In a puzzling move, an unidentified individual has spent approximately $64,000 to record nearly 9 megabytes of encrypted data on the Bitcoin blockchain. Spanning over 332 transactions, with fees varying from $14 to $2,500 in Bitcoin’s smallest unit, satoshis, the purpose behind this enigmatic activity remains shrouded in mystery.
Recently, someone spent around $64,000 (about 1.5 BTC) to add almost 9 megabytes of complex computer data to the Bitcoin network.
The mystery of the 2024 Bitcoin data inscription
A report from Ord.io, a digital data tracker, revealed that over 1 Bitcoin was used to make 332 separate entries on January 6th.
BREAKING: Someone just spent >1 BTC to inscribe 8.93 MB of raw binary data into Bitcoin.
As you can imagine, there is a lot of curiosity about who actually added this data.
The Bitcoin address linked to these mysterious additions is listed as “Unnamed” on Ord.io. The data itself is a mix of English, Greek, and mathematical symbols.
Interestingly, among the 332 entries, two feature a digital image of a pepperoni pizza.
According to Ord.io, this signifies that the entries include some of the 10,000 Bitcoins once used by early Bitcoin enthusiast Laszlo Hanyecz to buy two Papa John’s pepperoni pizzas on May 22, 2010.
This puzzling event of inscribing data occurred just a day after a massive 26.9 Bitcoins, valued at $1.17 million, were transferred to the very first Bitcoin wallet, known as the Genesis wallet, on January 5.
What is Bitcoin blockchain inscription?
Imagine the Bitcoin blockchain as a digital ledger or a record book.
Normally, this ledger keeps track of Bitcoin transactions – who sends and who receives Bitcoins.
An inscription on the Bitcoin blockchain is like writing a note in the margins of this ledger. Instead of recording a transaction, you’re adding extra information.
How is it different from typical transactions?
A standard Bitcoin transaction is like saying, “I give 5 Bitcoins to Alice.”
An inscription adds more: “I give 5 Bitcoins to Alice. P.S. Here’s a recipe for apple pie.” This ‘recipe’ is the extra data you’re inscribing.
This extra data doesn’t affect the transaction’s main purpose (sending Bitcoins), but it permanently records additional information.
Why inscribe data on the blockchain?
Permanence. Once something is written on the Bitcoin blockchain, it can’t be changed or deleted. It’s like carving into stone.
Visibility. Everyone who can see the ledger can see your inscription. It’s a public display.
Proof of existence. Inscribing data can prove that a certain piece of information existed at a certain time. For instance, if you inscribe a unique digital artwork, you’re showing that it existed at the time of the inscription.
Security. The blockchain’s secure nature makes it a trustworthy place to store important data.
The process of a Bitcoin blockchain inscription
You create a Bitcoin transaction.
Along with the transaction details (like sender, receiver, and amount), you include your extra piece of information – your ‘note.’
You send this transaction to the blockchain.
Miners on the Bitcoin network confirm the transaction and add it to a block.
Once added to a block, your inscription is permanent and visible to anyone who looks at the blockchain.
26.917 BTC transaction to Genesis Wallet
On January 5, at 1:52 am Eastern Time, an anonymous Bitcoin user made a notable transaction, sending 26.917 Bitcoins, valued at $1.17 million, to Bitcoin’s first-ever wallet, the genesis wallet (1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa).
This wallet is historically significant, as it was set up by Satoshi Nakamoto, the elusive creator of Bitcoin.
The transaction was unique for several reasons.
Firstly, the amount was transferred from a wallet that had been emptied specifically for this purpose. The transaction fee was $100, which is considerably higher than the average fee.
Secondly, the funds were moved in a complex manner, involving three wallets initially and then dispersing to 12 others.
Notably, a large portion of these funds was traced back to a wallet associated with Binance, a major cryptocurrency exchange, as identified by Arkham Intelligence, a blockchain analytics platform.
Coinbase director Conor Grogan commented on the transaction, speculating on two possibilities: either this was an action taken by Nakamoto himself, moving Bitcoins from Binance, or it was someone else making a dramatic gesture by effectively ‘burning’ over $1 million. Grogan also raised the possibility of this being part of an unusual Bitcoin exchange-traded fund marketing campaign.
It’s important to note that there has been no movement of funds from wallets associated with Nakamoto, including the genesis wallet, since Nakamoto’s disappearance in December 2010.
However, it’s speculated that Nakamoto could still possess the private keys to these wallets and control the funds within.
The genesis wallet initially contained 50 Bitcoins mined by Nakamoto.
By the end of 2023, on the occasion of Bitcoin’s 14th birthday, the global Bitcoin community had added to this wallet’s balance, bringing it up to 72 Bitcoins through various celebratory contributions.
Bitcoin ETFs are the intersection where cryptocurrencies meet the structured universe of traditional investing.
Bitcoin ETFs, or ‘exchange-traded funds’ that focus on Bitcoin, offer a unique way to participate in the exciting growth potential of cryptocurrencies without diving headfirst into the often complex crypto markets.
These ‘crypto ETFs’ blend the familiarity of conventional stock trading with the adventurous spirit of digital currencies, providing a gateway for both seasoned investors and curious newcomers.
As we explore this innovative investment vehicle, you’ll discover how it simplifies the process of adding digital assets to your portfolio, all while maintaining the ease and accessibility of traditional stock market trading. Let’s dive in and unravel the essentials of Bitcoin ETFs.
What are exchange-traded funds (ETFs)?
Imagine you want to invest in the stock market, but instead of picking individual stocks (like shares of Apple or Google), you decide to buy a little bit of lots of different stocks all at once. That’s essentially what an Exchange-Traded Fund (ETF) is.
An ETF is like a basket that contains a mix of various stocks, bonds, or other assets. When you buy a share of an ETF, you’re buying a small piece of all the things inside that basket. This mix can include all sorts of investments – from tech companies to government bonds. The beauty of ETFs is that with just one purchase, you can invest in a whole range of assets, which can reduce the risk compared to buying just one company’s stock.
What makes ETFs special is that they are traded on the stock exchange, just like regular stocks. This means you can buy and sell shares of an ETF throughout the day at different prices, just like you would with stocks of individual companies.
So, in a nutshell, ETFs offer a simple way to diversify your investments, spreading out your risk while still allowing you the flexibility to buy and sell as you would with traditional stocks.
Why is everyone talking about a spot Bitcoin ETFs?
The sudden importance of spot Bitcoin ETFs in the crypto world stems from their potential regulatory approval, a significant step forward in legitimizing Bitcoin as a mainstream investment.
Unlike previous ETFs tied to Bitcoin futures, spot Bitcoin ETFs would be directly linked to the current price of Bitcoin, offering a more direct and potentially more accurate reflection of Bitcoin’s market value. This direct connection attracts investors looking for a more straightforward way to invest in Bitcoin through traditional financial structures.
The anticipation of these ETFs has been heightened by the involvement of major asset management firms like BlackRock, Fidelity, and VanEck, signalling strong institutional interest.
The approval of spot Bitcoin ETFs by the SEC would not only increase Bitcoin’s accessibility to a broader range of investors but also potentially provide more stability and liquidity in the crypto market.
This move is seen as a critical milestone for the cryptocurrency industry, as it represents a significant endorsement from regulatory authorities and could lead to increased adoption and integration of Bitcoin into the traditional financial system.
The benefits of Bitcoin ETFs
Bitcoin ETFs are an exciting option for those interested in the buzz of the cryptocurrency world but looking for something a bit more familiar and potentially less risky. Let’s break down why someone might lean towards a Bitcoin ETF instead of buying Bitcoin directly.
Familiarity and Ease of Trading
Investing in a Bitcoin ETF feels much like investing in any other stock. You don’t need to learn the ins and outs of cryptocurrency exchanges or how to securely store digital coins. It’s as straightforward as trading regular stocks, making it a comfortable option for many traditional investors.
Diversification
Bitcoin ETFs often track not just the price of Bitcoin but can include other cryptocurrencies or related assets. This means you’re not putting all your eggs in one basket (Bitcoin) but spreading your risk across a range of assets. It’s like choosing a mixed fruit basket over just apples. This diversification can be a safer bet, especially in the volatile world of cryptocurrencies.
Regulatory oversight
ETFs are subject to regulatory oversight, which means there’s an added layer of security and transparency. When you buy Bitcoin directly, you’re stepping into a largely unregulated space, which can be riskier. With a Bitcoin ETF, you have the peace of mind that comes with regulated financial products.
Lower entry point
Investing in Bitcoin directly can be expensive, as you often have to buy whole units of the cryptocurrency. But with a Bitcoin ETF, you can invest with much smaller amounts, making it more accessible for the average investor.
No digital wallets are needed
Holding Bitcoin directly means dealing with digital wallets and the security concerns that come with them.
With a Bitcoin ETF, you don’t have to worry about digital wallet security or remembering complex passwords. Your investment is as safe as any other stock in your portfolio.
Top Bitcoin ETFs to invest in
When it comes to dipping your toes into the world of Bitcoin through ETFs, there are several key players you might want to consider. Here’s a list of some of the top Bitcoin ETFs, each offering a unique crypto-investing approach.
ProShares Bitcoin ETF
ProShares is a big name in the ETF world, and their Bitcoin ETF is a popular choice. It’s known for its reliability and is a go-to option for many investors looking to get involved in Bitcoin through a more traditional investment vehicle.
Grayscale Bitcoin Trust
While not a traditional ETF, Grayscale’s Bitcoin Trust is another major player. It offers exposure to Bitcoin’s price movements without the need to directly buy and store the cryptocurrency.
Valkyrie Bitcoin Strategy ETF
This ETF is relatively new but has quickly gained attention. It focuses on Bitcoin futures contracts, offering a different angle on Bitcoin investment.
VanEck Bitcoin Trust
VanEck is known for its innovative investment products, and its Bitcoin Trust is no exception. It aims to reflect the performance of Bitcoin, offering investors direct exposure to the cryptocurrency’s price changes.
Bitwise 10 Crypto Index Fund
For those who want broader exposure, the Bitwise 10 Crypto Index Fund covers the top 10 cryptocurrencies by market cap, not just Bitcoin. It’s a good option if you’re looking to diversify within the crypto space.
Each of these options has its unique features and approaches to Bitcoin investment. Whether you’re looking for something straightforward like the ProShares Bitcoin ETF or something more diverse like the Bitwise 10 Crypto Index Fund, there’s likely an ETF that fits your investment style and risk tolerance.
Remember, investing in Bitcoin, whether directly or through ETFs, carries risk. It’s always wise to do your own research and consider seeking advice from a financial advisor to find the best fit for your investment goals.
How to trade Bitcoin ETFs
Trading Bitcoin ETFs is like playing a video game where you need to know a few key moves. Let’s make sense of terms like ‘bitcoin tracking’ and ‘bitcoin exchange-traded note,’ and also explain how different platforms work for trading these crypto ETFs.
Bitcoin Tracking
Imagine Bitcoin’s price is like a rollercoaster at an amusement park. ‘Bitcoin tracking’ is like having a model of that rollercoaster in your backyard. The ETF follows the ups and downs of Bitcoin’s price, just like your model coaster follows the same path as the real one.
Think of ETNs as a promise note from your school friend. They promise to pay you back your lunch money with a little extra. In the financial world, an ETN is a promise by a company to pay you based on Bitcoin’s price performance.
But remember, if your friend moves away, you might not get your money back. Similarly, if the company behind the ETN has problems, your investment could be at risk.
Trading platforms for Bitcoin ETFs
Now, let’s talk about where you can trade these ETFs. You’ve got two main options: brokerage platforms and crypto exchange platforms.
Brokerage platforms: These are like your regular supermarkets where you can buy all sorts of things (stocks, bonds, ETFs). Trading Bitcoin ETFs here is like buying cereal from a supermarket. You use the same cart (platform) you use for other shopping. These platforms are user-friendly and regulated, offering a familiar environment for regular stock traders.
Crypto Exchange. These are specialized stores, like a shop that only sells video games. They mainly deal with cryptocurrencies. While you can’t directly buy Bitcoin ETFs here, these platforms are where the action happens for Bitcoin and other cryptocurrencies. They offer more crypto-specific features and can be a bit more complex to use.
The main difference between these platforms is what you can buy on them. Brokerage platforms offer a variety of investment products, including Bitcoin ETFs, while crypto exchanges focus on cryptocurrencies.
Also, brokerages are often seen as more beginner-friendly and regulated, while crypto exchanges offer more in-depth features for crypto trading.
Crypto vs crypto ETFs: comparing investment options
Let’s talk about the difference between buying cryptocurrencies directly and investing in crypto ETFs, and how these stack up against other investment options like mutual funds.
1. Direct crypto investment
Imagine buying cryptocurrencies like Bitcoin or Ethereum directly is like owning a specific type of exotic fruit. You have full control over it; you can eat it, save it, or sell it. However, you need to know where to buy it, how to store it safely and be ready for its price to jump up and down wildly.
2. Crypto ETFs
Now, investing in a crypto ETF is like buying a fruit basket that includes a bit of this exotic fruit along with other types. You don’t own the fruit directly, but you own a share of the basket. It’s simpler and safer in some ways because you’re not responsible for taking care of the individual fruits, and you also get a variety, which can balance out the risk.
3. Crypto ETFs vs traditional mutual funds
Traditional mutual funds are like a pre-packed lunch – you know what you’re getting, and it’s usually a well-balanced meal.
Mutual funds pool money from many investors to invest in stocks, bonds, or other assets and are managed by professionals. They’re not as volatile as cryptocurrencies but may offer lower returns.
4. Platforms for trading
The difference in platforms is like shopping at different types of stores.
Crypto exchanges are like speciality stores where you buy and manage individual types of fruit (cryptocurrencies). Some of the most popular centralized exchanges (CEXs) are Binance, KuCoin, WhiteBit, Kraken and Coinbase.
In contrast, brokerage platforms where you trade ETFs are like big supermarkets where you can buy fruit baskets (ETFs), along with other groceries (stocks, bonds).
As you see, there is more than one way to invest in crypto. Investing directly in cryptocurrencies is for those who want full control and are comfortable with high risk and volatility.
Crypto ETFs, on the other hand, offer a simpler, more diversified way to get into the crypto market, much like traditional mutual funds, but with a focus on digital assets.
And where you shop (trade) depends on whether you want to manage individual assets or prefer a more diverse, managed portfolio.
NYU law professors Richard Epstein and Max Raskin published a paper to explain the potential hazards of central bank digital currencies, highlighting the risk of overstepping governmental boundaries and the importance of maintaining the ‘separation of money and state’.
Central banks worldwide are swiftly progressing with their explorations in creating digital currencies.
Numerous examples, such as the recent announcement of a successful prototype by the New York Federal Reserve or the Bank of England’s achievement in the subsequent phase of its digital pound trial, indicate that over 130 nations globally are considering the idea of central bank digital currencies (CBDCs).
The reasoning behind this is twofold.
Firstly, central banks can position themselves as protectors of consumers and innovators in cost-saving technologies by eliminating the role of private banking intermediaries.
Secondly, they can acquire an additional mechanism for policymaking.
However, the proposition of excluding these intermediaries raises an important question of who would be responsible for the other end of the financial transactions.
The inevitable answer is a far-reaching and intrusive government capable of monitoring every single expenditure.
Digital cash?
Max Raskin, an adjunct professor of law at New York University and a fellow at the school’s Institute for Judicial Administration, and Richard Epstein, a law professor at New York University, a senior fellow at the Hoover Institution, and a senior lecturer at the University of Chicago, are exploring this topic in a paper called “A Wall of Separation Between Money and State: Policy and Philosophy for the Era of Cryptocurrency,“ published in The Brown Journal of World Affairs.
Their argument suggests that a central bank, for instance, the Bank of England, would issue a “digital pound,” which would be a direct claim on the central bank, much like current cash is.
This process would involve creating the necessary infrastructure for individuals to store digital pounds in digital wallets and facilitate interactions with retailers and other users.
Contrasting current practices where central banks such as the Federal Reserve and the Bank of England do not offer accounts to direct depositors, the proposed model would eliminate the costly private banking system that presently stands between the central bank and the accounts held by businesses and individuals.
At a glance, it seems that CBDCs might cut unnecessary costs.
However, these apparent efficiency benefits can be deceptive and hazardous.
Intermediaries function in thousands of markets, with representatives, aggregators, and monitors in almost every significant business line. These participants can’t be easily deemed obsolete.
Intermediaries often provide value as they are motivated to offer more than the bare minimum to stand out – such as new banking products and services.
The variety of services banks can offer due to competitive pressures that ultimately benefit consumers. Restricting these forces can hamper the market economy.
CBDC implementation can be risky
The implementation of CBDCs is not without risks.
The idea of providing extensive power and confidential information to a faceless government entity can be alarming. The system can use that data against you in numerous ways.
By removing the private banking intermediaries, CBDCs would eliminate a crucial barrier that currently safeguards individuals and firms from government intrusion and overstepping.
The use of cash and bearer instruments is currently untraceable by the central government.
However, the use of digital cash would be.
It’s clear that even those who decide to stick with private bankers will still be scrutinised by the state, which holds control over all transactions.
Moreover, these digital funds would empower central banks to direct personal loans and mortgages to specific private parties with minor competition, raising concerns around state industrial policies. It’s not hard to imagine potential nightmare scenarios, yet they are difficult to avert.
The question remains: can we trust thousands of new banker-bureaucrats to perform any better?
Can we trust banks?
The Bank of England, in its digital pound argument, emphasised the British government’s commitment to fighting climate change, stating that the digital pound would be designed with this objective in mind.
Why should a topic as intricate and contentious as climate change be regulated through the financial system?
Similarly, U.S. financial regulators have started to wade into political issues like climate change.
If such explicit political objectives are considered, it is not a stretch to imagine a government-run bank using its powers to favour certain energy producers and punish others through their bank accounts.
The power to impact credits and debits must be a feature of the central banks’ proposed code, which introduces a covert system of industrial policy.
If CBDCs become a reality, officially favoured energy sources like solar and wind power could witness their bank accounts receiving subsidies without the need to attract private investors or undergo the scrutiny of the private banking system.
Bank accounts could become vulnerable to political manipulations, bureaucracies, or even disenfranchisement overnight with limited recourse.
Furthermore, these CBDC initiatives in the U.S. were originally proposed in the context of directly providing pandemic stimulus to the economy. However, the evidence is overwhelming that this hasty system of government payments was incredibly wasteful.
Moreover, central banks could implement countercyclical monetary policies, such as providing cash boosts to individuals in specific regions or sectors, which again becomes a political football.
Money and new technologies
We should undoubtedly strive to leverage new technologies, but only when implemented correctly. According to the paper in the Brown Journal of World Affairs, “Money should be a neutral unit of measurement, like inches or kilograms.”
This concept, referred to as the “separation of money and state,” aims to stabilise all currencies over time, minimising the need for private parties to design complex and costly mechanisms like adjustable-rate mortgages to handle financial instability.
For instance, Bitcoin has a predetermined supply of no more than 21 million units, not governed by any individual institution but rather by the network’s consensus mechanism.
This feature provides a robust defence against value dilution that no government-centric system could hope to match.
This fixed system could offer additional institutional support for developing countries seeking modernisation.
Countries with a history of mismanaging their monetary systems could benefit from the discipline that comes with certain forms of digital currency.
For instance, a central bank like Zimbabwe‘s or Argentina’s, plagued with mismanagement, could adopt an innovative form of dollarisation using Bitcoin or another form of programmed cryptocurrency.
The next Bitcoin halving will take place in 2024. Is this a ‘buy the dip’ opportunity? With less than one year to the next big crypto event, investors are getting anxious.
Is it time to invest in Bitcoin as the halving approaches? Historical patterns suggest that Bitcoin’s price behaviour tends to follow a distinct cycle aligned with these halving events, which occur every four years.
These cycles, known as “epochs,” typically encompass a significant high and low point in Bitcoin’s value, with these events being roughly four years apart.
Interestingly, in each epoch, the significant low point usually materializes just over a year prior to the next halving. Therefore, long-standing Bitcoin advocates see little evidence to suggest a significant deviation from this pattern in the future.
Ultimately, the Bitcoin halving is just a reminder that the world’s most valuable crypto is designed to become increasingly scarce as time passes by. Even if your crypto investment isn’t in Bitcoin, this even still has a massive effect on the entire market, as Bitcoin represents almost 50% of the market.
What is Bitcoin halving?
Bitcoin is created by powerful computers which solve complicated mathematical puzzles to validate each blockchain block and generate new Bitcoins. Every four years (210,000 blocks, to be more exact), the reward for generating a new block is cut in half. Hence the name Bitcoin halving.
When Bitcoin started, miners got 50 Bitcoins for every block they added. This was a lot, but it helped attract people to the system.
For example, the first halving happened in 2012 when the reward dropped from 50 to 25 Bitcoins. The second halving, in 2016, cut the reward down to 12.5 Bitcoins. The most recent halving in 2020 reduced the reward to just 6.25 Bitcoins.
The next halving is expected to happen in 2024. This halving process will continue until we hit around the year 2140, by which time all 21 million Bitcoins should have been mined.
Why does Bitcoin halving happen?
Imagine the Bitcoin system as a digital gold mine that’s programmed to dig up a new chunk of gold every 10 minutes. As more miners (people with powerful computers) join the hunt, they’re able to dig up gold faster. But to keep things fair and maintain the 10-minute digging goal, the digging process is made harder every couple of weeks. Despite the growth of the Bitcoin network over the past decade, the average digging time has stayed below 10 minutes, around 9.5 minutes, to be exact.
Now, the total amount of Bitcoin that can ever exist is capped at 21 million. When this number is hit, no more Bitcoin can be created. Bitcoin halving is a process that gradually reduces the amount of new Bitcoin that can be mined each time a block is added to the blockchain. This makes Bitcoin scarcer and potentially more valuable over time.
You might think that halving the reward for mining would make people less interested in doing it. But Bitcoin halvings have historically been associated with big jumps in Bitcoin’s price. This keeps miners motivated to mine more, even though they’re getting less Bitcoin each time they mine a block.
So, miners are encouraged to keep digging as long as the price of Bitcoin keeps going up. If the price doesn’t rise and the reward for mining keeps getting smaller, miners might be less interested in mining Bitcoin. This is because it takes a lot of time, computer power, and electricity to mine Bitcoin.
If you want to know more about Bitcoin, check out this Bitcoin hard fork guide, which explains all past forks which affected all BTC holders.
Should I buy Bitcoin?
Investor and entrepreneur Alistair Milne shared his perspective, recommending that those seeking to benefit from Bitcoin should consider purchasing now, as the period preceding the halving might not present as advantageous an entry point. He advised, “Avoid shorting when it’s dark green and ensure you’re fully invested before it turns blue.”
In the earlier part of the month, a well-known yet contentious figure in the Bitcoin industry used the halving narrative to argue that the pricing cycles aren’t a matter of coincidence. PlanB, the anonymous creator of the Stock-to-Flow (S2F) Bitcoin price prediction models, noted that about half of the market participants believe the link between halvings and price is random.
Why is bitcoin S2F/halving not priced in?
Because ~50% thinks the BTC price jumps after last 3 halvings (red) are a coincidence. Halvings are key to S2F, but these critics focus on auto-correlation between halvings and conclude there is no relation between S2F/halvings and… pic.twitter.com/8VaIy6oM5i
PlanB’s comments were framed within the debate over the relevance of the S2F theory to halvings, a theory that has faced considerable criticism due to unmet price predictions from 2021 onwards. However, PlanB also asserts that the current BTC/USD value is low, and the market hasn’t adequately factored in the upcoming halving.
PlanB questioned, “Why is bitcoin S2F/halving not priced in? Because ~50% thinks the BTC price jumps after last 3 halvings (red) are a coincidence.
Why isn’t the Bitcoin S2F/halving reflected in the price? Approximately 50% believe the price spikes following the last three halvings are coincidental,” adding an explanatory chart to his statement. He continued, “Halvings are key to S2F, but these critics focus on auto-correlation between halvings and conclude there is no relation between S2F/halvings and price. I disagree, obviously. 2024 halving will be very interesting!”
What does the Bitcoin halving event mean?
Think about Bitcoin miners like gold miners. They get paid in Bitcoin for their hard work of adding new transactions to the blockchain. But when Bitcoin halving happens, miners earn less for their work. This means fewer new Bitcoins enter circulation, similar to how less gold would be available if miners dug up less gold.
Here’s where the basic rules of supply and demand come in.
When the supply of something goes down, but demand stays the same or even goes up, the price usually goes up.
The halving event also slows down how fast new Bitcoin is made, which helps control inflation. Inflation is like when a dollar can’t buy as much as it used to. But Bitcoin is designed to be the opposite – it’s supposed to become more valuable over time. The halving event helps make this happen.
For instance, Bitcoin’s inflation rate was 50% in 2011, but it dropped to 12% in 2012 after the first halving and 4-5% in 2016 after the second halving. Currently, it sits at around 1.77%. So, after each halving, Bitcoin tends to become more valuable.
However, this process isn’t without its issues. Mining Bitcoin uses a lot of electricity, and miners might struggle to break even if the reward they’re getting is halved but the price of Bitcoin doesn’t go up enough to cover their costs.
Also, because of this, miners will be on the lookout for newer, more efficient technologies that can help them mine more Bitcoin while using less energy.
Besides, Bitcoin’s growing popularity and its acceptance by more businesses and big institutions might also push its price up. More transactions are likely to happen as more people start to use Bitcoin and blockchain technology.
Time to buy Bitcoin?
Bitcoin, the world’s largest cryptocurrency, is currently at a low point, trading around $27,300, after dropping almost 2% recently. This dip came as Binance, a significant cryptocurrency exchange, temporarily stopped Bitcoin withdrawals twice in one day due to technical issues. However, these operations have since resumed, and there are signs that Bitcoin could be gearing up for a recovery.
Despite the recent dip, Bitcoin showed promising resistance last week at $29,000, indicating the potential to climb back to $30,000.
Many Bitcoin investors are hopeful due to anticipated pauses in U.S. interest rate hikes and shifting trust from traditional finance to decentralized finance (DeFi). Combined with the upcoming Bitcoin halving event in 2024, which typically brings a surge in Bitcoin’s value, some experts predict Bitcoin could reach $35,000.
Still, it’s important to remember that Bitcoin is trading 50% lower than its all-time high of $69,000 in November 2021, and the journey to recovery may be lengthy. Also, external factors such as regulatory changes in countries like India could influence the market.
So, is it time to buy Bitcoin? It seems like a potentially advantageous time, given the low price and positive future prospects. But, as always with cryptocurrencies, it’s crucial to be vigilant and cautious due to their volatile nature. It’s best to stay informed about the current macroeconomic conditions and regulatory developments.
Despite the 60% price drop from last year, El Salvador is celebrating its first Bitcoin anniversary. The good news is that Bitcoin is still a legal tender in El Salvador – and so the experiment continues.
On September 7, 2021, El Salvador was the first country to adopt Bitcoin as a legal tender. Many have criticized the decision, and others have been waiting to see this experiment fail. But so far, the first country to adopt a cryptocurrency as legal tender has managed to survive.
El Salvador and their pro-Bitcoin president
El Salvador president Nayib Bukele is a true advocate for Bitcoin. In September 2021, when he adopted the Bitcoin Law, he promised that this Bitcoin adoption as legal tender would help 70% of the local population without access to banking services.
Some of the main arguments for the pro-Bitcoin law were:
Foreign investments. The government believed that Bitcoin would attract new investments from crypto companies.
Create new jobs
Reduce reliance on the U.S. Dollar
While the economy is still struggling, some are now questioning the country’s economic future, as Bitcoin has lost over 60% in value since it has become a legal tender in El Salvador.
But let’s take a look at the stats.
On September 7, 2021, the price of 1 Bitcoin was around $46,100.
The first Bitcoin purchase by the Salvadoran government was made on Sept. 6, 2021. They bought 200 BTC for $10.36million. That means that the average price paid for 1 BTC was $51,800. This is a stark contrast to current BTC prices, as Bitcoin fell below $19,000 on September 7, 2022. This represents a 68.78% drop in the last year.
Data from Nayib Bukele’s portfolio tracker shows that El Salvador’s government is now at loss with all its 10 Bitcoin purchases since adopting it as legal tender.
The total purchase by the Salvadoran government adds up to 2,381 BTC. Considering the current price, the crypto holdings are now worth over $60 million less than what they originally paid.
Alejandro Zelaya, El Salvador’s Minister of Finance, previously stated that the country did not experience any losses due to falling prices. This is because they didn’t sell the coins. Unfavorable market conditions, geopolitical issues, and delays by the Salvadoran government have caused it to repeatedly delay its Bitcoin bond project.
Despite plummeting crypto prices and the continued bear market, industry observers began to refer to El Salvador’s Bitcoin adoption in a negative light. Others suggested that it might be a failure because the country appears to have had some positive effect on El Salvador’s financial market and economy, including the cost of transactions.
But El Salvador is still advocating for crypto
The overall struggle has put some strains on individuals, and only a few are willing to trade this volatile asset. But there is a great plus to it. People use Bitcoin transactions to send money from abroad to their families in El Salvador. And that’s because BTC blockchain transactions are cheaper than wire transfer fees offered by traditional banks.
Another great news is that the country is now a holiday spot for Bitcoin supporters from all over the world. The El Salvadorian Bitcoin Law has been a success in terms of tourism and foreign investment. Tourism in El Salvador has increased by 82% in the first half of 2022. Over one million tourists visited the country in 2022.
It seems that the Bitcoin law acted as a marketing campaign on which many countries spend billions of dollars.
Even more, it seems that Bukele, the president of El Salvador, is one of the most popular presidents in power, with an approval rating of 85%. However, this could also be due to his tough-on-crime policies.
Unfortunately, many businesses in El Salvador refused to use Bitcoin, and consumers rarely choose it as a payment method.
The El Salvador Central Reserve Bank reported that Salvadorans living in other countries had sent more than $52 million in remittances between January and May 2022. A 400% increase in Lightning Network transactions in 2022 was also due to the adoption of Bitcoin by the Salvadoran government-backed Chivo wallet. That’s because citizens from abroad use it to make commission-free crypto transfers.
It seems that El Salvador is the ideal place to experiment with Lightning applications, as well as to create a trusted ecosystem of proven and interconnected services.
Small-time investors have the opportunity to realize their dreams of owning at minimum 1 Bitcoin, with BTC trading in the $20,000 area for the first time since 2020.
Bitcoin trading in the $20k range
Investors around the world have been chasing one of the total 21 million BTC since the early days of Bitcoin (BTC). This massive hysteria has been caused by the phenomenal interest in the cryptocurrency and the widespread acceptance of the internet in the last few years.
After hitting another all-time high in November 2021, when bitcoin’s price reached almost $69,000, the leading cryptocurrency has been declining in value ever since. In May 2022, the bear market has been confirmed, and it involves not only the cryptocurrency market, but the most important financial markets. The crypto market is now more tied to the stock market than ever, as more institutional investors have joined in 2021.
While many online celebrities have been raising concerns and painting a gloomy future for bitcoin, some see it as an opportunity to become a bitcoin owner.
BTC trading in the $20,000 area for the first time since 2020 gives small-time investors the opportunity to realize their goal of owning a minimum of 1 BTC. According to Glassnode, there has been a significant increase in the total number of Bitcoin addresses containing 1 BTC or more. These have increased by over 13,000 in June.
The total number of addresses that hold 1 BTC has seen an immediate decrease in the days ahead, but the Reddit crypto community continues to welcome new crypto investors who have worked hard to become wholecoiners.
New investors become wholecoiners
Some Reddit users even share their stories about how they saved enough to accumulate 1BTC and share screenshots of their achievements.
This Reddit user, arbalest_22 said that he spent approximately $35,000 to accumulate 1 BTC. He continues to support the Bitcoin ecosystem by pledging to procure Satoshis and sats until his total of 2 BTC. The ultimate goal of this user, and those who contributed to the discussion is to have tax-free income.
Other users say that they were able to become wholesalers by using the dollar-cost-average strategy. This dollar-cost-averaging (DCA) requires investors to regularly buy smaller amounts of BTC over a longer time.
According to Glassnode data, the total number of Bitcoin wallet addresses that hold more than 1 BTC increased is around 800,000.
Although falling BTC prices can be seen as an opportunity for investment, Google search trends highlight the tendency of other investors to speculate about its future.
Is it time to buy the Bitcoin dip?
After weeks of unrelenting selloffs, the Google search results show that cryptocurrency markets are experiencing peak anxiety.
After the comments of the United States Federal Reserve on the inflation outlook, nerves were high in crypto markets. The sell-off began at the beginning of June 2022.
Bitcoin lost the $20,000 psychologically significant mark. It also crosses another negative milestone, as it kept falling below the previous halving cycle’s highest for the first time ever in its history.
BTC/USD suffered 37% losses in the first two weeks, making June 2022 the worst month for Bitcoin.
The pair has traded almost 60% lower year-to-date. This is 70% less than the record high of $69,000 set in November last year.
According to cryptocurrency analysts, Bitcoin needs a higher volume and volatility to match volume levels from previous bear market bottoms, at the 200 MA (200-week moving average), a key lifelong support line.
The US stock market seems to recover and the S&P had its second-best week of 2022, which indicates a modest relief across risk assets. Everyone is looking at Bitcoin’s 200-week MA, which is the major indicator that gives the average price of Bitcoin over the last 200 weeks, hoping to surpass this support lever soon.
