Bitcoin’s momentum will slow for months if it’s unable to quickly climb back above the crucial $60,000 level – and 2 main hurdles stand in its way, JPMorgan says

Bitcoin Bubble
  • A decay in momentum could represent a big problem for bitcoin, JPMorgan said in a Tuesday note.
  • A steep liquidation in bitcoin futures contracts has transpired over recent days, suggesting future weakness in the cryptocurrency.
  • “The challenge for bitcoin momentum in the current conjecture is to break above $60,000,” JPMorgan said.
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A decline in momentum could set bitcoin up for weakness going forward, according to a Tuesday note from JPMorgan.

Over the past few days, bitcoin futures contracts have faced a steep liquidation, which in the past has occurred near big round price levels. Certain thresholds like $20,000 in November, $30,000 in mid-January, and $50,000 in mid-February were all met with a brief decay in momentum.

According to the bank, it’s likely that momentum traders are behind the buildup and decline of long bitcoin futures in recent week.

“Each previous episode presented a challenge for bitcoin momentum to break out above the certain price thresholds,” JPMorgan said.

Now, that price threshold is the $60,000 level. If bitcoin fails to break out above the $60,000 level, momentum signals “will naturally decay from here for several months, given their still elevated level,” JPMorgan said.

Bitcoin currently trades near $55,500 after topping out around $64,000 last week amid the Coinbase direct listing frenzy.

The recent decline in bitcoin has investors watching key technical levels, including the 50-day moving average, which would signal further downside to $42,000 if that level doesn’t hold as support, according to one technical analyst.

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

JPMorgan is doubtful that bitcoin will be able to break above the key $60,000 level amid a decline in momentum for two reasons.

“First, the decay in our bitcoin momentum signals seems more advanced, reminiscent of the second half of 2019, and thus more difficult to reverse than in the previous three episodes. Second, the flow into bitcoin funds appears weak, raising concerns about the strength of the overall bitcoin flow picture at the moment,” JPMorgan concluded.

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Bitcoin eyes new record above $61,000 as the crypto market’s focus turns to Coinbase IPO

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Bitcoin rose as much as 2.6% to $61,229 on Monday as the crypto world prepared for a week dominated by Coinbase’s direct listing on Wednesday. The surge took the coin close to its all-time high of $61,742 reached on March 13.

The world’s biggest cryptocurrency has since pared gains slightly, trading at $60,429.68 as of 9:05 a.m. in New York.

“There’s a lot of anticipation, some restlessness, maybe some anxiety in crypto markets today,” Justin d’Anethan, head of sales at Nasdaq-listed exchange Equos, told Insider.

“With BTC solidly in the upper 50Ks, everyone is looking to see if we can reclaim or surpass that last all-time high… seen a couple of weeks back,” he said.

The big event of the week in the cryptocurrency world is the direct listing of crypto exchange Coinbase on the Nasdaq on Wednesday.

It will be the first listing of a major crypto company, with Coinbase pulling in around $1.8 billion of revenue in the first quarter of 2021. The exchange said private market transactions valued the firm at about $68 billion in March.

D’Anethan added: “Coinbase’s IPO is definitely a supportive move for the space as it is bolstering the legitimacy of the asset class and offering investors new ways to interact with it.”

Edward Moya, senior market analyst at currency firm Oanda, said in an email “a disappointing IPO or excessive concerns over enhanced regulatory oversight could weigh on bitcoin and the other altcoins.”

Bitcoin has more than doubled in 2021 thanks to a renewed interest in digital currencies supported by huge amounts of stimulus from governments and central banks.

Now, many major institutions are moving into the crypto space, adding legitimacy to bitcoin and other currencies.

Yet cryptocurrencies continue to divide the financial world, with many figures saying they are too volatile to become serious investments for major players. Others argue they serve little purpose except speculation.

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

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Bitcoin has been declared ‘dead’ 402 times since its inception. Here’s how you can track the number of times it has ‘died’ in mainstream media.

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  • Interest in bitcoin continues to grow, and its meteoric rise is difficult to ignore.
  • But many skeptics have debated its potential ever since the mysterious Satoshi Nakamoto released a whitepaper explaining its technology in 2009.
  • Disbelief in bitcoin’s use as a currency has led to the token being declared “dead” about 402 times since then.
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Bitcoin has had a tumultuous ride ever since its inception on Jan 3, 2009. The token is an extremely volatile asset class that has been ridiculed by numerous skeptics. Dr Doom economist Nouriel Roubini recently said the “Flintstones had a better monetary system” than bitcoin and that it shouldn’t be considered a currency.

Harvard professor Kenneth Rogoff has said he doesn’t see bitcoin succeeding and that it “could have some use in a dystopian future.”

‘Shark Tank’ star Kevin O’Leary previously called bitcoin “garbage.” He recently changed his mind, saying he’s planning to allocate 3% of his portfolio to the world’s most popular cryptocurrency. 

At the time of writing, bitcoin has been declared “dead” in mainstream media 402 times. Despite the scores of times various personalities and publications have pronounced it dead, the asset continues to rise in value and get adopted by major Wall Street institutions.

Bitcoin’s “death” can be tracked at Bitcoin Obituary, a parody website that collates news articles and blogs. It has already been declared dead nine times this year and 14 times in 2020. But the highest number of “deaths” it recorded (124) was in 2017, when its market cap hit $100 billion for the first time. 

The token’s most recent death was announced on February 24, 2021 by Steve Hanke, an American applied economist at Johns Hopkins University, who said it’s only a matter of time before bitcoin “death spirals” to its intrinsic value which is $0. 

Its earliest death was recorded on December 15, 2020 – almost two years since its creation – by a blogger called “The Underground Economist,” who predicted bitcoin would either remain a novelty forever or it would be “dead faster than you can blink.”

The price of bitcoin slipped on Friday by 0.4%, to $48,155, but is up 70% year-to-date.

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Bitcoin’s energy use is ‘staggering’ and a worry for big investors, Kleinwort investment chief says

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Bitcoin mining uses vast amounts of electricity.

  • Bitcoin uses a “staggering” amount of energy each year, the chief investment officer of Societe Generale’s UK private bank said.
  • Fahad Kamal said it means bitcoin clashes with the new focus on environmental investing.
  • Yet advocates say that bitcoin mining can be powered by renewable energy.
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The energy use of bitcoin is a key factor that makes the cryptocurrency unattractive to institutional investors, the chief investment officer of Société Générale’s UK private bank has said.

“We are very alarmed, I’m sure as others are, by the environmental aspects of bitcoin,” Fahad Kamal, the investment boss at SocGen’s Kleinwort Hambros bank, told Insider. He said the energy it used was “staggering.”

Estimates from the University of Cambridge suggest that bitcoin uses more electricity each year than Argentina and Ukraine, due to the energy-intensive mining process.

As the price of bitcoin has soared in recent months, a number of investors have raised questions over bitcoin’s energy consumption. Yet others argue that bitcoin increasingly uses renewable energy – and will do so more in the future.

Bill Gates told CNBC’s Andrew Sorkin in a live-streamed Clubhouse session last week that the currency “uses more electricity per transaction than any other method known to mankind.”

Kamal said bitcoin’s energy use means it clashes with environmental, social and governance investing, which is becoming increasingly important in the financial world.

“If you think about various trends that are occurring in the market, right now, bitcoin is one but ESG is a much bigger one.”

The issue of bitcoin’s energy use has come to the fore in recent weeks, after Elon Musk’s electric car company Tesla announced it had bought $1.5 billion of the currency in January.

Bitcoin is “mined” when computers are hooked up to the cryptocurrency’s network to verify transactions. As a reward for this work, which involves solving puzzles, miners can sometimes receive small amounts of bitcoin.

Read more: MORGAN STANLEY: Buy these 14 infrastructure stocks now as Congress gets ready to pass a deal later this year – including 8 that could rise at least 55%

Some miners have hooked up whole warehouses of computers to try to get more bitcoin, using vast amounts of electricity.

Yet Matt Blom, head of trading at Nasdaq-listed crypto exchange group Diginex, said fears about bitcoin’s environmental impact were overblown, because in the future almost all mining could be done through renewable energy.

“As time goes by I think that is the way things are going to be,” he told Insider.

A report from Cambridge University in September 2020 estimated that 39% of proof-of-work mining is powered by renewable energy, primarily hydroelectric. And it said more than 70% of miners used renewables as part of their energy mix.

Kamal said: “You can imagine that bitcoin gets environmentally friendly too and is only mined using solar power, but we’re not there yet.

“As of right now, it’s a huge consumption of electricity used to mine it. And that electricity is produced in very dirty ways.

“And for us, that is a big factor,” he said. “The fact that bitcoin is dirty, relatively speaking, is a pretty big issue.”

However, Kamal said Kleinwort Hambros – which is part of SocGen’s €119 billion ($145 billion) private banking network – does not have a “black and white view” of cryptocurrencies.

“There’s obviously some really positive aspects to it, and some not.” He said many of bitcoin’s problems, such as high volatility, would become less serious if more people adopted the cryptocurrency.

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Bitcoin’s sell-off is ‘part of its DNA’ and could still surge to $100,000, Fundstrat’s Tom Lee says

Tom Lee
  • Bitcoin’s recent correction of more than 20% is “part of its DNA and its history,” Fundstrat’s Tom Lee said in a tweet on Tuesday.
  • Lee reiterated his $100,000 price target on bitcoin, arguing that the sell-off doesn’t change fair value.
  • Bitcoin “looks on sale,” Lee Tweeted.
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The more than 20% sell-off in bitcoin this week shouldn’t be a surprise to investors familiar with the cryptocurrency, according to Fundstrat’s Tom Lee.

In a tweet on Tuesday, Lee said bitcoin is prone to corrections of 40%-50%, adding that the sizable corrections are “part of its DNA and its history.”

After topping out at more than $58,000 over the weekend and eclipsing $1 trillion in market value, bitcoin sold-off to a low of $45,000 on Tuesday amid risk-off sentiment among investors due to concerns of rising interest rates.

But the decline in bitcoin “doesn’t change fair value” for the cryptocurrency, Lee said before reiterating his $100,000 price target. A surge in bitcoin to $100,000 would represent potential upside of 117% from Tuesday afternoon levels.

Lee’s price target for bitcoin is predicated on his view that 2021 represents a similar setup to 2017 for the cryptocurrency: a parabolic rally following a halvening event. A halvening in bitcoin is when the reward for miners completing problems on the bitcoin blockchain is cut in half. Bitcoin completed a halvening event last year.

“Looks on sale, right?” Lee asked. 

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‘Dr. Doom’ economist Nouriel Roubini says bitcoin is not a hedge against inflation and investors are ‘feeding the bubble’

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Nouriel Roubini

  • Economist Nouriel Roubini renewed his pessimistic views on bitcoin in an interview with Yahoo Finance this week.
  • The professor said he sees bitcoin as a “pseudo-asset” that is pumped by “massive manipulation.”
  • Roubini also argued bitcoin isn’t a hedge against inflation or a store of value, because of its correlation with stocks.
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Nouriel Roubini, an economist known as “Dr. Doom” for his bearish views, said bitcoin is not a hedge against inflation and investors are “feeding the bubble” in an interview with Yahoo Finance on Monday.

 “If people were really worried about inflation they would diversify in a wide range of assets that are historical good hedges against inflation. That’s not happening,” Roubini said.

“People say bitcoin’s a store of value against tail risk, but in February, March of last year when US stocks went down, say 35%, bitcoin was not a hedge, it went down by 50%” the economist added. “The reality is that no one knows what the value of this pseudo-asset is.”

Roubini has long been a critic of digital currencies, but after bitcoin hit a $1 trillion market cap last week the NYU professor has renewed his bearish calls. 

Roubini said he sees the digital currency as a volatile “pseudo-asset” and argued much of the price movement “is driven not by worries about inflation or debasement of fiat currencies,” but rather by “massive manipulation.”

The economist said that there are a number of schemes used by digital currency whales to push the price of bitcoin higher. In particular, he highlighted the stable coin tether as an example.

Roubini said tether is “produced out of nowhere with we don’t know which kind of backing and every other day there is another billion dollars of it that goes to buying bitcoin.”

“We know there are a whole bunch of legal investigations by the DOJ, CFTC, the attorney general’s office in New York, they are looking into what’s going on,” the economist added.

JPMorgan strategists including Josh Younger and Joyce Chang, also warned investors about tether in a note to clients last Thursday, per Bloomberg.

The analysts said Tether Limited is “engaged in a classic liquidity transformation along the lines of traditional commercial banks, but is not subject to the same strict supervisory and disclosure regime, and certainly does not have anything like deposit insurance.”

They also warned problems with Tether could lead to liquidity issues in the crypto market and that Tether Limited has “famously not produced an audit.”

Tether Limited announced a settlement with the New York AG for $18.6 million on Tuesday. The firm was accused of hiding $850 million in losses and has been under scrutiny to see whether it has sufficient cash reserves to back up all tether tokens in circulation, per CNBC.

Tether responded to questions about its business in a statement saying, “contrary to online speculation, after two and half years there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices.”

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‘Big Short’ investor Michael Burry says he doesn’t hate bitcoin but thinks its ‘long-term future is tenuous’

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  • Michael Burry sees central governments as bitcoin’s biggest adversaries.
  • The investor said in a tweet that “legally violent, heartless central governments with #lifeblood interest in monopolies on currencies” won’t allow bitcoin to remain decentralized.
  • Burry said he does not hate bitcoin, but he sees the digital asset’s “long-term future” as “tenuous.”
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Government regulation is what bitcoin bulls should fear more than anything, according to legendary investor Michael Burry.

In a Sunday tweet, the Scion Asset Management chief said while he doesn’t hate bitcoin and isn’t short the digital currency, he sees its “long-term future” as “tenuous.”

In his tweet, Burry said “legally violent, heartless centralized governments with #lifeblood interests in monopolies on currencies” won’t allow bitcoin to thrive and remain decentralized in the long-term.

Still, the Big Short investor noted “in the short-run anything is possible” for the digital currency. Bitcoin surpassed the $1 trillion market capitalization milestone last week before retracing gains on Monday. The cryptocurrency returned over 300% to investors in 2020 alone.

Burry is best known for his billion-dollar bet on a US housing market crash before the 2007-08 financial crisis which was immortalized in “The Big Short” by Michael Lewis, and a subsequent movie by the same name.

The Sunday tweet from Burry comes as he continues to sound alarms over a potential stock market collapse.

Burry claimed the “market is dancing on a knife’s edge” in a recent series of Tweets that argued rampant speculation has caused a huge bubble in the equity market.

Even worse for bitcoin investors, Burry doesn’t see gold or the digital asset as a way to prevent losses in the event of an “inflationary crisis” following a market crash. 

“In an inflationary crisis, governments will move to squash competitors in the currency arena. $BTC #gold,” the investor said.

Burry recently tweeted a string of quotes discussing Germany’s path to hyperinflation in the 1920s.

He sees America’s current trajectory as replay of the post-World War I mishaps that eventually led to a 320% monthly inflation rate in the country.

If Burry is right again, investors won’t be able to argue that they weren’t warned.

“People say I didn’t warn last time,” Burry said in a tweet. “I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned.”

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Bitcoin on track for biggest weekly fall since September as Janet Yellen and ‘double spend’ report spook speculators

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Bitcoin has had a volatile couple of weeks after hitting a record high of close to $42,000

The bitcoin price was set for its biggest one-week fall since September on Saturday morning, having slipped around 10% since Monday.

Bitcoin – which hit an all-time high of close to $42,000 on January 8 – tumbled to around $28,000 on Thursday evening.

But it recovered to around $32,170 by Saturday morning. That means it was down about 10% since Monday, putting it on course for the the biggest weekly drop since declining by 12% in September, according to TradingView data.

Should the price tumble back towards the lows seen in the Asia session, the bitcoin price could be heading for its worst week since it crashed 33% in March 2020.

Read More: We spoke to Winklevoss-backed crypto platform Gemini about bitcoin, how to use stable coins, and why regulation won’t kill the boom in digital currencies

Bitcoin came under selling pressure this week after Janet Yellen, Joe Biden’s pick for Treasury secretary, suggested the use of cryptocurrencies should be “curtailed” because they were used mainly for “illicit financing”.

Many analysts put bitcoin’s overnight slide on Thursday down to a report by BitMEX Research that suggested a flaw called “double spend” – when someone is able to spend the same coin twice – had occurred in the cryptocurrency’s blockchain.

Yet the report was widely rejected in the cryptocurrency community. Analysts said that what BitMEX initially thought could be a “double spend” was in fact a regular occurrence in the blockchain system that underlies Bitcoin.

Cryptocurrency expert Andreas Antonopoulos said on Twitter: “There was a chain re-organization in the Bitcoin blockchain. This is a common occurrence that is part of Bitcoin’s normal operation.”

He added: “All of this is normal. A 1-block reorganization happens every couple of weeks.”

Bitcoin has soared in recent months, rising from a 2020 low of less than $4,000 in March to more than $41,000 earlier this month. Overall, it is up around 280% in the last year.

Fellow cryptocurrency Ethereum was around 1% higher on Saturday morning to $1,256. That was shy of an all-time high of more than $1,430 hit last week.

Advocates say cryptocurrencies are fast becoming safe-haven assets that can protect investors’ portfolios against the risk of inflation and currency devaluation triggered by the unprecedented fiscal and monetary stimulus unleashed during the coronavirus pandemic.

They point to a growing number of institutional investors showing interest in Bitcoin. BlackRock on Wednesday moved to add Bitcoin futures to two of its funds, highlighting the demand for the currency.

Yet regulators and critics have warned that cryptocurrencies like Bitcoin have no fundamental factors driving their value and are highly volatile, meaning investors could “lose all their money”.

Read More: The chief investment strategist at a $9.6 billion volatility-focused money manager breaks down why the stock market is poised to get more chaotic in 2021 – and shares how investors can take advantage of it

Nonetheless, market interest has picked up sharply in recent months. Some analysts said the recent fall could be an opportunity.

“The current correction is a blessing for those who have missed the rally during which the cryptocurrency doubled from its previous high, a move from $20,000 to $40,000,” said Naeem Aslam, chief market analyst at Avatrade.

Craig Erlam, senior market analyst at currency platform Oanda, said: “We may see a small rebound now, just as we did earlier this month.

“But the price action we’ve seen this month suggests there’s some nervousness around these levels. It will certainly be an interesting watch over the coming weeks.”

This article was updated to highlight that the report that suggested a “double spend” occurred was widely rejected in the Bitcoin community.

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Bitcoin falls 11% after report suggests a critical flaw in the cryptocurrency called ‘double spend’ may have occurred

NYSE trader worried
  • Bitcoin fell as much as 11% on Thursday after a report from BitMEX Research suggested that a critical flaw called “double spend” had occurred in the Bitcoin blockchain.
  • Double spend is a highly feared scenario where a user is able to spend their bitcoins more than once.
  • Ultimately, a double-spend event did not actually occur, according to the CTO of Bitfinex.
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Bitcoin fell as much as 11% on Thursday, hitting its lowest level in nearly three weeks, as the popular cryptocurrency was hit with a double whammy that jolted faith in its user base.

First, Janet Yellen, President Joe Biden’s nominee for treasury secretary, suggested during her confirmation hearing on Tuesday that lawmakers “curtail” the use of Bitcoin because of its use in illicit activities.

And second, a debunked report from BitMEX Research on Wednesday suggested that a critical flaw called “double spend” had occurred in the Bitcoin blockchain.

Double spend is when someone is able to spend the same bitcoin twice. It is a feared and dire scenario for the digital asset, and the blockchain was thought to have solved the issue when Satoshi Nakamoto published the Bitcoin white paper in 2009.

Early attempts to launch a digital cash system were ultimately halted by vulnerabilities that could have enabled double spending and undermined faith in the system.

BitMEX Research tweeted that “it appears as if a small double spend of around 0.00062063 BTC ($21) was detected.”

Read more: GOLDMAN SACHS: These 22 stocks still haven’t recovered to pre-pandemic levels – and are set to explode amid higher earnings in 2021 as the economy recovers

BitMEX later said it appeared that the double spend was actually an RBF transaction, which is when an unconfirmed bitcoin transaction is replaced with a new transfer paying a higher fee. But BitMEX’s Fork Monitor said that “no (RBF) fee bumps have been detected.”

BitMEX said in another tweet: “A transaction in the losing chain sent 0.00062063 BTC to the address 1D6aebVY5DbS1v7rNTnX2xeYcfWM3os1va, and a transaction in the winning chain which spent the same inputs only sent 0.00014499 BTC to this address.”

Ultimately, the double-spend event did not occur, according to Bitfinex CTO Paolo Ardoino. In an e-mail to Insider, Ardoino explained, “In fact, what happened is that two blocks were mined simultaneously. As a consequence, there was a chain reorganization, which did not result in double-spending.”

Meanwhile, institutional investors continue to gain exposure to bitcoin. Filings with the Securities and Exchange Commission on Wednesday said BlackRock had enabled two of its mutual funds to invest in the cryptocurrency.

Read more: We spoke to the Winklevoss-backed crypto platform Gemini about Bitcoin, how to use stable coins, and why regulation won’t kill the boom in digital currencies

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Bitcoin has now replaced tech stocks as the most crowded trade, according to a BofA fund manager survey

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Bitcoin.


A Bank of America fund manager survey reveals that a significant number of investors believe bitcoin is the most crowded investment trade. 

In a January survey of portfolio managers, strategists, and chief investment officers who together manage over $561 billion, 36% of investors surveyed said bitcoin is the most crowded trade. “Long tech” had previously held that title since October 2019. 

The survey emphasizes the extreme bullishness around the cryptocurrency as it soars past new records and attracts new investors from the retail and institutional sides of the market. 

The last time bitcoin was deemed the most crowded trade was in December 2017, when it peaked at $20,000 but spiraled downward in the following year. 

Read more: We spoke to crypto platform Gemini, which is backed by the Winklevoss twins, about Bitcoin, how to use stable coins and why regulation won’t kill the boom in digital currencies

“Long tech” came in second place, with 31% of investors considering it the most crowded trade. Meanwhile 23% said short the US dollar was the most crowded, and 4% said long corporate bonds. 

The survey comes as the cryptocurrency sheds off some of its gains from the beginning of 2021. Bitcoin sank as low as $33,412.72 on Wednesday, after climbing to a record of nearly $42,000 earlier this month. On Tuesday, Biden’s pick for Treasury Secretary Janet Yellen suggested that lawmakers “curtail” the use of cryptocurrencies such as bitcoin over concerns that they are “mainly” used for illegal activities.

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