According to online reports, Galatasaray S.K. and Netherlands national football team’s Ryan Babel has been shilling bitcoin to his teammates.
Babel has played for Ajax, Liverpool, Fulham and others. He has played in the UEFA European Championship and the World Cup, building connections to some of the best-known and well-compensated soccer players in Europe. Babel has shared his eagerness to accumulate bitcoin on Twitter, so it is not a stretch to imagine that the reports are accurate.
If Babel and his teammates have been buying bitcoin for the past six months, for example, then they’ve made some hefty gains. This is as important to athletes as it is to anyone else, as they need a place to store their wealth in the best possible way. Securing their wealth behind a wall of cyber hornets and a 21 million supply cap ensures it will not deteriorate, but actually increase in value. The only meaningful difference between Bitcoin plebs and pro athletes is that the latter tend to have tens- to hundreds-of-millions of dollars more than the former with which to buy bitcoin.
Athletes have also been buying bitcoin here in the U.S., with NFL player Russell Okung using Strike to get a sizable portion of his $13 million contract paid to him in bitcoin. Why? Because Bitcoin is the perfect tool to protect one’s wealth. The average career length of athletes isn’t too long, and even though they make a lot of money, they need to protect it for the rest of their lives. Bitcoin excels at this.
Buying bitcoin, especially at around $60,000 prices, gives professional athletes a massive potential upside in gains. To put how big the gains can be in perspective: Babel reportedly earned a $2.37 million signing bonus in 2019, and the price of bitcoin rose by 87 percent across that year. Had he been able to allocate that bonus to BTC, he would have made more than $2 million in profit.
Rich athletes are figuring out that if they want to make a lot of money, all they’ve got to do is accumulate bitcoin, and sit on it.
He thinks China is strategically approaching Bitcoin.
Speaking at a virtual event for the conservative Nixon Seminar, PayPal co-founder and venture capitalist Peter Thiel opined openly on whether China is set to win a financial arms raise with the US.
The weapon? Bitcoin.
“I’m sort of a pro-crypto, pro-Bitcoin maximalist,” Thiel said. “I do wonder if at this point Bitcoin should also be thought of in part as a Chinese financial weapon against the US. It threatens fiat money but it especially threatens the US dollar.”
“Even though I’m a pro-crypto, pro-Bitcoin maximalist person, I do wonder whether if at this point Bitcoin should also be thought of in part as a Chinese financial weapon against the U.S.” says @Paypal co-founder Peter Thiel.
More on cryptocurrencies from The #NixonSeminar: pic.twitter.com/sIUQTQEWgr
— Richard Nixon Foundation (@nixonfoundation) April 7, 2021
The question Thiel was ostensibly answering wasn’t about Bitcoin per se, but about China’s plan to create a digital yuan. Was this a “threat to the dollar and its dominance of world markets?” moderator Hugh Hewitt wanted to know.
Thiel’s view is that it isn’t; he dismissed the coin, which would be issued by the country’s central bank, as “some sort of a totalitarian measuring device.”
The real concern, Thiel said, is Bitcoin because it’s more likely to serve as a functional reserve currency. The less pervasive the dollar is, the less effected it is by American monetary and foreign policy.
“If China’s long Bitcoin, then perhaps from a geopolitical perspective the U.S. should be asking some tougher questions about exactly how that works,” he said.
The seminar, titled “Big Tech and China: What Do We Need from Silicon Valley?,” also included former Secretary of State Mike Pompeo and former National Security Advisor Robert O’Brien.
Pompeo agreed that a digital yuan “has a huge impact for [China’s] surveillance capacity,” though he seemed to assert that such a coin itself would also allow it to make cross-border transactions that could skirt US sanctions: “They want to make sure that when Secretary Pompeo issues sanctions against the Iranian leadership, that there is a way to purchase Iranian oil.”
Thiel has invested in multiple crypto ventures including Bitcoin mining company Layer1 Technologies and blockchain development platform Alchemy.
According to an analyst at CFRA Research, VanEck, Fidelity Investments, and Valkyrie Digital Assets may not see their Bitcoin exchange-traded funds, or ETFs, approved by U.S. regulators for up to two years.
In an interview on CNBC’s ETF Edge Monday, Todd Rosenbluth, head of ETF and mutual fund research at CFRA, told host Bob Pisani that he believed the U.S. Securities and Exchange Commission, or SEC, would extend the timeline for considering the Bitcoin ETF first pitched by investment management firm VanEck in January. The SEC officially acknowledged receipt of the Bitcoin ETF application on March 15, giving the regulatory body until April 29 to come to a decision or extend the deadline.
“We’ve got a number of firms that have either gone through the filing process or have previously filed but are waiting for more clarity,” said Rosenbluth. “The SEC is less likely we think to try to pick a winner, as to who comes first and I think we’re more likely to see them — if they do approve an ETF — to approve multiple Bitcoin-related ETFs.”
He added:
“We’ve got a number of firms that have entered. We think we’re likely to see one in the coming year or two, but we don’t have a firm timeframe as to when the answer would be yes.”
VanEck and Valkyrie both filed a registration with the SEC to form a Bitcoin ETF in January, with Fidelity following in March. The regulatory body has offered no indication as to what it will decide, but given its seeming reticence in previously approving a crypto ETF, many experts do not expect a decision soon.
The U.S. may not yet have approved a crypto ETF, but Canadian firms have been leading the way in North America. Toronto-based Purpose Investments launched a Bitcoin ETF in February, and Ninepoint Partners is reportedly planning to change its Bitcoin trust offering to an exchange-traded fund as well. Both investment fund manager 3iQ and Evolve Funds Group announced they had filed a prospectus with Canadian regulators for approval to begin trading crypto ETFs.
Following the Fidelity filing last month, Rosenbluth said it was “a question of when, not if, the SEC will approve a Bitcoin ETF.” He seemed to be implying on Monday that the approval of even one in the United States could potentially open the floodgates for firms looking to form crypto ETFs.
“If they approve someone, they’re gonna approve all of them,” said Pisani.
It wants Grayscale to make a tender offer to GBTC investors.
At least one investor isn’t happy with the performance of the Grayscale Bitcoin Trust (GBTC), which holds more than 3% of all Bitcoin in circulation. So it’s putting Grayscale on blast.
In anopen letterto the Grayscale board of directors published yesterday, investment firm Marlton took aim at GBTC’s discount to NAV (net asset value), calling it “abysmal” despite Grayscale’s attempts to bring the price up.
Marlton, which says it’s a substantial GBTC holder, estimates the discount has lost GBTC stockholders $3.1 billion, even as investors are also paying a 2% management fee for the privilege. It’s asking Grayscale to conduct a tender offer that would allow shareholders to cash out at a higher price than GBTC’s market value.
The Grayscale Bitcoin Trust allows certain investors to get exposure to Bitcoin’s price without actually buying Bitcoin. Grayscale instead sells shares in a trust that roughly correlates to the price of Bitcoin; it custodies the coins on investors’ behalf in exchange for a fee. However, partly due to limitations in what shareholders can do—there is a lengthy lockup period where funds can’t be withdrawn—shares rarely sell for the same price as actual Bitcoin.
For five straight years, the majority of its existence, GBTCsold at a premium, meaning that it cost people more to buy shares in Bitcoin than actual Bitcoin. That was, by and large, accepted because they could also cash out at a premium later.
That streak was snapped in February. Now, GBTC has traded at a discount for more than a month and is currently at -8%. Therefore, those investors who bought at a higher price are getting hosed by a much lower one and not getting the full advantage of a Bitcoin bull run that has taken the asset from $32,000 at the start of the year to $56,000 today.
“It’s fine for new investors into GBTC since they’re getting a discount but for long term shareholders like Marlton it’s not right and closed-end funds like GBTC have a lot of mechanisms they can and do employ to close that gap,” a representative for Marlton toldDecryptvia email. “GBTC needs to do that. That’s partially why you pay the 2% fee.”
Marlton is a family office, a private investment firm for ultra-high-net-worth individuals—exactly the sort of security-conscious folks for whom it makes sense to pay Grayscale’s management fees instead of dealing with seed phrases and private keys.
Marlton’s asking that Grayscale hold a Modified Dutch Auction Tender Offer for shares. Essentially, it would allow Grayscale to buy back shares during a short, pre-established time frame for a set value. “We believe a tender offer would materially narrow — if not eliminate — the discount to NAV, immediately offering stockholders confidence in the Sponsor’s ability to manage the Fund’s discount,” Marlton Managing Partner James Elbaor wrote in the letter.
Grayscale declined to comment toDecrypt,but it announced earlier this week that it intends to convert GBTC into an exchange-traded fund (ETF), a type of investment vehicle that trades more like a stock. Doing so would allow it to lower management fees while also keeping share trading prices much closer to the price of Bitcoin. However, since the SEC has yet to grant a Bitcoin ETF application, the firm may need to find a shorter-term fix to keep existing investors happy.
Sweden’s plans to create a central bank digital currency might be more complicated than initially thought according to a new study published by the nation’s central bank. It estimated that the Scandinavian country could delay the release of the e-krona until 2026.
How Does a Cashless Future Look Like?
The Riksbank published the results of the first phase of a pilot project exploring an eventual post-cash era and its consequences. The simulation showed that the rapid speed at which cash is disappearing presents ”potential problems.” However, a digital currency under the control of a central bank has the ability to address them.
The project is colossal, and Sweden’s central bank, which is the oldest one in the world, keeps delaying the timeframe for completing it. Initially, the institution announced it will be ready with the task and move ahead with the e-krona by 2018.
The Riksbank now indicated the current pilot project won’t see the light of day before next year. Some more pessimistic projections, though, stretched the timeframe until the end of 2026.
Mithra Sundberg, who leads the Riksbank project in Stockholm, said that it’s vital to avoid settling on the technology before realizing precisely what the digital currency needs to do. The bank indicated it’s not replacing cash and moving forward with the task will most likely require a new legal framework before releasing it.
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In the meantime, the largest economy on the Scandinavian peninsula is proud to be one of the smallest users of cash in the world. During the pandemic, cash usage in the country was at its lowest level ever. According to Riksbank’s research, less than one-tenth of all payments in the county are made in cash.
Sweden. Source: GlobalRiskInsights
The Controversy From Other Countries
Norway, Sweden’s neighboring country and another mainly cashless nation, also weighed in on the CBDC topic. However, its central bank said there’s ”no acute need” to introduce digital currency yet.
Other countries also spoke about being a first-mover in the field of digital currency. Federal Reserve Chairman Jerome Powell recently opined that there is no need to force the process. He noted that the US would ”rather be right than first”.
Sundberg noted that Sweden’s e-krona project still needs to explore the monetary policy consequence of such a transformation. But her team had ”looked at the technical possibilities of being able to charge interest.”
Meanwhile, the Riksbank has focused on a so-called two-tier model. This system will be responsible for the circulation and redemption of CBDC. Michael Lindgren, the technical project manager at the entity, mentioned that this model will allow direct contact between the so-called participants, such as banks or payment firms, and the end-users.
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A widely-followed crypto strategist who continues to build his following amid savvy altcoin calls is naming five big-name crypto assets that he says are poised to erupt.
In a new tweet, the trader known as Kaleo tells his 137,400 followers that he sees peer-to-peer digital currency Litecoin (LTC/USD) surging to as high as $2,300 from its current price of $233, representing potential gains of over 887%.
“LTC 2017 Fractal Update: I posted this in early February. It doesn’t seem quite as crazy at the moment, does it? Long your longs.”
Source: Kaleo/Twitter
Another coin on Kaleo’s list is smart contract platform for entertainment and media TRON (TRX/USD), which he says has retested previous resistance as support and is now gearing up for a bullish ascent of 75% in the near term from its current price of $0.12 to $0.21.
“TRXI write the rules. Get ready.”
Source: Kaleo/Twitter
Next up is smart contract platform Tezos (XTZ/USD). According to Kaleo, XTZ is primed to follow the footsteps of Chainlink (LINK) when it ignited a massive breakout that sent the decentralized oracle platform from about $5 to over $25.
$XTZ
Insane. The chart looks so much like $LINK did in July of last year. pic.twitter.com/DI8cLVSNxA
— K A L E O (@CryptoKaleo) April 5, 2021
The fourth altcoin on Kaleo’s radar is exchange token Binance Coin against Bitcoin (BNB/BTC). The trader expects the pair to climb as high as 0.01 from its current value of 0.0069 for gains of nearly 45%.
“BNB/BTCThis is your future.”
Source: Kaleo/Twitter
The last coin is leading smart contract platform Ethereum (ETH/BTC). According to Kaleo, the writings on the wall say that ETH/BTC ripe for a huge breakout.
“ETH/BTClooks like it’s about to explode upwards.”
Source: Kaleo/Twitter
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Dallas Mavericks owner and Dogecoin proponent Mark Cuban says nonfungible tokens may have the ability to disrupt and even transform industries dealing with digital identity verification and electronic signatures.
In an episode of the Unchained podcast released yesterday, Cuban said “anything documentation driven” could potentially be transformed by nonfungible tokens, or NFTs. The billionaire said that smart contracts could destabilize companies like electronic signature technology firm DocuSign.
“Right now we see quite a bit of utilization of smart contracts for NFTs but those are really just proof of concepts for what can happen in the business world applications like insurance, legal documents,” said Cuban.
Though the Dallas Mavericks owner said the NFT industry as a whole may change certain industries, his involvement was personally limited to buying the things he “likes to look at.” He’s also a major investor behind the marketplace Mintable.
Cuban proposed using NFTs with real-world data at basketball games, saying Mavericks fans could hold tokens featuring “highlights from the first quarter” or events with the time minted on the blockchain. Others in the crypto space have been experimenting with similar use cases, by geotagging street art and developing technology capable of recording and encrypting data including temperature, air quality and motion to NFTs.
“I think there’s going to be a fair amount of winners [in the NFT industry]” said Cuban. “Probably within the next 3-5 years you’re gonna see a huge consolidation where there’s somebody who was on the outside looking in or somebody who got bigger that we didn’t expect to get big and they buy up the others to get their NFT base and get their customers.”
The statement seemingly represents a change in the billionaire’s stance on the technology, given he said in January that valuations in the NFT space were inflated and implied his involvement was more of an experiment.
Coinbase CEO Brian Armstrong says he plans to release three songs as NFTs.
He’s teamed up with a DJ called DAVI.
DAVI will pocket the earnings.
You have to imagine that, as Coinbase prepares to go public later this month, CEO Brian Armstrong has a lot on his plate. It’s the most valuable cryptocurrency exchange in the US—the company just announced a Q1 profit of between $730 and $800 million, and shares have already been selling in the mid-$300 range in private transactions.
Apparently, though, Armstrong still has time to indulge his hobbies.
In a tweet today, he said he plans to release “some electronic music” in the near future, in collaboration with a DJ called DAVI. Three original songs will be auctioned off in the form of NFTs, or non-fungible tokens—the digital collectibles that have spawned a white-hot market over the past few months.
1/ Over the next few days I’ll be releasing some electronic music that I created with DJ DAVI (David Khanjian). We’ll be releasing them as NFTs.
— Brian Armstrong (@brian_armstrong) April 7, 2021
Electronic musicians like Grimes, Jacques Greene, and Yaeji have all released their own NFTs. M.I.A. plans to auction one off tomorrow.
Armstrong isn’t the first billionaire with an electronic side project: Goldman Sachs CEO David Solomon moonlights as DJ D-Sol. Heplayed a concert in the Hamptons with the Chainsmokersat the height of the pandemic.
Armstrong said that DAVI (real name David Khanjian) taught him the basics of composing electronic music (with Ableton Live!) last year. The three NFTs will be auctioned off on Zora, a dedicated NFT auction house that’s funded in part by Coinbase’s venture arm.
DAVI, presumably not a crypto billionaire, will keep the proceeds of the NFT sales.
In his annual letter to his shareholders, J.P. Morgan Chairman and CEO Jamie Dimon addressed the status of regulations towards Bitcoin and cryptocurrencies in the United States. At the beginning of the letter, Dimon calls 2020 a “strong” year for the banking institution in spite of the pandemic Covid-19.
Dimon seems to have changed his stance, as have other executives in the banking sector, after giving statements against Bitcoin and cryptocurrencies. In a section dedicated to the inability of the United States to “deal” with its past, he states that the country has been “distracted” about its future.
$JPM Chairman and CEO, Jamie Dimon, releases his Annual Letter to Shareholders.
— J.P. Morgan (@jpmorgan) April 7, 2021
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In that sense, Dimon points out 3 “serious emerging issues”: shadow banking, financial information management, and the legal framework on cryptocurrencies. J.P. Morgan executive calls on regulators and financial system actors to take a more active stance, Dimon said:
Regulators need to decide what they want included in the regulatory system – and what they don’t want included (…). We need to recognize that if a regulated system has higher capital requirements than the market demands, then the product will move outside of the regulated system.
U.S. losing edge on Bitcoin?
The U.S. banking system holds close to $4 trillion in cash o Treasury securities. JP Morgan’s CEO wonders if the bank shouldn’t use that liquidity to “help the economy grow”. However, he claims there are many obstacles that prevent this capital from “actually” reaching the banks or the “broader” economy.
Therefore, he reaffirms his argument that regulations in the United States must undergo “calibration”. Dimon wrote:
This calibration will be one of the main factors in determining what ends up in the regulatory system – and what doesn’t. It is a fine balance. Too much capital and liquidity could possibly slow down the economy and push lots more to the shadow banking system. Too little capital and liquidity could make banks riskier and more subject to failure.
When referring to cryptocurrencies several members of different regulatory bodies in the U.S., from SEC Commissioner Hester Pierce or former OCC Brian Brook, have acknowledged that “well” regulated products are a benefit for all players in the economy.
Dimon agreed, adding that regulated assets “generally” have greater transparency, more scrutiny, and support.
In the United States, numerous institutions have called for the approval of an Exchange Traded Fund (ETF) for Bitcoin. In that way, institutional investors hope to gain exposure to the BTC.
If regulators continue to fail to recognize the growth of the crypto market, they could deepen the advantage that other countries, such as Canada, appear to be consolidating in the area.
At the time of publication, Bitcoin is trading at $56,180 with 2.8% losses in the last 24 hours.
BTC with small losses in the 24-hour chart. Source: BTCUSD Tradingview
It is the way that Hemingway penned the process of going bankrupt: first comes a series of incremental steps which bring you closer to bankruptcy, until reality hits you and a sudden realization of what has occurred dawns upon you.
This process can be thought of as a universal one: it applies to many things in life, like achieving success, declining health or the once-in-a-lifetime emergence of a brand-new asset class.
Across the “gradually, then suddenly” spectrum, Bitcoin is inching closer and closer to the “suddenly” part—and this quarter is an immaculate example of that.
In this piece, we will provide a short overview of all the Bitcoin news in the first quarter of 2021. Let’s dig in.
Corporate Treasury Adoption
High-profile companies continued to accumulate bitcoin in their treasury, with Square buying $170 million worth of BTC and MicroStrategy performing the carry trade of the decade by taking out a $1.05 billion bond loan at 0% interest to buy bitcoin.
The biggest splash this quarter was made by Tesla’s surprise bitcoin investment when they put $1.5 billion (7.7%) of their cash holdings into bitcoin, started accepting bitcoin payments for their cars (promising to not convert the proceeds into fiat) and, to top it off, contributed an important security patch to the open-source ecosystem’s BTCPay Server project. Just like that, the company owned by the world’s richest man established itself as a Bitcoin ally—from zero to 100, in less than a quarter.
Other, smaller publicly traded companies also piled on: Marathon invested $150 million, Seetee with $58.6 million and Meitu with $17.9 million. It is reasonable to assume that more companies are accumulating bitcoin but do not plan to announce it. One such example is a New Zealand retirement fund which had allocated 5 percent to bitcoin back in October 2020 but was only recently reported or German company SynBiotic which did not disclose its holdings, just the intention to shift free capital into BTC.
A survey showed that 5 percent of finance executives plan to hold BTC this year which is certainly a much larger number than the handful of organizations that have publicly announced holdings so far.
Financial Institution Support
Like a set of dominos, every financial institution seems to be scrambling to announce support for bitcoin as their competition is rushing to do the same, resulting in a whirlwind of announcements.
Bank of New York Mellon, the world’s largest custodian with $41 trillion assets under management (AUM) and the US’ oldest bank announced that it will offer custody for digital assets like bitcoin.
A day after, news broke about the sixth largest European bank—Deutsche Bank—prototyping its own digital custody platform and aiming to roll out a minimum viable product in 2021.
Then news started flooding in:
Even popular payment networks rushed to announce support for digital assets:
Mastercard announced that they plan to integrate cryptocurrencies into their network.
Visa announced support for USD Coin to be used to settle transactions on its payment network. Admittingly on the Ethereum blockchain, this is a large step forward for the industry; it is not a stretch to imagine them extending support for lightning. CEO Al Kelly mentioned that they are working on enabling bitcoin purchases on Visa credentials.
PayPal launched a new service that allows US customers to seamlessly use bitcoin as payment to the company’s 29 million merchants while also signaling a desire to move into custody with their recent acquisition of Curv.
Smaller banks around the world are also converging on bitcoin support, just not making the news. For example, a small private German bank, Donner & Reuschel, which has been in business for 223 years, is offering cryptocurrency buying and custody or Blue Ridge Bank which became the first US commercial bank to provide access to bitcoin at its ATMs, allowing people to purchase directly from them.
Institutional Interest
Institutions continued to show interest for the asset throughout 2021, with BlackRock, the world’s largest asset manager, admitting it started to dabble in bitcoin and Soros Fund Management implying that they already own bitcoin.
Canada made headlines earlier this year with the approval of North America’s first bitcoin ETF, Purpose’s Bitcoin ETF, has amassed over $950 million ($1.2 billion Canadian dollars) of assets under management so far, beating Canada’s largest gold ETF which is at approximately $855 million (CA$1.08 billion) AUM. This product also broke the Canadian record for first-day trading volumes of an ETF by trading 10x the average first-day volume of an average Canadian ETF. Soon after, Canada saw two more bitcoin ETFs (Evolve and CI Galaxy) and is on track to have up to five ETFs with $1.6–2.4 billion (CA$2–3 billion) in AUM.
Meanwhile, over in the United States, the SEC is drowning in bitcoin ETF applications. A US-based bitcoin ETF seems imminent. There are six firms that have filed applications to the SEC proposing bitcoin ETFs that either track and hold the underlying asset directly or have more indirect exposure through funds which invest in bitcoin. As of writing, the firms who have applied are Fidelity, Goldman Sachs, NYDIG, SkyBridge Capital, Valkyrie and Cboe.
To scour the full continent, South America also approved its first ETF in Brazil and is set to go live in summer 2021.
A View of the World in 2021
Just as we were all ready to take a break from 2020, this year proved to be just as dynamic.
It all started with the capitol riots and massive censorship of sitting president of the United States Donald Trump, where several high-profile internet platforms acted in a coordinated fashion to completely remove him from the mainstream internet, with some banks also announcing they would stop doing business with him. Regardless of your political views, this massively unprecedented event sent shocks throughout the world by exposing the scary power that these centralized platforms have. It only goes to show that a censorship-resistant and permissionless currency is desperately needed in a world which can erase even the most prominent figure in a matter of days.
Countries burdened with inflation and a failing currency saw their bitcoin interest skyrocket, with Google searches for bitcoin in Argentina reaching peak popularity (300 percent-plus growth) and a spike in Turkey, where their currency lost 15 percent purchasing power in a single day. Bitcoin seems to be heavily favored compared to gold in such burdened countries, consistently surpassing gold’s Google search volume in Venezuela and Nigeria.
In a world which seems broken, everything seemingly continues to head downhill. Broad money supply was already set to increase 12 percent year over year just from the current planned Federal Reserve purchases ($120 billion a month) when the International Monetary Fund (IMF) urged every country to take on more debt and “spend as much as it can.”
This advice was seemingly taken, as the United States signed a $1.9 trillion stimulus package, followed up by immediately announcing a newly planned $2.3 trillion plan for rebuilding infrastructure. Modern monetary theory is in full effect, as the Federal Reserve is set to own more US treasuries than foreigners any minute now.
As always, inflation numbers are unlikely to reflect what’s actually happening, as official numbers can rarely be trusted. The Federal Reserve’s chairman Jerome Powell asserts this belief as he publicly states that the real unemployment rate is closer to 10 percent compared to the officially stated one of 6.3 percent. If a government official cannot trust the publicly reported numbers, how can an average citizen?
Fear, Uncertainty and Doubt
It all started with this anonymously published fear-provoking article about Tether’s alleged instability which might have scared some investors temporarily but ultimately culminated with Tether finally settling their case with the New York Attorney General and promising to issue quarterly reports of what’s backing the stablecoin.
This quarter we saw many government officials speak about bitcoin from Europe’s Christine Lagarde accusing bitcoin of being involved in “funny business” and the United States’ Janet Yellen suggesting curtailing use because cryptocurrencies are mainly used for “illegal financing.” Both of these statements are provably false by Chainanalysis’ latest report, which found that the criminal share of all cryptocurrency activity in 2020 was just 0.34 percent.
Later, US officials began presenting the energy narrative, talking about how bitcoin is “extremely inefficient,” how it uses a “staggering amount” of energy and continued to speak condescendingly about it, with the Federal Reserve’s Jerome Powell implying it is as useless as gold.
It is likely that officials are scared of the asset, as they know that banning it is futile.
History, this quarter including, has proven that countries cannot outright ban bitcoin; they can only temporarily ban their citizens from participating in the network. Some countries like Nigeria realized this inevitability and backtracked on their previous ban within a month after announcing it.
While noisy, this year did not bring any new content with relation to FUD, rather, it simply recycled old content that has long been debunked. Despite the unoriginal negative press, this quarter we saw many people write very eloquently and positively about bitcoin, in particular about its energy use.
Worthy mentions include Stone Ridge’s annual letter, which changed many people’s minds about how eco-friendly bitcoin mining is and can grow to be. Later, Seetee followed up with a letter from its billionaire Norwegian founder citing similar arguments. Both letters were certain that bitcoin will enable many more renewable-energy projects than otherwise would be possible, mainly due to miners’ location-independent nature.
Balaji Srinivasan also wrote an extensive piece about how India would be smart in canceling its proposed bitcoin ban and embracing the technology directly, going as far as to exhaustively describe what they should actually do.
Regulations
Some pro-bitcoin US politicians established key positions in the government, like Cynthia Lummis who joined the banking committee, Former TD Ameritrade Head of Digital Assets Sunayna Tuteja was named US Federal Reserve chief innovation officer and Gary Gesler, who has taught a blockchain course in MIT, is nominated for leading the SEC.
There was mixed news regulations-wise. As we started the year with the FinCEN proposal that had an unreasonably short comment period of 14 days over the holiday season, the onslaught of comments from the community made it so that they had to considerably extend it, with the new Biden administration significantly extending the comment period by some 75 days.
Throughout that period, there was a very positive regulatory change of the Comptroller of the Currency (OCC) providing guidance in having banks participate in public blockchain systems as another form of settlement infrastructure (like Swift and ACH).
Further, Kentucky signed a bill into law that incentivizes bitcoin mining in the state by allowing for tax exemptions on property and electricity used in mining.
Miami, the hosting city of the Bitcoin 2021 Conference, proved to capture attention in the Bitcoin space with the prolific mayor Francis Suarez actively engaging with the industry through Twitter and in-person meetings with famous Bitcoin proponents like the Winklevoss twins. Suarez has also publicly pushed back on some of the negative comments from Janet Yellen and has said to be actively exploring investing part of the city’s treasury into bitcoin. He said that they are procuring a vendor to offer employees to get a percentage of their salary in bitcoin, allow Miami’s residents to pay for fees in bitcoin, potentially also allow taxes to be paid in bitcoin and rumours say they’re working on giving mining incentives to attract investment.
The city, which is aiming to become the crypto capital of the world, even hired a chief technology officer for the first time ever.
With all this positive news, there was bound to be some negativity. The intergovernmental Financial Action Task Force, consisting of non-elected officials, formed ill-detailed crypto regulatory guidelines, with the risk of the current interpretation prohibiting KYC-free use of decentralized networks.
Investments
Throughout Q1, the Bitcoin industry continued to see a large amount of investments:
Coinbase, in what is hailed as a watershed moment, has been gearing up for an IPO with the market valuing it over $100 billion: it is scheduled to do so on April 14, 2021.
Cipher Mining is set to go public via a SPAC in a deal that is set to provide them with $595 million.
Blockchain.com seemingly raised money twice, $120 million in a Venture Round in February 2021 and $300 million in a Series C in March 2021.
BlockFi completed a $350 million Series D round, valuing the company at $3 billion, and also recruited the World Gold Council’s director.
NYDIG, the firm which facilitated MassMutual’s bitcoin purchase, raised $200 million from large names like Soros, Morgan Stanley and New York Life.
Fireblocks, cryptocurrency custody infrastructure provider, raised $133 million in a Series C.
Jack Dorsey and Jay-Z invested 500 BTC into a fund to support Bitcoin development in Africa and India.
Federally chartered crypto bank Anchorage raised $80 million.
Compute North, a North American bitcoin American, announced $25 million in gross capital funding.
Unchained Capital closed a $5.5 million seed funding round, planning to build out bitcoin-native infrastructure.
Topic Square received a $4.7 million investment to develop an open-source security chip for use in popular hardware wallets.
Casa raised $4 million in a seed round.
Ledn raised a $2.7 million financing round.
MintGreen, a Canadian startup aiming to capture heat from bitcoin mining, closed a seed financing round.
A Pakistan province invested in two hydroelectric-powered mining farms.
Ukraine considered building a bitcoin mining center based on excess nuclear power.
Capitulations
Throughout Bitcoin’s history, many pundits have openly dismissed the asset while bitcoiners have always seen their incompetence through the fallacy in their arguments.
In a petty battle between Norwegian billionaires, Øystein Stray Spetalen was quick to reverse course after seeing the other Norwegian billionaire Kjell Inge Røkke’s company Seetee buy $58 million worth of bitcoin. In a conference in early March 2021, he expressed his negative views about bitcoin, but just a couple of weeks later, he realized he was wrong and bought some.
Many previously outspoken opponents of bitcoin reversed course this quarter, like The Motley Fool which capitulated and bought $5 million worth of bitcoin, or all of the large banks:
We’ve seen hugely respected names in the investment industry turn from skeptic to lukewarm, like Howard Marks who initially called bitcoin a pyramid scheme only to admit this year that he did not understand it. Ray Dalio has been trekking across the spectrum as well, most recently scheduled to speak at two crypto conferences: Texas A&M Bitcoin Conference inApril 2021 and Consensus in May 2021.
Bitcoin has the power to convert even the most faithful gold believers, like long-time gold bull Jeffrey Gundlach who turned neutral on his views on gold and the dollar, admitting bitcoin may be the better bet which is no surprise considering the Bank of Singapore implied the same thing in a research note.
Retail interest has been rekindled over the quarter as well, with many exchanges recording all-time high traffic and bitcoin-related social media seeing parabolic growth:
In the same way that people never notice the “gradually” part of bankruptcy and are left struggling with solutions once the “suddenly” part hits, today’s market participants are scrambling to establish their position in this new Bitcoin world, be it as a service provider, investor or anything in-between.
While the flurry of news can certainly seem like we are in the “suddenly” part of the spectrum, it is worth taking a step back, observing the bigger picture and realizing we still have a long way to go.
My intuition tells me that we are still a fair amount of time away from jaw-dropping adoption. Money, after all, is humanity’s most valued asset, as the whole world readily trades its scarcest resource (time) for it. Bitcoin is a global permissionless network consisting of the soundest money the world has ever seen. Any quarter which truly embodies the “suddenly” part of the market penetration of this global asset will surely not be able to fit inside a single sub-3000-word piece.
This is a guest post by Stanislav Kozlovski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine
