Fidelity Digital Assets the crypto wing of Fidelity Investments, which has $4.2 trillion assets under management, shared their two sats on the future of the digital assets space. The key takeaways touched upon miners behavior and Bitcoin (BTC) network adoption.

In the annual report released last week, the group shared some insights into the world of BTC mining:

The report stated that the recovery in the hash rate in 2021 was truly astounding, particularly when considering that the worlds second-largest economy,China, banned Bitcoin in 2021. The rebound in hash rate since the ban thanks to BTCs hash power being more widely distributed around the world, showed miners are set on long-term profits.

The statements aligned with miners recent selling performance. Key on-chain metric indicate Bitcoin miners are in massive BTC accumulation mode, as miners show no desire to sell.

Related: Fidelity exec says Bitcoin is technically oversold, making $40K a pivotal support

When it came to orange-pilling entire countries, Fidelity made some interesting predictions into more nation-states accepting BTC as legal tender:

Their comments come as Tongas former MP suggested the country could adopt BTC in late 2022.

In essence, more regulation and better products will open up the crypto space, bringing a greater portion of the hundreds of trillions in traditional assets into the digital asset ecosystem. Combined with miners' hodling, it could lengthen the cycle and drive BTC to new highs.

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Bitcoin cycle is far from over and miners are in it for the long haul: Fidelity report - Cointelegraph

Bitcoin (CRYPTO:BTC), the biggest cryptocurrency on the market, has bitten the dust so far in the new year. So has the best-performing digital token in 2021,Shiba Inu (CRYPTO:SHIB).

It's not their fault. Cryptocurrency prices, in general, have fallen significantly in recent days. But not all of them. Here are two cryptocurrencies that have trounced Bitcoin and Shiba Inu during the current crypto crash.

Image source: Getty Images.

While Bitcoin and Shiba Inu have fallen so far this year,Chainlink (CRYPTO:LINK) has delivered an impressive year-to-date gain of close to 40%. It now ranks No. 16 on CoinMarketCap's list of the top cryptocurrencies with a market cap of around $12.9 billion.

How has Chainlink been able to defy gravity with most other cryptocurrencies sinking? Some crypto whales deserve much of the credit. Crypto whales are investors who invest heavily in cryptocurrencies. Where they put their ample financial resources is a subject of intense scrutiny.

The Whale Stats website specifically tracks the top 1,000 crypto wallets on the Ethereum (CRYPTO:ETH) blockchain. Last week, the site reported that crypto whales were swimming toward Chainlink more than any other digital coin. That was all it took to provide a big boost to Chainlink's price.

Why has Chainlink gained favor? Probably because it's the leader in what are called oracle networks. Smart contracts are built on blockchains. However, they often need data from outside the blockchain ecosystem. Oracles enable smart contracts to access this external real-world data.

For example, Arbol developed a smart contract platform for farmers and other businesses to hedge against climate risks. This requires weather data from outside the blockchain. Arbol selected Chainlink to make it happen.

Chainlink could enjoy even wider adoption going forward thanks to the planned Ethereum 2.0 upgrade. Because Chainlink is built on the Ethereum blockchain, the transition from Ethereum to a proof-of-stake protocol could entice even more developers to use the Chainlink oracle network.

Internet Computer (CRYPTO:ICP) has emerged as another top winner so far in 2022. The cryptocurrency is up more than 30% year to date. It currently holds the No. 27 spot on CoinMarketCap's ranking with a market cap of around $6.6 billion.

There isn't any evidence that crypto whales have been pouring their money into Internet Computer as they have Chainlink. However, investors seem to be increasingly enamored with Internet Computer's Web3 (or Web 3.0) opportunity. Internet Computer was one of the top 10 fastest-growing cryptocurrency ecosystems last year, according to Web3 venture firm Electric Capital.

If you're not familiar with Web3, you can think of it as the third version of the internet where individuals instead of large corporations are in control. Web 1.0 was the initial internet of the 1990s. Web 2.0 came about later with companies such as Amazon.com, Facebook (now Meta Platforms), Google (now part of Alphabet), and Twitter dominating. The idea with Web3 is that you'll be able to control your own data thanks to the power of blockchains.

Internet Computer was designed to enable the internet to host all kinds of smart contracts and decentralized finance (DeFi) applications. Unlike traditional blockchains, any device connected to the internet, including smartphones and smartwatches, can authenticate artifacts using Internet Computer.

Several projects in the Internet Computer ecosystems are already making the promise of Web3 a reality. For example, Fleek allows any web content to deploy on Web3. Distrikt is kind of a Web3 version of Microsoft'sLinkedIn.

If Web3 takes off as much as some expect it will, Internet Computer could keep up its winning ways. And it just might continue to trounce Bitcoin and Shiba Inu.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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2 Cryptocurrencies That Have Trounced Bitcoin and Shiba Inu During the Crypto Crash - Motley Fool

Mai Capital Managements chief equity strategist and regional president, Chris Grisanti, has predicted that this year will be tough for crypto largely due to regulations. However, he expects established cryptocurrencies, such as bitcoin and ether, to do quite well once regulations come into focus.

Mai Capital Managements Chris Grisanti shared his outlook for the cryptocurrency market in an interview with CNBC Thursday. Grisanti, CFA, is chief equity strategist and regional president of Mai Capital Management, a wealth management firm that provides planning and investment advisory services.

Noting that crypto is almost a victim of its own success, Grisanti detailed:

I think its going to be a tougher year for crypto There will be calls for regulation from all over the place from China, from Europe, and here in the United States.

Nonetheless, the equity strategist sees some cryptocurrencies coming out ahead. I do think there will be a great winnowing as well. I think the more established coins like bitcoin and ethereum will do quite well after regulations come into focus, he described.

The strategist elaborated:

Once regulations are in place, institutional investors, I think, will get more comfortable treating bitcoin not like a currency but like gold, which is a hedge against inflation and other things.

A recent survey by Nickel Digital Asset Management, a regulated European digital asset hedge fund manager, also shows that institutional investors are optimistic about more regulation coming to the crypto industry.

Commenting on the U.S. Securities and Exchange Commission (SEC) being granted more power to regulate the crypto space, 73% of institutional investors and wealth managers believe this will have a positive impact on the price of crypto and digital assets and 32% believe it will have a very positive effect.

What do you think about the predictions by the equity strategist? Let us know in the comments section below.

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Near Foundation Raises $150 Million to Bolster Web3 Adoption

On Thursday, the Near Foundation announced the project has raised $150 million from strategic investors such as Three-Arrows Capital, a16z, Mechanism Capital, Dragonfly Capital, and Circle Ventures. Following the announcement, the Near protocols native crypto asset jumped more than 7% ... read more.

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Mai Capital Predicts Tough Year for Crypto Expects Bitcoin and Ethereum to Do Well Once Regulations Come Into Focus Regulation Bitcoin News -...

For years, the U.S. government has maintained a side hustle auctioning off bitcoin and other cryptocurrencies. Historically, Uncle Sam has done a pretty lousy job of timing the market.

The 500 bitcoin it sold to Riot Blockchain in 2018 for around $5 million? That's now worth north of $23 million. Or the 30,000 bitcoin that went to billionaire venture capitalist Tim Draper for $19 million in 2014? That would be more than $1.3 billion today.

The government has obtained all that bitcoin by seizing it, alongside the usual assets one would expect from high-profile criminal sting operations. It all gets sold off in a similar fashion.

"It could be 10 boats, 12 cars, and then one of the lots is X number of bitcoin being auctioned," said Jarod Koopman, director of the Internal Revenue Service's cybercrime unit.

One of the next seizures up on the auction block is $56 million worth of cryptocurrencies that authorities confiscated as part of a Ponzi scheme case involving offshore crypto lending program BitConnect. Unlike other auctions where the proceeds are redistributed to different government agencies, the cash from this crypto sale will be used to reimburse victims of the fraud.

The government's crypto seizure and sale operation is growing so fast that it just enlisted the help of the private sector to manage the storage and sales of its hoard of tokens.

FBI agents finish loading materials into a truck out of the home of United Auto Workers President Gary Jones on Wednesday, Aug. 28, 2019.

Michael Wayland / CNBC

For the most part, the U.S. has used legacy crime-fighting tools to deal with tracking and seizing cryptographically built tokens, which were inherently designed to evade law enforcement.

"The government is usually more than a few steps behind the criminals when it comes to innovation and technology," said Jud Welle, a former federal cybercrime prosecutor.

"This is not the kind of thing that would show up in your basic training," Welle said. But he predicts that in three to five years, "there will be manuals edited and updated with, this is how you approach crypto tracing, this is how you approach crypto seizure."

There are currently three main junctures in the flow of bitcoin and other cryptocurrencies through the criminal justice system in the U.S.

The first phase is search and seizure. The second is the liquidation of raided crypto. And the third is deployment of the proceeds from those crypto sales.

In practice, the first stage is a group effort, according to Koopman. He said his team often works on joint investigations alongside other government agencies. That could be the Federal Bureau of Investigation, Homeland Security, the Secret Service, the Drug Enforcement Agency, or the Bureau of Alcohol, Tobacco, Firearms and Explosives.

"A lot of cases, especially in the cyber arena, become...joint investigations, because no one agency can do it all," said Koopman, who worked on the government's Silk Road cases and the 2017 AlphaBay investigation, which culminated in the closure of another popular and massive dark web marketplace.

Koopman said his division at the IRS typically handles crypto tracing and open source intelligence, which includes investigating tax evasion, false tax returns, and money laundering. His team consists of sworn law enforcement officers, who carry weapons and badges and who execute search, arrest and seizure warrants.

Other agencies that have more money and resources focus on the technical components.

"Then we all come together when it's time to execute any type of enforcement action, whether that's an arrest, a seizure or a search warrant. And that could be nationally or globally," he said.

During the seizure itself, multiple agents are involved to ensure proper oversight. That includes managers, who establish the necessary hardware wallets to secure the seized crypto.

"We maintain private keys only in headquarters so that it can't be tampered with," Koopman said.

In recent years, the government has brought back record amounts of crypto.

"In fiscal year 2019, we had about $700,000 worth of crypto seizures. In 2020, it was up to $137 million. And so far in 2021, we're at $1.2 billion," Koopman told CNBC in August. The fiscal year ended Sept. 30.

As cybercrime picks up and the haul of digital tokens along with it government crypto coffers are expected to swell even further.

Once a case is closed, the U.S. Marshals Service is the main agency responsible for auctioning off the government's crypto holdings. To date, it has seized and auctioned more than 185,000 bitcoins. That cache of coins is currently worth around $8.6 billion, though many were sold in batches well below today's price.

It's a big responsibility for one government entity to assume, which is part of why the Marshals Service no longer shoulders the task alone.

The U.S. General Services Administration, an agency that typically auctions surplus federal assets, such as tractors, added confiscated cryptocurrencies to the auction block earlier this year.

In July, following a more than yearlong search, the Department of Justice hired San Francisco-based Anchorage Digital to be its custodian for the cryptocurrency seized or forfeited in criminal cases. Anchorage, the first federally chartered bank for crypto, will help the government store and liquidate this digital property. The contract was previously awarded to BitGo.

"The fact that the Marshals Service is getting professionals to help them is a good sign that this is here to stay," said Sharon Cohen Levin, who worked on the first Silk Road prosecution and spent 20 years as chief of the money laundering and asset forfeiture unit in the U.S. Attorney's Office for the Southern District of New York.

The process of auctioning off crypto, in blocks, at fair market value, likely won't change, according to Koopman.

"You basically get in line to auction it off. We don't ever want to flood the market with a tremendous amount, which then could have an effect on the pricing component," he said.

But other than spacing out sales, Koopman said, trying to "time" the market to sell at peak crypto prices isn't his objective. "We don't try to play the market," he said.

In November 2020, the government seized $1 billion worth of bitcoin linked to Silk Road. Because the case is still pending, those bitcoins are sitting idle in a crypto wallet. Had the government sold its bitcoin stake when the price of the token peaked above $67,000 last month, coffers would have been a whole lot bigger than if they liquidated at today's price.

https://www.usmarshals.gov/

Once a case is closed and the crypto has been exchanged for fiat currency, the feds then divvy the spoils. The proceeds of the sale are typically deposited into one of two accounts: The Treasury Forfeiture Fund or the Department of Justice Assets Forfeiture Fund.

"The underlying investigative agency determines which fund the money goes to," Levin said.

Koopman said the crypto traced and seized by his team accounts for roughly 60% to 70% of the Treasury Forfeiture Fund, making it the largest individual contributor.

After it's placed into one of these two funds, the liquidated crypto can then be put toward a variety of line items. Congress, for example, can rescind the money and give the cash to other projects.

"Agencies can put in requests to gain access to some of that money for funding of operations," said Koopman. "We're able to put in a request and say, 'We're looking for additional licenses or additional gear,' and then that's reviewed by the Executive Office of Treasury."

Some years, Koopman's team receives varying amounts based on the initiatives proposed. Other years, they get nothing because Congress will choose to rescind all the money out of the account.

Tracking where all the money goes isn't a straightforward process, according to Alex Lakatos, a partner with Washington, D.C. law firm Mayer Brown who advises clients on forfeiture.

The Justice Department hosts Forfeiture.gov, which offers some optics on current seizure operations. This document, for example, outlines a case from May where 1.04430259 bitcoin was taken from a hardware wallet belonging to an individual in Kansas. Another 10 were taken from a Texas resident in April. But it's unclear whether the list is a comprehensive compilation of all active cases.

"I don't believe there's any one place that has all the crypto that the U.S. Marshals are holding, let alone the different states that may have forfeited crypto. It's very much a hodgepodge," said Lakatos. "I don't even know if someone in the government wanted to get their arms around it, how they would go about doing it."

A Department of Justice spokesperson told CNBC he's "pretty sure" there's no central database of cryptocurrency seizures.

But what does appear clear is that more crypto seizure cases are being trumpeted to the public, like in the case of the FBI's breach of a bitcoin wallet held by the Colonial Pipeline hackers earlier this year.

"In my experience, folks that are in these positions in high levels of government, they may be there for a short period of time, and they want to get some wins under their belt," said Welle."This is the kind of thing that definitely captures the attention of journalists, cybersecurity experts."

WATCH: Here's why Fed Chair Jerome Powell wants stablecoin regulation

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The U.S. government has a massive, secret stockpile of bitcoin Here's what happens to it - CNBC

Bitcoin (BTC) may have fluctuated in price this year, but BTC remains a better play than the biggest crypto stocks.

New data currently circulating shows that for all the growth in the industry surrounding Bitcoin, it still pays simply to buy and hold.

Looking at the stock performance of firms with the largest BTC allocations on their balance sheets, it becomes immediately apparent that it was more profitable to hold BTC than those equities at least this year.

Buying crypto stocks to outperform coins is hard, Three Arrows Capital CEO Zhu Su commented alongside comparative performance data from Bloomberg.

Both Bitcoin and Ether (ETH) have fared significantly better than stocks from companies, such as MicroStrategy (MSTR) and Coinbase (COIN), despite the successes of both in 2021.

The figures highlight the differences between traditional and crypto markets, the latter having a degree of freedom of expression long absent from equities, commodities and other assets.

Markets are forward looking. Crypto even more so bc its not under anyones control. Its the only free market left in the world, popular trader and analyst Pentoshi noted earlier this month.

For retail entities, in particular, a dollar-cost averaging strategy involving allocation into BTC, mitigating short-term volatility, thus looks all the more attractive.

Further data from the largest publicly traded mining corporations supports the trend.

Related:Bitcoin nears $50K Here are the BTC price levels to watch next

Versus their inception and even stock price at the time of their initial public offering, the vast majority are significantly lower in BTC terms.

Only BitFarms (BITF) is currently turning a profit as of December.

Nevertheless, the extent of progress among United States mining industry participants has been eye-opening, and as Cointelegraph reported, listing deals continue to flow in.

Texas, looking to become a mecca for mining, could see demand for power jump severalfold by next year.

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Missed out on hot crypto stocks in 2021? It paid just to buy Bitcoin and Ethereum, data shows - Cointelegraph