Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Top Stories This Week
What a difference 10 days makes. At the start of the month, the markets were euphoric as Bitcoin touched a new all-time high. But at some points this week, BTC has been down 10% from these levels, reaching depths of $17,600 — the lowest level since November.
The prospect of new crypto regulation in the U.S. may have spooked traders, and indeed, it’s worth noting that equities have also cooled off this week, too.
Cointelegraph analyst Michaël van de Poppe said hopes of $20,000 in 2020 appear to have been dashed, writing: “Overall, the downtrend will post lower highs and lower lows always until a clear bottom is found.”
Not everyone is pessimistic. Some price analysts expect that BTC’s downside will be limited, and a gradual uptrend will follow as we head into late December. Denis Vinokourov, head of research at Bequant, predicted that the uncertainty over Brexit and the U.S. stimulus package could positively affect BTC in the short term.
And Guy Hirsch, managing director of eToro in the U.S., added: “We may see a bit more of a drop heading into the end of the year, but many investors see these dips as buying opportunities and are likely keeping Bitcoin from correcting as dramatically as the last time it rose above $19,000 back in December 2017.”
Institutions are continuing to snap up Bitcoin like there’s no tomorrow. This week, MicroStrategy announced that it had sold convertible senior notes worth $650 million so it could buy even more BTC. That’s 60% more than the $400 million initially reported.
Even before this purchase commences, the company is sitting on 40,824 BTC worth $751 million at current rates. That’s a gain of about $275 million from the acquisition price.
Other institutions are also joining the party. The insurance firm MassMutual has purchased $100 million in Bitcoin for its general investment account — a drop in the bucket considering it has a war chest of $235 billion.
Meanwhile, the number of major banks announcing plans to offer crypto custody services is increasing thick and fast. Standard Chartered, one of the biggest banks in the United Kingdom, said it will be launching a platform for institutional investors in 2021.
But MicroStrategy’s Bitcoin binge has attracted criticism. Citi analysts have downgraded the stock from “neutral” to “sell” amid concerns that the company is now overexposed and that investors are at considerable risk because of its “disproportionate focus on Bitcoin.”
Messari released a (rather sweary) report this week looking at crypto trends for 2021, but the colorful language ended up getting one of its sponsors into trouble.
The company’s founder and CEO, Ryan Selkis, described XRP as “toxic waste” and went on to brand Bitcoin Cash and Bitcoin SV as “piles of s—.” He wasn’t that nice about Stellar and Litecoin, either.
Overall, the report used the word “f—” five times and “s—” nine times — something Bitstamp wasn’t aware of when it shared the report with its followers.
After receiving a backlash from some of its users, the exchange tweeted: “We did not complete a thorough enough review of the 130+ page report before it was published. This is on us, we should have done better.”
Selkis said he regretted that Bitstamp was put in that position but stood by his decision to use a “no-BS tone,” adding: “Humor is the only thing that keeps people reading 134 page reports in a 280-character world.”
Facebook was hoping that the rebrand from Libra to Diem would herald a new dawn for its controversial stablecoin project — and finally convince regulators there’s nothing to worry about. But the headaches just keep coming for the tech giant.
It’s now emerged that there’s another fintech company called Diem, and executives say they were “flabbergasted” by the rebrand because it could cause customer confusion and “significantly impact our growth.”
Diem co-founder Chris Adelsbach said legal action is being considered, adding: “It wouldn’t have taken that much effort for Facebook to find out if there’s another Diem in financial services […] They obviously took the view that ‘we can just crush them, we’re Facebook.’”
German politicians weren’t all that impressed with the new name either, with finance minister Olaf Scholz warning: “A wolf in sheep’s clothing is still a wolf. It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed.”
Despite all this, Facebook Financial head David Marcus remains hopeful that the Diem stablecoin and Novi wallet can launch next year, urging regulators to give the project “the benefit of the doubt.”
Awkwardly, the U.S. Federal Trade Commission filed a lawsuit against Facebook days later, alleging that the corporation has been engaging in anti-competitive practices.
Jeremy Allaire has warned that the Treasury’s proposed ban on self-hosted wallets wouldn’t address the risks facing the industry, would harm American competitiveness, and would give “economic and industry advantage to Chinese firms.”
The co-founder of Circle, the peer-to-peer payments firm, has joined several members of Congress in opposing the rumored restrictions.
Four members of the Congressional Blockchain Caucus — Warren Davidson, Tom Emmer, Ted Budd and Scott Perry — urged Treasury Secretary Steven Mnuchin to have a rethink amid fears that the U.S. will be unable to participate in the “technological innovation currently underway throughout the global financial system.”
The letter also warned: “Such a regulation could actually undermine the Treasury Department from stopping illicit actors from exploiting the financial system, both within the traditional banking system and the digital asset ecosystem.”
Winners and Losers
At the end of the week, Bitcoin is at $18,698.08, Ether at $562.67 and XRP at $0.50. The total market cap is at $545,775,291,506.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Blockstack, CyberVein and Nexo. The top three altcoin losers of the week are Ampleforth, Numeraire and Horizen.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
Most Memorable Quotations
“Obviously, miners are selling $BTC a lot today. I’m still long, but this is not a good signal in the short-run.”
Ki Young Ju, CryptoQuant CEO
“Yesterday we posted a syndicated report by Messari, parts of which contained language and content that does not reflect Bitstamp’s views or values. We would like to apologize for that.”
“Bitcoin Cash can’t stop infighting and forking, and it’s become a soap opera (or underage telenovela) starring crypto’s formerly important people.”
Ryan Selkis, Messari CEO
“Humor is the only thing that keeps people reading 134 page reports in a 280-character world.”
Ryan Selkis, Messari CEO
“There’s going to be more digital assets of many different kinds coming over the next few decades. I expect that there will be a lot of opportunities to fairly exchange between different kinds of assets and move from one ecosystem to another.”
Vitalik Buterin, Ethereum co-founder
“We’re right on the cusp, of what I like to think of, as the broadband moment of digital currency.”
Jeremy Allaire, Circle CEO
“I think a new investor could put 5% into Bitcoin. Bitcoin’s not going back to zero […] It could certainly trade back to $14,000 — you could lose 30-40%, but you’re not losing 80-90% of your money.”
Mike Novogratz, Galaxy Digital founder and CEO
“I think there are a few issues that are still holding back the majority of institutional investors from allocating capital freely toward Bitcoin.”
Robert Li, Draper Dragon analyst
“We believe that cryptocurrency will eventually be powered completely by clean power, eliminating its carbon footprint and driving adoption of renewables globally.”
Jack Dorsey, Square CEO
“It wouldn’t have taken that much effort for Facebook to find out if there’s another Diem in financial services.”
Chris Adelsbach, Diem co-founder
“A wolf in sheep’s clothing is still a wolf.”
Olaf Scholz, German finance minister
Prediction of the Week
Growing mainstream acceptance of BTC as a reserve asset is having a direct impact on gold, according to analysts at JPMorgan Chase.
Quantitative strategists believe Bitcoin’s digital gold narrative will draw investors away from precious metals — possibly for years to come.
In a note to clients, JPMorgan’s analysts added: “The adoption of Bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”
Also this week, the investment bank’s head of wholesale payments, Takis Georgakopoulos, confirmed that JPMorgan has “softened its stance” toward Bitcoin in recent years.
FUD of the Week
New restrictions in France are being rolled out to ban anonymous crypto accounts in the hope that digital assets won’t be used for money laundering and terrorism financing.
While finance minister Bruno Le Maire said digital assets provide “significant opportunities for the economy,” he also warned that crypto comes with significant risks.
In September 2020, 29 people were arrested on suspicion of using crypto to send funds to al Qaeda and Islamic State fighters in Syria.
The founder of a now-defunct cryptocurrency has been arrested and charged in connection with a “multimillion-dollar tax evasion scheme.”
Amir Bruno Elmaani — also known as “Bruno Block” — allegedly claimed he had only earned $15,000 in his 2017 tax return and that he earned nothing in 2018. Despite that, he’s accused of buying a $10-million yacht, two homes and spending $700,000 in home improvement stores.
The 28-year-old is believed to have kept gold bars in a safe on his yacht and to have used large sums of cash to pay for personal expenses.
If convicted, Elmaani faces five years in prison for each count of tax evasion.
“After this arrest, he won’t be sailing anywhere anytime soon,” FBI assistant director William Sweeney added.
Executives of what was once South Korea’s third-largest cryptocurrency exchange have been charged over market manipulation allegations.
Prosecutors are preparing a case against Coinbit chairman Choi Mo and two unnamed executives on charges of fraud and forgery.
The police searched and confiscated a number of properties associated with Coinbit in a series of August raids. At that time, authorities estimated that 99% of the exchange’s volume had been faked by wash trading BTC and other cryptocurrencies and that those responsible for the exchange’s fraudulent activities had netted $84 million.
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