thus, emerge as a consumer protection requiring further actions by state regulators.

All players in cryptocurrencies should be keeping an eye on the states policy priorities, because the states are clearly keeping an eye on them.

In recent years, state regulators primarily attorneys general and securities regulators have led the charge to regulate perceived consumer harms. They act to fill a perceived void left by the federal government that they believe is too slow, legally limited or disinclined to do so itself, depending on the administration. Examples are abundant and include data privacy, e-cigarettes, cannabis and social media. Similarly, given the lack of comprehensive regulation from the federal government concerning cryptocurrency, state regulators are actively pursuing enforcement against interest-bearing cryptocurrency accounts.

Up until April 2018, state enforcement of cryptocurrency was relatively minor and focused on remedying overt consumer scams. That changed in April 2018, when the North American Securities Administrators Association (NASAA) initiated Operation CryptoSweep, where 40 securities regulators across North America organized a task force to share information and coordinate actions against various cryptocurrency companies trading bitcoin and other virtual currencies.

It is not a coincidence that in the same month, the New York Attorney General launched an investigation of 13 large cryptocurrency platforms, seeking a better understanding of each companys internal controls and safeguards of consumer assets.

In a little more than three-and-a-half years, state securities regulators have issued more than 50 cease-and-desist orders to currency-related investment products, mostly related to initial coin offerings (ICOs) for failure to register and to provide resulting statements to investors. These enforcement actions are traditionally brought by one state and have resulted in the voluntary cessation of the ICO with monetary fines and promises not to offer unregistered ICOs in the future.

The breadth of who can be charged with oversight of the safety and soundness of a cryptocurrency product was expanded in September 2020, when the Massachusetts Attorney General prosecuted payment processor, Stripe, Inc. for allegedly inappropriately facilitating transactions by individuals engaged in the PlexCoin ICO, resulting in the fraudulent and unregistered offer and sale of cryptocurrency. To resolve the claims, in addition to a $120,000 payment, Stripe committed to improve its risk monitoring procedures.

The last few months have seen states moving from individual action to multistate enforcement actions against two of the largest cryptocurrency platforms: BlockFi and Celsius Network. Both companies were charged with offering unregistered securities under the guise of high interest-bearing accounts, allowing investors to use cryptocurrency such as bitcoin to earn interest at higher annual percentage yield than traditional banking institutions. Both companies use the accounts to fund their lending operations and proprietary trading. The actions stemmed from state regulators concerns over increased levels of risk to investors.

Underscoring the seriousness of this expansion in regulatory enforcement, these actions were coordinated by multiple states that typically fall across the political spectrum. In July, New Jersey, Texas, Alabama, Vermont and Kentucky issued cease-and-desist or show cause orders against BlockFi. In September, New Jersey, Texas, Alabama and Kentucky again united to file similar actions against Celsius. In October, Celsius announced that it received a request for information from New York.

Notably, New Jersey and Kentucky issued cease-and-desist orders against BlockFi and Celsius, requiring them to cease offering interest bearing accounts, as they are classified as unregistered securities. New Jerseys orders classify the accounts as offering unregistered securities because the [i]nvestor relinquishes control over the deposit cryptocurrency and BlockFi and Celsius are free to use those assets as they see fit. The accounts are not registered with any state or federal securities regulator. The orders highlight that, due to the lack of regulatory oversight, these programs appear to pose higher levels of risk to investors.

The states harmonized actions communicated a unified emphasis on protection of investors. In a September 17 press release, acting New Jersey Attorney General Andrew Bruck said the action was intended to send a broader message: Financial companies operating in the cryptocurrency marketplace are on notice. If you sell securities in New Jersey, you need to comply with New Jerseys investor-protection laws. Companies dealing in cryptocurrencies are not immune from oversight.

Based on past experience, we expect that additional enforcement actions will be taken against other bitcoin platforms, to the extent they employ similar business models.

This year, one in ten Americans invested in cryptocurrency and bitcoins price rose to an all-time record in November 2021. The rise of cryptocurrency also means a rise in regulatory scrutiny, especially from state regulators who focus on consumer protection. The fact that states are taking joint coordinated action is commonplace. State regulators have biweekly or monthly calls to discuss companies they are investigating or enforcement actions they are taking. It would be unwise to think that the 46 state regulators that did not take action against BlockFi and Celsius are not paying close attention to these actions.

Yet, each of these regulators is a distinct sovereign. Even when four or five sovereign entities take coordinated action, each action must be consistent with each states goals and priorities. Observers should not make the mistake of thinking that coordinated action equates to like-mindedness on all issues even in just one industry.

One thing is clear, however: when states share a common goal of consumer protection and are unified in believing a particular action will achieve that goal, states will not hesitate to act in a coordinated way across the aisle to target perceived offenders. For this reason, we are likely to see continued coordinated enforcement actions by states to regulate perceived violations of existing state laws.

This is a guest post by Stephen Piepgrass, James Stevens, Chris Carlson and Namrata Kang. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Continued here:
State Coordination Will Continue To Regulate Use Of Bitcoin - Bitcoin Magazine

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Marathon Digital Holdings (MARA) is still my favorite Bitcoin (BTC-USD) mining company despite a massive drop in share price since the November 2021 tech bubble popped.

The Federal Reserve hinted at its desire to raise interest rates and capped the growth stock rally because it will cost companies like Marathon more money to raise capital.

Thus, MARA stock is down a whopping 53% since November 21 with no exact bottom in sight.

Data by YCharts

(Source: Ycharts)

The funny thing is Bitcoin mining production reached an all-time high in December but investors dumped MARA stock anyway.

However, Benjamin Graham said it best with his infamous quote about the stock market:

"In the short run, the market is a voting machine but in the long run it is a weighing machine".

In this article, I'll explain why I'm still HODLing my Marathon shares while other investors are panic selling.

I strongly believe the majority of the money will be made as we progress towards mass Bitcoin adoption and hyperbitcoinization so it makes little sense to sell at these levels if you're a long-term investor.

First off, I want to dig into the latest Bitcoin mining updates for Marathon because I'm more interested in future Bitcoin flows rather than the current price of Bitcoin.

In 2021, Marathon mined 3,197 BTC (Up 846% YOY) and achieved a record 484 BTC mining output in December 2021.

This is an extremely impressive BTC mining output that can only be appreciated if we perform a side-by-side comparison of Marathon's mining output vs. other publicly traded miners.

Riot Blockchain (RIOT)

Source: Author

Marathon finished the year with the 4th highest BTC mining production among publicly traded stocks but still holds the largest amount of BTC with 8,133 in total.

The company has plans to increase its Bitcoin mining output by 6x by early 2023 with the deployment of just under 200,000 miners producing approximately 23.3 EH/s.

Marathon Q4 Mining Update

In Q3 2021, Marathon earned 43 cents per share with its Bitcoin mining operations but lost money due to $95.7 million in stock-based compensation.

Total losses reached 22 cents per share but I expect Marathon to swing back to profitability in Q4 2021 as well as moving forward.

The biggest problem with Bitcoin mining stocks is the recent crash in Bitcoin's price since many retail investors bought stocks like MARA at the top of the bubble.

Data by YCharts

(Source: Ycharts)

Just a few months ago, Marathon Digital Stock hit $80 per share and now some investors are suffering 66%+ losses if they bought at the top.

Bitcoin is a volatile asset that often has massive 50%+ price swings within a fiscal year. Crypto is still a very young asset class and Bitcoin itself is only 13 years old.

I believe Bitcoin will slowly mature into a much more stable asset once more people join the network and adopt the best form of digital money in my opinion.

Until then, investors shouldn't fear volatility but instead profit from it by scooping up high-growth Bitcoin miners with solid balance sheets.

The Crypto Fear and Greed Index is one of the best indicators for buying Bitcoin-related stocks.

Short-term investors trade based on emotions instead of underlying fundamentals so we can look towards periods of extreme fear as wonderful long-term buying opportunities.

As I type this article, the Crypto Fear and Greed Index is sitting at 24 due to lots of uncertainties surrounding the Fed raising interest rates, rising Omicron cases, and lack of interest in the cryptocurrency industry at the time.

Nothing has changed the fundamentals of Marathon and its goal to become arguably the largest Bitcoin mining company in North America.

Once Bitcoin goes back up in price then MARA stock could easily double or triple in price based on its current valuations.

MARA stock trades just under a $3 billion market cap with a price to sales ratio of 61. However, we can account for Marathon's 6x in mining output by the end of 2022 once all 199,000 mining machines are deployed.

2022 total revenue should exceed $500 million and could hit $1 billion+ if Bitcoin returns to all-time highs.

With nearly $1 billion in potential annual revenue by 2023, MARA stock trades at a future price to sales ratio of just 3!

Marathon holds around $580 million in total cash holdings (Bitcoin along with cash) so I don't think future dilution is a major issue.

Marathon owns more Bitcoin than every other publicly-traded company other than MicroStrategy (MSTR) and Tesla (TSLA) so the company has built a rock-solid crypto foundation.

However, there are several risk factors that could severely impact MARA's stock price in the short term.

The most obvious issue is Bitcoin's price because Bitcoin miners benefit from rising Bitcoin prices but watch their balance sheets crumpled during a crypto bear market.

If Bitcoin enters a bear market then historically it only lasts around 1 year until a new bull cycle starts. That means MARA stock could underperform the broader market over the 12 months. Assuming the Fed raises rates in March, it won't be a strong year for Marathon if Bitcoin continues selling off.

Another major risk is dilution through convertible bonds or stock offerings. Bitcoin mining companies prefer offering shares when stock prices are soaring to raise capital for mining fleet expansion.

The problem is you own a smaller part of the company and your equity stake gets diluted. Any Bitcoiner will tell you that owning an asset with a fixed cap like Bitcoin is better than investing in dilutable assets like stocks.

If Marathon Digital continues issuing more shares then it may be a better move to just buy Bitcoin instead of investing in Bitcoin mining companies.

However, Bitcoin mining companies will soar in value as Bitcoin overtakes Gold's market cap within the next few years.

For example, Barrick Gold (GOLD) has a 15x larger market cap than Marathon Digital but I expect Marathon and other Bitcoin mining companies to flip gold miners by 2025.

Data by YCharts

(Source: Ycharts)

Once Bitcoin flips gold then investors will witness the biggest FOMO ever as retail and institutional investors pile into Bitcoin mining companies with reckless abandonment.

It should be an epic sight. Let's wait and see what happens!

I first bought MARA stock at $8 and still hold my original shares. Many investors may feel frustrated with the recent price volatility but Bitcoin will remain volatile for at least a few more years until the BTC network hits 1 billion or more users.

I believe every investor needs at least 10% exposure to Bitcoin in their investment portfolio so MARA stock provides plenty of BTC exposure without the risks of holding Bitcoin outright.

I'm buying the dip and plan to sell covered calls on my shares to generate income while I wait for the next Bitcoin bull run.

In the meantime, I encourage lower stock prices as long as Marathon remains committed to increasing hash rate and total BTC mining output.

Once investor fear turns into greed, many MARA longs will reap the rewards of remaining silent and patient during a chaotic market crash.

Read more from the original source:
Marathon Digital: Buy The Dip Before Bitcoin Fear Turns Into Greed - Seeking Alpha

Google is tiptoeing into Bitcoin and cryptocurrencies as the companys payments division struggles to gain significant market share in the payments industry and touts adding custody capabilities of such assets to its digital cards, according to a report by Bloomberg.

Crypto is something we pay a lot of attention to, said Bill Ready, Googles president of commerce, per the report. As user demand and merchant demand evolves, well evolve with it.

According to the report, Google has formed partnerships with cryptocurrency exchange Coinbase Inc. and cryptocurrency payment processor BitPay to enable the new functionality. The executive told Bloomberg that his team is looking for additional partnership opportunities, though the company still isn't accepting bitcoin for transactions.

Googles cryptocurrency integrations allow its customers to hold BTC in their digital cards while spending fiat currency, an arrangement that doesnt precisely use the peer-to-peer asset as a medium of exchange but enables users to spend their bitcoin holdings.

Given Bitcoins astronomical rise in purchasing power over the past decade, it is hard to conceive a scenario where Bitcoiners would want to get rid of part of their BTC stack, as the opportunity cost to hold it and spend fiat currency directly instead rises.

The news comes after the company in October turned its back on a previous push into banking, hiring former PayPal executive Arnold Goldberg to run its payments division. According to Ready, Google wants to become a connective tissue for the entire consumer finance industry.

Were not a bankwe have no intention of being a bank, Ready told Bloomberg. Some past efforts, at times, would unwittingly wade into those spaces.

Here is the original post:
Google Cards To Store Bitcoin And Crypto: Report - Bitcoin Magazine