Category Archives: Bitcoin
Bitcoin stands apart from other crypto, and what that means for US public policy – Cointelegraph
United States President Joe Bidens executive order on digital assets has kickstarted an interagency mission to support financial innovation while protecting American consumers and interests. While many industry leaders welcome the constructive tone, some critics hope for a crackdown. We dont blame them.
Many cryptocurrency projects operate behind thin veils of decentralization. In public, theyre sold on the premise that they distribute power. Behind the curtains, leaders pull the strings. In the recent case of Wonderland, a serial scammer and felon directed a $1 billion treasury.
Many projects secretly pay influencers to shill their tokens. The price pumps. Insiders dump. Naive investors lose money. Sometimes, the shillers are celebrities. And, sometimes, those celebrities leak the surprisingly low cost of their integrity.
Related: Year of sponsorships: Celebrities who embraced crypto in 2021
Hundreds of projects suffer technical vulnerabilities. Seemingly every week, hackers exploit hidden software bugs. The third-largest ever occurred in early February, with $326 million gone. And then in late March, another $600 million poof.
Many cryptocurrencies are blatant scams some, proudly pyramid-shaped. Market participants treat these as facts of life, with oft-used terms for exit scams (rug pulls) and pyramid-shaped projects (Ponzis).
To most, cryptocurrencies look the same, like tomatoes pasted in Aisle 9 only tasteless, useless, and more numerous. The cynical see the menu of cryptocurrencies as a proxy most-wanted list. Neither group is entirely wrong.
Yet one item on the menu stands apart. It is arguably one of the more important technological advances since the internet, itself. Buy it or not, we dont care. But we three professors do care to bring one simple message: Bitcoin (BTC) is special. It deserves study and discussion.
Bitcoin is genuinely decentralized. Tens of thousands run nodes all around the world. Operating a node is easy; you could do so within the hour with an internet-connected computer and a few hundred gigabytes of storage. In 2017, these nodes vetoed a controversial change to Bitcoin that would have upped the networks centralization by making it harder for ordinary people to run a node. In doing so, they trumped a majority of Bitcoin miners, exchanges and other powerful legacy players.
Bitcoins decentralization makes it fair. No foundation enjoys a trademark or governs its monetary policy. This contrasts not only with more centralized cryptocurrencies but with the Federal Reserve, itself. In the past year, three Federal Reserve officials have resigned after a series of, lets say, well-timed trades. Bitcoin has never had any officials resign in disgrace it has no such officials. The network automates these jobs away.
Bitcoins decentralization also makes it secure. Most money is digital and sits under the thumb of third parties like banks and payment processors. But innocent Russian and Canadian citizens remind us that third parties can freeze and seize those balances, especially when subject to state pressure. Reliance on third parties jeopardizes funds. Bitcoin participants can hold their own private keys and thereby save and send value without third parties. Bitcoin is in a different league than other cryptocurrencies. In the digital age, Bitcoins unparalleled level of decentralization makes it the safe haven from state and corporate overreach.
Related: The meaningful shift from Bitcoin maximalism to Bitcoin realism
And unlike most other cryptocurrencies, Bitcoin never had a private token sale to venture capitalists or an initial coin offering to enrich insiders. Bitcoin is the most widely distributed digital asset. In an important sense, it has no insiders only early adopters.
The main early adopter, Satoshi Nakamoto, mined about a million Bitcoin (5% of the maximum supply). Satoshis holdings are fully visible, and Satoshi never spent a single dime. With most other cryptocurrencies, the rich get richer, sometimes in hidden ways, and have more say over the network. Not so with Bitcoin.
Whereas some projects move fast and break things, Bitcoin moves slowly but surely. Bugs are rare. Granted, this conservative approach has tradeoffs. Upgrades are as rare as bugs. And Bitcoin lacks the flexibility of other platforms. But in exchange, countries and corporations feel secure with Bitcoin on their balance sheets.
You may have heard of hacks and stolen Bitcoin. These cases dont involve weaknesses in Bitcoin, itself. They illustrate instead the pitfalls of insecure key storage or relying on third-party custodians.
Related: Satoshi may have needed an alias, but can we say the same?
Finally, Bitcoin is no scam. It can certainly be used for scams much like the U.S. dollar, or other digital assets. But the Bitcoin network offers final settlement of its native asset, much like the Federal Reserve System offers final settlement of the U.S. dollar. People do speculate wildly on the Bitcoin price. Such is the way for early stages of innovation. And people worldwide need it even as privileged Westerners speculate.
Bitcoins design involves tradeoffs, to be sure. Its public ledger makes privacy difficult, though not impossible. It requires energy for its security. And its fixed supply engenders price volatility. But for all that, Bitcoin has become something remarkable: a neutral monetary system beyond the control of autocrats. Ideologues will balk as they seek that perfect but perfectly elusive monetary system. Wise and pragmatic policymakers, by contrast, will instead seek to use Bitcoin to improve the world.
First, we must not assume that cryptocurrencies share more in common than they, in fact, do. Bitcoin leads them all precisely because no one leads it. The policy must begin here from a place of understanding not of cryptocurrency, in general, but of Bitcoin, in particular. As President Bidens executive order conveys, digital assets are here to stay. The general category isnt going anywhere precisely because Bitcoin, itself, isnt going anywhere. We owe it special attention. Not Bitcoin only, but Bitcoin first.
Second, Bitcoin is credibly neutral since the network remains leaderless. Consequently, the U.S. can use and support Bitcoin without picking winners and losers. Bitcoin has, in fact, already won as a globally neutral monetary network. Nurturing the Bitcoin network, using Bitcoin as a reserve asset, or making payments over Bitcoin would be analogous to deploying gold within the monetary system only digital, more portable, more divisible, and easier to audit and verify.
We commend President Biden for recognizing that digital assets deserve attention. Well need all hands on deck from computer scientists, economists, philosophers, lawyers, political scientists, and more to spur innovation and nurture whats already here.
This article was co-authored by Andrew M. Bailey, Bradley Rettler and Craig Warmke.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Andrew M. Bailey, Bradley Rettler and Craig Warmke are fellows with the Bitcoin Policy Institute and the Resistance Money Bitcoin research collective and teach, respectively, at Yale-NUS College, the University of Wyoming and Northern Illinois University. Warmke is also a writer for Atomic.Finance.
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Bitcoin stands apart from other crypto, and what that means for US public policy - Cointelegraph
Missed Out on Bitcoin? Buy This Cryptocurrency Now – The Motley Fool
Given recent events in the cryptocurrency space, I believe it's fair for investors to question whether anything will ever turn out as good as Bitcoin (BTC 2.87%). In a moment, we'll examine why certain cryptocurrency investing theses have legitimately been dismantled recently. This underscores the need for caution when approaching this space.
Bitcoin may be down more than 50% from its high. But its market capitalization is still north of $500 billion. Therefore, many investors understandably believe it's too late to enjoy life-changing gains from buying Bitcoin today, and are looking elsewhere. If that's you, then one cryptocurrency to consider is Theta (THETA 3.22%).
Image source: Getty Images.
In recent years, developers have tried boatloads of new ideas in the cryptocurrency space. And right now, we're rudely awakening to the shortcomings of most.
Take stablecoins, for example. TerraUSD and Luna were developed to maintain stablecoin price parity with the U.S. dollar while taking fiat reserves completely out of the equation. This algorithmic system worked for a while, but a fundamental flaw was exposed and crashed the whole thing. Now other stablecoins without reserves are similarly being exploited. In my opinion, the entire concept of stablecoins is breaking down.
Consider cryptocurrency bridges as another example. Layer-1 blockchains like Ethereum and Solana speak different languages. Yet users frequently interact with multiple blockchains. Bridges are translators, going from one blockchain to another. However, hundreds of millions in value has been stolen by finding and exposing bridge flaws.
It's amazing that after a decade of innovation, we're finding that (despite its shortcomings)Bitcoin still works better than almost anything else that's been tried so far. Many novel ideas in the cryptocurrency space simply aren't working, and this should give investors pause when buying anything new right now.
Theta was created to solve a growing problem. The metaverse, synchronous livestream gaming, and higher-resolution videos all strain our internet infrastructure. And it'll likely only worsen. This is why content-delivery networks (CDNs) have growing businesses -- they speed up the internet by bringing it closer to the end consumer.
Theta could be faster than traditional CDNs because nodes are even closer to end consumers than traditional CDN infrastructure. And Theta intends to be a cheaper option as well -- traditional CDNs can be pricey.
Here's how it works: People can become network nodes by providing bandwidth and staking Theta tokens. For this service, they earn Theta Fuel (TFUEL 3.52%). Nodes sell this Theta Fuel to video platforms (like Theta.tv and Samsung VR). Video platforms pay Theta Fuel as videos are hosted and streamed. Some Theta Fuel is burned in the transaction.Some goes to end users to incentivize them to watch videos.
There are different levels for nodes, the most exclusive of which is the Enterprise Validator Node. Theta has some big players at this level, including Alphabet's Google, Sony, and Samsung. These companies are dreaming up big ideas. But these ideas will be bandwidth hogs. Therefore, it's clear why they're interested in Theta.
By the way, these tech giants might be tempted to develop their own solution to the faster-internet problem. But Theta's idea is patented, which might be why they're choosing partnership instead.
Theta's primary use case right now is video streaming. But the project intends to launch the fourth iteration of its main net before the end of the year. This new version is intended to open up new use cases for Theta, including web hosting.However, different applications have different blockchain needs, which is partly why we have so many layer-1 blockchains to begin with. Different chains solve different problems.
Theta plans to allow greater developer flexibility with subchains. Developers can build what they need. But all subchains are going to speak Theta's language, and will all use Theta Fuel as a standardized gas token. This eliminates the need for potentially problematic bridges.
Image source: Getty Images.
Theta is certainly a big idea that could be extremely valuable. But don't think I'm some crypto clairvoyant predicting life-changing gains in Theta -- as recently as last month, I believed Terra's Luna was a good buy. And it went to zero.
However, even if I'm a blind squirrel, I might still find an acorn occasionally by accident. Therefore, Theta skeptics here should focus on shortcomings in the message, not the messenger. And indeed, there's reason to approach Theta with caution.
I fear Theta's success is being driven by the wrong things so far. For this project to be viable long term, it doesn't matter which players are involved at the top. To the contrary, end consumers need to actually beusing it -- watching videos, etc. However, there isn't much content available for streaming now. And the connection can be spotty, despite its mission to improve delivery speeds.
Weak user adoption could be because of node incentives. While Google and Sony are at the Enterprise Validator level, the network needs thousands more edge nodes to truly be better than traditional CDNs for everyone. Edge nodes earn Theta Fuel. But this token is down about 90% from its all-time high. Simply put, the incentive to provide edge-node services may be too weak. And weak incentives keep new nodes on the sidelines, and leave connection speeds wanting.
That said, maybe a simpler explanation is it's still very early with Theta, and user adoption will come.
To close, I consider cryptocurrency to be a speculative investment, worthy of only a very small percentage of a diversified investment portfolio. Within that small portion of the portfolio, I diversify my crypto holdings, but recognize many of the more obscure projects will likely fail. Theta could be one of those failures, which is why one shouldn't buy much here. However, I do like Theta more than most cryptocurrencies because of its potential and progress to date.
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Missed Out on Bitcoin? Buy This Cryptocurrency Now - The Motley Fool
The Performance Cycle Of Public Bitcoin Miners – Bitcoin Magazine
The below is a full, free article from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.
The purpose of this release in specific will be twofold; the first will be to update readers on the latest updates for publicly-traded miner hash rate, production, and bitcoin holdings. The second will be to present a framework for how to approach investing in bitcoin miners, with a focus on the publicly-traded sector in particular.
With the end of the month near, we will have another round of public miner production updates for all of May 2022 in a couple weeks. With the latest monthly production releases, April 2022 was yet another month of growing hash rate and held bitcoin, despite a slightly lower production month. The group of public miners were tracking below now make up roughly 18% of total network hash rate using their April numbers of 37.91 EH/s and the latest decline in total network hashrate to 209.91 EH/s.
Bitcoin holdings across miners are now up to 46,132 bitcoin worth over $1.3 billion at a $29,000 price. Thats roughly a 7% monthly increase when including miners with reported data for both March and April. All of this data is pre bitcoins market fall from $40,000 so the next month of data updates will be key to see if top public miners are scaling down their bitcoin holdings or hash rate in response.
Hash rate of public mining companies
Hash rate of public mining companies March 2021 to April 2022
Bitcoin holdings of public mining companies
Monthly bitcoin production of public mining companies
Investing in publicly-traded bitcoin miners carries risks that buying bitcoin itself does not, due to the operational risk as well as the reality that public equities trade at multiples of future expected earnings. During environments where treasury yields rise significantly, this causes earnings multiples to fall, which is why equities as a whole have performed poorly over the course of 2022.
However, the dynamics involved with evaluating publicly-traded bitcoin miners is a bit different. Unlike other commodity producers, bitcoin miners often attempt to retain as much bitcoin on their balance sheet as possible. Relatedly, the future supply issuance of bitcoin is known into the future with near 100% certainty.
With this information, if an investor values these equites in bitcoin terms, significant outperformance against bitcoin itself is achievable if investors allocate during the correct time during the market cycle using a data-driven approach.
An extremely simple framework for investors is:
Hash price bull market = Bitcoin miners outperform bitcoin
Hash price bear market = Bitcoin miners underperform bitcoin
Hash price divides miner revenue by hash rate (daily miner revenue per 1 TH/s, as first coined by the team at Luxor).
While there are certainly other variables involved in valuing these companies, including the operational risks and the competence of the management team to just name a couple, this is a simple framework for investors to internalize and utilize going forward.
To start, lets display hash rate since the start of 2020, which hash price is partially derived from.
Average bitcoin hash rate
Below is the hash price (daily miner revenue per TH/s) in both USD and BTC.
Hash price in USD and BTC terms
Currently, hash price is $0.118, which is above the 2020 low of $0.074 but falling rapidly as hash rate (and subsequently miner difficulty) continue to increase as price falls/consolidates.
Lets take a look at the latest hash price bull and bear cycles and how the publicly-traded miners performed benchmarked not against dollars, but instead bitcoin (as this should be the entire purpose of investing in a mining operation).
Below is the hash price from its 2020 low to its 2021 high and the performance of a few publicly-traded miners ($MARA, $RIOT, $HUT) benchmarked to bitcoin. During the hash price bull market (where price rises faster than hash rate), these three names outperformed bitcoin by 318%, 207%, and 62% respectively.
Bitcoin hash price and public mining stocks priced in bitcoin
Following the hash price top in October at $0.4222 dating all the way to today where hash price is $0.1182, these same names have returned the following against bitcoin:
Hash price and public mining company stocks priced in bitcoin
While bitcoin itself has obviously drawn down significantly since its highs made in the fall of 2021 (down 57%), these publicly-traded miners have declined in value by significantly more with most down over 70%.
Public miner stocks percent drawdown from all-time high
Bitcoin public miner market capitalization
Bitcoin public miner stocks priced in bitcoin
The point of this article is to dissect the cyclicality of the mining industry, and how to think of these securities when navigating the bitcoin market cycle.
Another important fact of the bitcoin market is that hash rate has continued to rise in an exponential manner over the course of its history, which in turn means hash price is in a secular downtrend in both USD and BTC terms.
To circle back to a point made earlier, the entire purpose of investing into a mining operation should be to get a return on investment in bitcoin terms. If you cannot achieve a positive ROI in BTC terms, it was likely not a good investment in the first place.
Thus, because of the diminishing block reward and rising hash rate, hash price in BTC terms is falling in lockstep in programmatic fashion with each subsequent positive difficulty adjustment and halving event.
Bitcoin hash price
In simple terms, this means that it is becoming increasingly more challenging to produce a marginal unit of bitcoin with a unit of hash, which is also why nailing the timing of investing in publicly-traded miners as well as the ASIC rigs themselves can be so lucrative.
While nothing is ever certain, using a data-driven approach, it is possible to achieve significant return on investment in bitcoin terms with bitcoin miners, in both the public and private sectors.
While achieving advantageous levels of relative performance requires a fair share of analysis (and luck) regarding both the bitcoin hash rate, the bitcoin price action, and increasingly the macroeconomic backdrop, we expect the opportunity to once again arise for mining investors to outperform in the not-so-distant future.
While that day may not be here today, our mission is to put forward transparent analysis around the bitcoin ecosystem, with an aim to help individuals and institutions alike make informed decisions regarding their savings/investments.
If you enjoyed the content/analysis in todays free issue, make sure to give this post a like, share with a friend, and consider subscribing to our paid research tier
The Bitcoin Magazine Pro Team
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The Performance Cycle Of Public Bitcoin Miners - Bitcoin Magazine
SEVA announces bitcoin mining partnership to help advance the development of SunPark – WV News
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SEVA announces bitcoin mining partnership to help advance the development of SunPark - WV News
The Giving Block Launches First-Ever Bitcoin, Crypto Donations Fund For Miami Nonprofits – Bitcoin Magazine
The Giving Block, a bitcoin and cryptocurrency fundraising platform for nonprofits, announced the Miami Impact Index Fund, allows donors to provide funds to all participating Miami area nonprofits with a single donation, according to a press release sent to Bitcoin Magazine.
When donors provide donations to the fund, each participating nonprofit will receive an equal share of the donation. Donations will also be doubled due to The Giving Block partnering with Shift4, a payment processor, in a program called Caring With Crypto.
The partnership between the two companies will see Shift4 CEO Jared Isaacman personally match any donation up to the first $10 million donated to the program. This effectively doubles any donation made to all of the causes in a single transaction.
The release explains that it is more common for high net-worth individuals to donate property than it is to donate cash, as donating cryptocurrency like bitcoin directly to a 501c3 nonprofit is more tax efficient than a standard cash donation since the IRS classifies cryptocurrency as property.
When a donor donates bitcoin to one of the previously mentioned nonprofits, they receive a tax deduction equal to the fair market value of the bitcoin and they avoid paying the capital gains tax normally incurred by selling bitcoin, meaning that donors would have less access to donatable cash after paying the taxes to receive cash for selling the bitcoin. In short, donors can give more and deduct more from their taxes, which sometimes makes up to a 30% difference, according to the release.
Participants of the fund include but are not limited to: Nicklaus Childrens Health System, NU Deco Ensemble Inc., Third Wave Volunteers Inc, Chapman Partnership, Jackson Health Foundation, Legal Services of Greater Miami, and United Way Miami.
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The Giving Block Launches First-Ever Bitcoin, Crypto Donations Fund For Miami Nonprofits - Bitcoin Magazine
Bitcoin ends week on the edge as S&P 500 officially enters bear market – Cointelegraph
Bitcoin (BTC) struggled to recover its latest losses on May 21 after Wall Street trading provided zero respite.
Data from Cointelegraph Markets Pro and TradingViewshowed BTC/USD trading dipping below $28,700 into the weekend, subsequently adding around $500.
Down 4.7% from the previous days $30,700 highs, the pair looked firmly rangebound at the time of writing after United States stocks indexes saw a volatile final trading day of the week.
The S&P 500, managing to reverse after initially falling at the open, nonetheless confirmed bear market tendencies, trading at 20% below its highs from last year.
Another wacky day in the stock market. Dow Jones -500 early in the day, then recovers it all and closes +8, popular Twitter account Blockchain Backers commented about broader U.S. market performance:
As Cointelegraph previouslyreported, various sources had called for Bitcoin to fall once again in a manner similar to last weeks capitulation event.
Continuing the conservative macro outlook, fellow Twitter commentator PlanC argued that external shifts could still bring Bitcoin down significantly from current levels.
If the Crypto market was in a bubble I would say 25k to 27.5k is the Bitcoin bottom, but there is a decent probability that macro factors drag us down to 22-24k. Significant black swan, 15-20k becomes a possibility, part of a tweet on the day read.
Beyond stocks, the U.S. dollar index (DXY) was consolidating after a strong retracement from twenty-year highs.
With ten days left until the end of the month, BTC/USD risked May 2022 being the worst in terms of returns in its history.
Related:Bitcoin must defend these price levels to avoid 'much deeper' fall: Analysis
Data from on-chain analytics resource Coinglass showed month-to-date returns currently totaling -22% for Bitcoin, the largest retreat of any year except 2021s -35%.
2022, the collective figures confirmed, was also the worst-performing first five months of the year for Bitcoin since 2018.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Bitcoin ends week on the edge as S&P 500 officially enters bear market - Cointelegraph
Your 401(k) and the bitcoin boogie – Star Tribune
Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.
Bitcoin had a very bad day a few weeks ago, its price crashing along with those of other cryptocurrencies, adding a dollop of misery for those who put money into the asset class without snatching it right back out. The crypto market is notoriously volatile, and the trouble this time was the collapse of part of it known as stablecoins. Go figure.
We refer to the recent misery as an added "dollop" because things did, well, stabilize for crypto, which trades around the clock. Even so, the most prominent cryptocurrencies of which bitcoin is the mostest are down by half since November.
So, that'd be a terrible thing to let people muck around with in their retirement accounts, right?
The U.S. Department of Labor thinks so, issuing guidance in March with concerns about the "reliability and accuracy of cryptocurrency valuations" and reminding fiduciaries about their "obligation to ensure the prudence of the options on an ongoing basis." The department isn't necessarily driving a "never crypto" bandwagon, but it's eyeing the reins.
More pointedly, the famed investor Warren Buffett once called cryptocurrency "rat poison squared." More pointedly still, his famed compatriot Charlie Munger recently said bitcoin is "like a venereal disease or something."
And yet.
In April, Fidelity the mostest among the hosts of retirement accounts announced a plan that would put bitcoin on the menu of investment options for 401(k)s. But just bitcoin for now, not the multitude of other cryptocurrencies, and only at levels of no more than 20% of an account, and only for those investors whose employers agree to it.
This isn't necessarily a bad thing, despite any purported resemblance of cryptocurrencies to rodenticides or worse. Even Buffett's and Munger's firm, Berkshire Hathaway, has invested in a bank that focuses on crypto.
Consider this: If you're a buy-and-hold investor of the broad market, which is basically what is recommended for most people for most of their working years, you're also down over the last few months about 20%, as it happens. History suggests that your account will bounce back, but history makes no guarantees about how fast.
Set aside the promises of astronomical long-term gains supporters say are inevitable because of the way some cryptocurrencies, including bitcoin, are designed. While crypto at present can only be described as speculative, there may come a day when it is a reliable alternative to asset classes influenced by central banks. As a nonphysical form of money created using encrypted data (thus the name), the movement of which is managed by decentralized computer networks, not by governments, it could offer investors a way to diversify and potentially steady their accounts.
The Star Tribune Editorial Board wrote last year about signs that crypto was beginning to gain serious traction. The Fidelity plans confirm that. We also wrote that there is room to let the crypto market shake out before deciding how best to regulate it. But that permissiveness can't last forever.
Indeed, there are reasonable questions about Fidelity's plans, and U.S. Sen. Tina Smith of Minnesota is among those raising them. Along with Sen. Elizabeth Warren, D-Mass., Smith wrote a letter to Fidelity asking why the company ignored the Labor Department's guidance; how it plans to deal with various crypto risks, including theft, fraud and the reliability of record-keeping, in addition to volatility; what fees it may charge, and whether it has a conflict of interest as a bitcoin miner. A response is pending.
"My job is not to tell people what to invest in," Smith told an editorial writer. "My job is to make sure that they have accurate and fair information."
That sounds right to us.
In any case, having a bitcoin option in retirement accounts doesn't mean investors have to choose it. They certainly shouldn't if they don't understand it, and even those who think they grasp the concept would be wise to limit their risk to less of their account value than Fidelity would allow. One recommendation we read recently was 1%.
In other words, handle it with care, as with any potential poison.
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Your 401(k) and the bitcoin boogie - Star Tribune
What to know as crypto such as Bitcoin and stablecoins plunge – NPR
A Bitcoin logo is seen during the Bitcoin 2022 Conference at Miami Beach Convention Center in Miami on April 8. Crypto such as Bitcoin have tumbled in recent days as part of a storm hitting all kinds of markets. Marco Bello/Getty Images hide caption
A Bitcoin logo is seen during the Bitcoin 2022 Conference at Miami Beach Convention Center in Miami on April 8. Crypto such as Bitcoin have tumbled in recent days as part of a storm hitting all kinds of markets.
As the old maxim goes, sometimes the bigger they are the harder they fall.
Bitcoin and other cryptocurrencies surged during the pandemic, turning many amateur investors into millionaires, on paper at least. Bitcoin, for example, hit an all-time of nearly $68,000 in November.
Today, it's trading at less than half that amount as part of an intense sell-off that has accelerated in recent weeks.
It's been even worse for an area of cryptocurrencies called stablecoins, in particular one called TerraUSD that has tumbled hard.
Here's a look at what's going on.
Put simply, cryptocurrencies got caught up in the maelstrom affecting broader markets.
Stocks, bonds and other assets have tumbled in recent weeks as investors fear the Federal Reserve will need to raise interest rates aggressively to fight inflation, raising the prospect of a recession.
The falls in broader markets have affected cryptocurrencies, with Bitcoin down more than 20% in the past two weeks.
The selloff has been worse for some of the newer cryptocurrencies such as Dogecoin, which started as a joke and then took off, in part, thanks to the support of billionaire Elon Musk.
It's a stark reversal from a few months ago, when actors such as Matt Damon and Larry David were pitching crypto companies in Super Bowl commercials.
Actor Matt Damon speaks onstage during Focus Features' "Stillwater" panel at the Deadline Contenders Film: New York event in New York City on Dec. 4. Damon has appeared in commercials for a company called Crypto.com. Michael Loccisano/Getty Images for Deadline hide caption
Actor Matt Damon speaks onstage during Focus Features' "Stillwater" panel at the Deadline Contenders Film: New York event in New York City on Dec. 4. Damon has appeared in commercials for a company called Crypto.com.
Yes, but it hasn't turned out to be one, at least so far.
Bitcoin was the first cryptocurrency and is still the most popular of them all.
Proponents of Bitcoin had long touted the digital currency as an inflation hedge, in part because there is a finite amount of it.
But Bitcoin has tumbled hard, along with stocks.
If Bitcoin was seen as a true hedge against inflation, it should be rallying given that inflation is at its highest in decades.
"A lot of people thought it would be an inflation hedge, but there's really very little data to prove that," says Randy Frederick, a managing director at Charles Schwab who covers cryptocurrencies. "Most recently, it has not moved up as the market has moved down. Had it been an inflation hedge, it might have done that."
In fact, Bitcoin is reacting just like any other riskier asset such as stocks.
Still, the argument of Bitcoin as an inflation hedge is not quite dead either, experts say.
Bitcoin may be the oldest of the cryptocurrencies, but it has only been around for just over a decade.
That means analysts don't have a lot of historical data. Frederick, for instance, says we'll know a lot more about how Bitcoin behaves through more market cycles.
A sign that reads "Bitcoin is going to the moon" is seen during the Bitcoin 2022 Conference at Miami Beach Convention Center in Miami on April 8. The expression has become popular among some Bitcoin enthusiasts. Marco Bello/Getty Images hide caption
A sign that reads "Bitcoin is going to the moon" is seen during the Bitcoin 2022 Conference at Miami Beach Convention Center in Miami on April 8. The expression has become popular among some Bitcoin enthusiasts.
Cryptocurrencies have spawned offshoots and led to more sophisticated or as some regulators see them, dangerous assets.
Stablecoins such as tether or USD Coin are a type of crypto that are gaining in popularity.
Most stablecoins are meant to be backed by real assets. That means that for every dollar-worth of a stablecoin, the exchange or the seller would need to set aside the equivalent in a real fiat currency, such as the dollar, or the equivalent amount in an easy-to-trade security such as government bonds.
That's what is supposed to make them more "stable." If the buyer of the stablecoin wanted to cash out of that virtual currency, it should be easy since the exchange is supposed to have the money at hand, similar to how bank customers expect to be able to withdraw their money at any time.
But regulators have long questioned whether exchanges really do keep those hard assets aside in an account. Moreover, stablecoins have created their own offshoots.
One of them, TerraUSD, has run into big trouble in recent days. TerraUSD is known as an algorithmic stablecoin because it relies on financial engineering to maintain the 1-to-1 peg between the stablecoin and the backup assets.
TerraUSD is even pegged to another cryptocurrency called Luna.
The stablecoin cratered to 14 cents as of Friday, well below the $1 it should theoretically be fetching.
Pat Tschosik, a senior portfolio strategist with Ned Davis Research, says TerraUSD's troubles could be part of a potential winnowing of cryptocurrencies.
"It's still really young," he says, of crypto. "You know, this is still a developing area. There is going to be speculation. There is going to be booms and busts along the way, and this is all still new."
Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. Stocks and other markets have tumbled in recent weeks over economic fears. Spencer Platt/Getty Images hide caption
Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. Stocks and other markets have tumbled in recent weeks over economic fears.
More broadly, the outlook for cryptocurrencies will likely continue to be tied to broader market sentiment.
But the falls in cryptocurrencies and the collapsing value of TerraUSD stand to alarm policymakers such as Treasury Secretary Janet Yellen and Securities and Exchange Commission Chair Gary Gensler.
That may lead to more regulation of cryptocurrencies in general.
Sustained falls in cryptocurrencies could also raise doubts about the future of the virtual money more broadly, just when there had been signs that it was trying to mature, with more and more professional investors starting to trade them.
Last month, Fidelity, the largest provider of retirement plans, announced it would allow employers to offer Bitcoin in 401(k) plans, although the Department of Labor has cautioned employers against doing that.
Still, cryptocurrencies also have a lot of fanatical followers who are used to steep selloffs and reversals, and many of them believe that this is a short-term decline.
Tschosik from Ned Davis Research, for example, is "long-term bullish on Bitcoin," he says. "We still see the acceptance of it continuing to expand."
He points to millennials, for example, who want to invest in cryptocurrencies because they seem as as a "legitimate option."
Not everybody agrees, however, leaving the future of cryptocurrencies uncertain.
Link:
What to know as crypto such as Bitcoin and stablecoins plunge - NPR
Russia Legalizing Bitcoin And Crypto Is A Matter of Time, Says Minister of Industry And Trade – Bitcoin Magazine
Denis Manturov, Minister of Industry and Trade of the Russian Federation, recently expressed his opinion that bitcoin and other cryptocurrencies being legalized in Russia is just a matter of time, according to a report from Russian state news agency TASS.
At an educational event called New Horizon, when asked whether or not Russia would be legalizing bitcoin or any other cryptocurrency, Manturov stated:
The question is when it will happen, how it will happen and how it will be regulated. Now both the Central Bank and the government are actively engaged in this.
Currently, Russian authorities are discussing the future of cryptocurrencies and mining. The Bank of Russia pushed for a complete ban on cryptocurrency, citing systemic threats to the current financial system.
The Ministry of Finance, however, has held the position that cryptocurrencies should be legal and well-regulated and PresidentVladimirPutin also pleaded with regulatory agencies to come to an agreement on the matter due to Russias natural resource advantages.
But everyone tends to understand that this is a trend of time, and sooner or later, in one format or another it will be carried out, said Manturov at the New Horizon event. But, once again, it should be legal, correct, in accordance with the rules that will be formulated.
This past February, the Russian government approved the concept of regulating bitcoin and other cryptocurrencies based on a proposal drafted by the Ministry of Finance. During the same month, the Ministry of Finance also submitted a bill.
The Ministry of Finance reportedly expects legislation regulating bitcoin and other cryptocurrencies will be introduced this year and is also working on the collection of tax as it relates to cryptocurrency.
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Russia Legalizing Bitcoin And Crypto Is A Matter of Time, Says Minister of Industry And Trade - Bitcoin Magazine
Crashes are the best times to get rich heres why Robert Kiyosaki thinks bitcoins plunge is great news and how you can take advantage of it – Yahoo…
Crashes are the best times to get rich heres why Robert Kiyosaki thinks bitcoins plunge is great news and how you can take advantage of it
Bitcoin is on a wild ride.
The worlds largest cryptocurrency soared to $68,990 last November. Now, its at around $29,000 a staggering 58% pullback from the peak.
If the downtrend continues, Rich Dad Poor Dad author Robert Kiyosaki says hes ready to start buying.
BITCOIN CRASHING. Great news, he tweeted last week. I am waiting for Bitcoin to crash to 20k. Will then wait for test of bottom which might be $17k. Once I know bottom is in I back up the truck. Crashes are the best times to get rich.
Kiyosaki added that bitcoin is the future of money and that its bottom may be even lower at $11,000.
In todays market environment, its not easy to be a contrarian investor. But if you share Kiyosakis view, here are three simple ways to capitalize on bitcoin's potential rebound.
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The first option is the most straightforward: If you want to buy bitcoin, just buy bitcoin.
These days, many platforms allow individual investors to buy and sell crypto. Just be aware that some exchanges charge up to 4% in commission fees for each transaction. So look for apps that charge low or even no commissions.
While bitcoin commands a five-figure price tag today, theres no need to buy a whole coin. Most exchanges allow you to start with as much money as you are willing to spend.
Exchange-traded funds have risen in popularity in recent years. They trade on stock exchanges, so its very convenient to buy and sell them. And now, investors can use them to get a piece of the bitcoin action, too.
For instance, ProShares Bitcoin Strategy ETF (BITO) started trading on NYSE Arca in October 2021, marking the first U.S. bitcoin-linked ETF on the market. The fund holds bitcoin futures contracts that trade on the Chicago Mercantile Exchange and has an expense ratio of 0.95%.
Theres also the Valkyrie Bitcoin Strategy ETF (BTF), which made its debut a few days after BITO. This Nasdaq-listed ETF invests in bitcoin futures contracts, and charges an expense ratio of 0.95%.
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When companies tie some of their growth to the crypto market, their shares can often move in tandem with the coins.
First, we have bitcoin miners. The computing power doesnt come cheap and energy costs can be substantial. But if the price of bitcoin goes up, miners such as Riot Blockchain (RIOT) and Hut 8 Mining (HUT) will likely receive growing attention from investors.
Then there are intermediaries like Coinbase Global (COIN) and Paypal (PYPL). When more people buy, sell, and use crypto, these platforms stand to benefit.
Finally, there are companies that simply hold a lot of crypto on their balance sheets.
Case in point: enterprise software technologist MicroStrategy (MSTR). It has a market cap of $2.3 billion. Yet its bitcoin count reached 129,218 at the end of March, a stockpile worth around $3.8 billion.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.