Bitcoin may have to tumble to $25,000 before major investors really buy back in, says CEO of crypto unicorn Amber Group

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Bitcoin has tumbled since April.

  • Bitcoin may have to drop to $25,000 before investors really start to buy the dip, Amber Group’s CEO said.
  • Michael Wu said institutions are still interested in crypto, but are wondering where the bottom is.
  • Bitcoin has fallen dramatically from its April record high, thanks in part to a Chinese crackdown.
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Bitcoin may have to fall as low as $25,000 before major investors start snapping up bitcoin in large quantities again, the chief executive of $1 billion crypto lender Amber Group has said.

Michael Wu told Insider in an interview this week he thought bitcoin has to fall further before institutions such as hedge funds are attracted to the asset again. He said he thought that level was probably between $25,000 and $30,000.

Bitcoin fell 5.5% on Thursday to $32,640. That was well below April’s record high of close to $65,000.

“If we really have a flush down to, say, $25,000, or even briefly below that, I think there’s tremendous interest waiting to buy very cheaply at those levels for long term entry,” Wu said.

Read more: A short seller who made 50% returns betting against MicroStrategy lays out his bear case thesis on crypto stocks – and shares an area of the market where he’s incredibly bullish

Bitcoin has tumbled since April, with selling driven by Elon Musk’s U-turn on accepting the token as payment for Tesla cars and a crackdown on crypto mining and transactions in China.

The breakneck rally in the first few months of the year was in large part driven by interest from big institutions like hedge funds and banks, analysts have said.

According to JPMorgan’s crypto expert Nikolaos Panigirtzoglou, institutional interest has all but dried up in recent months. He told Insider in June: “There is no evidence here of a buying-the-dip mentality.”

Wu, whose Amber Group recently gained the backing of major hedge funds and a $1 billion valuation, said institutions are not rushing into the crypto space “like they were doing last year, or the beginning of this year.”

But he said he still has plenty of conversations with institutional investors that are interested.

“I think most of them are still very confident and optimistic about the long term outlook of crypto assets. But in the near term, they are not sure [if we are] at the bottom or near the bottom,” he said.

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Bitcoin tumbles 8% after China steps up crackdown on crypto mining, shutting down 26 key sites in Sichuan

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China is increasingly cracking down on bitcoin.

Bitcoin dropped 8% on Monday after Chinese authorities ramped up their crackdown on cryptocurrency “mining” over the weekend, with bodies in the Sichuan province ordering 26 of the biggest miners to halt operations.

The world’s biggest cryptocurrency fell to $32,950 as of 6.20 a.m. ET. Bitcoin was down around 49% from April’s record high of close to $65,000, but was still roughly 12% higher for the year.

Other cryptocurrencies also dropped sharply, with ether down around 6% and binance coin roughly 4% lower, according to Coinmarketcap. A broader market sell-off also appeared to be weighing on crypto, as investors moved towards safer assets.

The latest move by Chinese authorities to restrict bitcoin mining came in the southwestern Sichuan province over the weekend, when bitcoin miners were told to “clean up and terminate” their operations. Sichuan authorities said 26 bitcoin mining companies must be closed down on Sunday, according to a notice seen by the South China Morning Post.

Chinese state media outlet Global Times then reported that more than 90% of China’s bitcoin mining capacity was estimated to be closed down, at least for the short term, on Sunday.

Bitcoin mining – whereby computers solve complex puzzles to secure the network and mint new coins – has become a target in increasingly climate-conscious China because of the huge amounts of energy it uses.

Sichuan’s clampdown followed similar moves by authorities in Xinjiang, Yunnan and Qinghai.

“The dominant driver of bitcoin right now is the crackdown on mining & trading in China that began in May,” Michael Saylor, a leading bitcoin bull and chief executive of tech firm MicroStrategy, wrote on Twitter.

“This created a forced & rushed exodus of Chinese capital & mining from the bitcoin network,” Saylor said, describing this as “a tragedy for China and a benefit for the Rest of the World over the long term.”

Jeffrey Halley, senior market analyst at currency group Oanda, said the broader drop in risky assets following the Federal Reserve meeting was also weighing on bitcoin. Stocks have sold off after Fed officials on Wednesday moved forward their estimates of when the US central bank would have to raise interest rates.

“If, as I expect, the global buy-everything unwind continues this week, bitcoin will feel those chill winds as well,” Halley said.

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The president of El Salvador says the country is exploring using geothermal energy from volcanoes to mine bitcoin following its decision to make the cryptocurrency legal tender

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A bitcoin sign in El Salvador.

El Salvador’s president Nayim Bukele took to Twitter on Wednesday for yet another big bitcoin announcement.

This time, Bukele said that he has instructed the president of the country’s state-owned geothermal electric company, LaGeo SA de CV, to “put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos.”

The move comes after the country passed a law to make bitcoin legal tender on Wednesday via a supermajority (62 votes out of 84 possible).

Bitcoin’s price rose roughly 10% on Wednesday to trade around $36,000 per coin after the bullish news broke.

Bitcoin mining’s energy-intensive nature has led critics to question its environmental impact over the past few years.

According to data from Cambridge, the bitcoin network’s total energy consumption represents about 0.53% of total global energy consumption, and more than 85% of the energy consumed is used in the mining process.

Critics have argued bitcoin mining could exacerbate climate change, while others, including Cathie Wood of ARK Invest, have said that bitcoin’s power use will only help boost the adoption of renewable mining and solar power.

In other crypto news, Coindesk reported Chinese consumers are currently unable to search for popular cryptocurrency exchanges including Binance, OKEx, and Huobi on popular Chinese search engines in a sign of potential censorship.

China has been cracking down on cryptocurrency mining for some time, even going so far as to block the social media accounts of prominent crypto influencers over the weekend.

Last month, crypto miners were forced to halt operations in China after the country implemented tighter regulations. Chinese government officials have previously stated they would target the crypto industry to try to reach net-zero emissions by 2060.

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The number of active bitcoin addresses has rebounded to near-record highs, new data shows

El Salvador bitcoin

The number of active bitcoin addresses rebounded to near-record highs, driven partially by El Salvador’s passage of a law that makes it the first country to accept the digital currency as legal tender.

According to Glassnode data, on May 8 there were roughly 1.229 million active bitcoin addresses. That’s just under 15,000 addresses away from the January 8 all-time record of 1.243 million.

Glassnode chart bitcoin adresses 2

During the recent bitcoin sell-off, active bitcoin addresses fell dramatically, but now, as bitcoin’s price has stabilized, there’s been a resurgence in the number of active addresses on the network.

According to Glassnode, the rise in bitcoin addresses is a common “characteristic of bull markets” as the number of addresses rises when there is “strengthening demand for on-chain transactions, value settlement, and urgency for inclusion in an upcoming block.”

Bitcoin has been on a wild ride of late. The price of the digital asset reached an all-time high on April 15 of over $63,500 per coin before bearish news pulled the price down.

From Tesla’s u-turn on accepting bitcoin as a payment to concerns about the digital currency’s environmental impact, there was a flurry of bearish signals that hurt bitcoin.

Now though, the digital currency seems to have regained some of its previous luster after landing support at the soldout Bitcoin 2021 Miami conference and from El Salvador’s President Nayib Bukele.

Bukele sent a bill to El Salvador’s congress asking to make bitcoin legal tender in the country this week, and the bill was passed with a supermajority (62 out of 84 votes).

Nicholas Cawley from DailyFX told Insider that making Bitcoin legal tender “will help the remittances trade in El Salvador, for people sending money back to the country.”

The strategist said that “if this proves successful then the other big remittance markets including Mexico will be very interested onlookers.”

Read more: Forget bitcoin and other hypervolatile cryptocurrencies. For everyday transactions, the future of money is stablecoins.

Inflation concerns could also be helping bitcoin regain its prominence as digital assets are often viewed as a way to protect capital from inflationary pressures.

Google Trends data shows terms relating to inflation have seen skyrocketing search volume over the past month as market commentators continue to question whether current inflationary forces are truly “transitory” as the Fed describes.

Wharton professor Jeremy Siegel even said inflation could spike to 20% in the next few years in a recent interview with CNBC.

If inflation does spike and investors seek uncorrelated stores of value, bitcoin could end up gaining even more traction.

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US bitcoin investors saw quadruple the gains of their Chinese peers in 2020, even though China has the world’s highest crypto transaction volume, new study shows

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  • US investors gained $4.1 billion in bitcoin profits last year – nearly four times more than the Chinese, said Chainalysis.
  • This, despite the Asian superpower having the highest volume of cryptocurrency transactions in the world.
  • The disparity in gains stemmed from the huge inflows that US-focused exchanges saw in 2020.
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Investors in the US saw $4.1 billion in bitcoin profits last year – nearly four times more than Chinese investors – even as the Asian superpower has the highest volume of cryptocurrency transactions in the world, new data from Chainalysis shows.

The disparity in gains stemmed from the huge inflows that US-focused exchanges saw in the latter part of 2020. Most of the activity came from Coinbase, the largest cryptocurrency exchange in the US, which debuted on the Nasdaq on April 14.

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To arrive at the figures, Chainalysis tracked cryptocurrency exchange transactions, although it did not account for gains on coins yet to be withdrawn. The New York-based blockchain analysis company also acknowledged that the decentralized nature of the technology makes it difficult to determine with certainty where the deals transpired.

Looking closely, the sharp rise can be seen from October to December, the timeframe when the price of bitcoin more than doubled – and kept rising to new all-time highs.

The steepness of the US curve may also suggest that many investors in America sold at higher prices compared to those in other countries who may have held on to their cryptocurrencies more.

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Chainalysis

The price of bitcoin exploded in the past year, catapulting into the mainstream as institutional investors from Tesla to MicroStrategy adopted the cryptocurrency. It peaked to $64,829 ahead of Coinbase’s listing before losing nearly 50% of its value in the following month.

Bitcoin is trading lower Tuesday by 11.68% at $31,781.

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Not so hot: Bitcoin’s 50% plunge since April puts it far behind lumber, copper and US banks for the year

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Bitcoin has lost around half its value since April.

Once up more than 120% for the year, bitcoin’s dramatic plunge since April means the world’s biggest cryptocurrency is now lagging behind a host of more traditional financial assets in 2021.

  • Bitcoin’s 50% plunge since April has put its 2021 returns behind a host of more-traditional assets.
  • It now lags well behind commodities and US banks, which have jumped as economies have reopened.
  • Bitcoin’s gains were on a par with the S&P 500 and Dow Jones on Tuesday after another sharp drop.
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Bitcoin has lost around 50% of its value since peaking at close to $65,000 in April. It traded below $33,000 on Tuesday, around 13% higher than where it started the year.

The 13% increase put it far behind some of 2021’s biggest risers – particularly commodities and bank stocks, which have jumped as economies have reopened and markets have stayed buoyant.

Bitcoin’s plunge even put the cryptocurrency roughly on a par with the Dow Jones and S&P 500 for the year.

Lumber prices have rocketed as housing markets around the world have boomed despite the coronavirus pandemic, with the random-length price rising around 40% in 2021. It stood at just over $1,220 per 1,000 board feet on Tuesday, after a fall in recent days.

Copper has also jumped as global manufacturing has picked up again, rising roughly 28% across the year to above $4.50 a pound on the New York Mercantile Exchange.

Even US banks, the bedrock of the traditional economy, were far outperforming bitcoin on Tuesday as a rebound in growth and rising bond yields boosted share prices. The Dow Jones US banks index has risen around 36% since the start of the year after a lackluster 2020.

Bitcoin was down close to 5% on Tuesday morning. Analysts said one explanation was that former President Donald Trump said the crypto asset “seems like a scam” on Fox Business. Another was that the US has recovered a major ransom payment by breaking into a wallet, denting the anti-government case for crypto.

The cryptocurrency could crash again if it falls much further, said Jeffrey Halley, senior market analyst at currency firm Oanda. “Failure of $30,000 will basically put every long position since January 1 in the red, which, I believe, will trigger another capitulation trade,” he said.

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Bitcoin is still driven by the ‘digital gold narrative’ among institutional clients who see it as a hedge against inflation, Fidelity’s digital assets president says

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  • Institutional investment in bitcoin is still driven by the “digital gold” narrative, according to Tom Jessop.
  • Jessop, Fidelity’s digital assets president, said his clients are worried about monetary inflation and see bitcoin as a hedge.
  • Bitcoin is also viewed as a “long-dated call option on the use of the asset or the technology as a means of payment.”
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Bitcoin is still driven by the “digital gold narrative” among institutional investors who see the digital asset as a way to hedge against inflation, according to Tom Jessop, Fidelity’s digital assets president.

In an interview with CNBC on Tuesday, Jessop was asked which narrative surrounding bitcoin is the most popular with institutional investors.

The digital assets president said: “I would say the predominant narrative at this point is still the digital gold narrative which really started driving the market higher about a year ago after the pandemic.”

He added: “There are a number of clients that are concerned about the fiscal and monetary stimulus, monetary inflation, and they see a scarce digital asset like bitcoin, specifically, being an important part of that thesis.”

Bitcoin’s scarcity and potential to hedge against inflation are key reasons institutions are taking an interest in the asset, according to Fidelity’s digital assets president, but they aren’t the only ones.

In his interview, Jessop explained how a growing number of institutional investors are looking at bitcoin “from an asset allocation standpoint” due to its lack of correlation with other assets over longer periods of time.

Jessop also said that bitcoin is seen as a “network effect opportunity” by some institutional clients. He explained that a portion of his clientele views the digital asset as a “long-dated call option on the use of the asset or the technology as a means of payment.”

Fidelity’s digital assets president went on to say that he believes bitcoin’s recent boom and bust cycles “are part of the maturation of bitcoin as an asset class.”

Jessop also echoed comments from other crypto analysts who have called bitcoin’s recent fall a result of massive leverage unwinding.

“In some cases, we touched close to $30 billion of leverage driving prices higher, and in many cases, these investors can trade on 50 to 100 times leverageā€¦in the subsequent weeks that leverage has come down significantly, in some cases by two thirds,” Jessop said.

The digital assets president added that this de-leveraging process can be viewed as a “cleansing” for the ecosystem and that he expects with “basing” and “positive news flow,” bitcoin and other cryptocurrencies will begin to stabilize.

Read more: Financial researcher Nik Bhatia explains why asset managers with a growth focus could be violating their fiduciary duty if they don’t consider bitcoin – and compares the crypto to Amazon’s stock 20 years ago

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Cathie Wood’s ARK Invest buys the dip in bitcoin amid a volatile 50% sell-off

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • A more than 50% decline in bitcoin hasn’t stopped Ark Invest’s Cathie Wood from buying the dip in the cryptocurrency.
  • Ark Invest’s Next Generation Internet ETF has purchased 697,996 shares of the Grayscale Bitcoin Trust over the past two days.
  • Wood is sticking by her long-term $500,000 price target for bitcoin and believes the recent environmental concerns surrounding they cryptocurrency are “misguided.”
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Cathie Wood’s Ark Invest is buying the dip in bitcoin, according to the firm’s daily trade report that summarizes trades made in its family of ETFs.

The ARK Next Generation Internet ETF purchased 516,001 shares of the Grayscale Bitcoin Trust on Monday, worth about $17 million based on the fund’s closing price on Monday. The ETF purchased an additional 181,995 shares on Tuesday, worth about $5.7 million based on the fund’s Tuesday closing price.

Ark Invest’s $22 million purchase in the bitcoin fund comes after the cryptocurrency sold off more than 50% from its record-high over the past two weeks. The volatility in bitcoin was in part driven by Tesla CEO Elon Musk’s concerns about the environmental impact of bitcoin mining, but Ark Invest has called those concerns “misguided.”

The volatility in bitcoin accelerated further after China reiterated its ban against the cryptocurrency for banks and other financial institutions, as well as warning against mining and trading it.

But Wood remains bullish on bitcoin, and is sticking by her long-term price target of $500,000. That price target is driven by expectations that institutional investors will continue to allocate a portion of their portfolios to bitcoin over time, which would spark demand for the cryptocurrency and help drive up the price.

The Grayscale Bitcoin Trust is the sixth largest holding of the Ark Next Generation Internet ETF, with 7.6 million shares worth about $240 million as of Tuesday’s close, according to fund holdings data from ARK Invest.

Bitcoin is up about 30% since it hit a low of $30,066 on May 19.

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Elon Musk met with Bitcoin miners to discuss making the cryptocurrency more environmentally friendly

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Bitcoin mining uses huge amounts of energy.

  • Elon Musk met with leading Bitcoin miners to discuss the environmental impact of their industry.
  • In a tweet, the Tesla CEO called the proposed next steps “potentially promising.”
  • Bitcoin prices shot up after Musk’s tweet from about $38,000 to a peak of $39,600.
  • See more stories on Insider’s business page.

Elon Musk joined a discussion among leading Bitcoin miners centered around ways to improve the cryptocurrency’s environmental impact, the Tesla CEO tweeted on Monday.

MicroStrategy founder and CEO Michael Saylor said he convened industry leaders including Blockcap, Hut 8, Marathon Digital Holdings, and Riot Blockchain to discuss forming an organization that would establish reporting standards and ESG goals for mining. The companies did not immediately respond to a request for comment.

“The miners have agreed to form the Bitcoin Mining Council to promote energy usage transparency & accelerate sustainability initiatives worldwide,” Saylor said in a tweet.

Bitcoin prices popped from about $38,000 to a peak of $39,600 after Musk’s initial tweet, before sliding back down below $39,000.

MicroStrategy holds roughly 21,000 bitcoin as part of its treasury reserve policy, which was worth roughly $2 billion in April, according to its first-quarter financial disclosures.

The price of the currency has been especially volatile this month after Musk expressed concerns about the environmental impact of crypto mining and said Tesla would no longer accept the currency for car sales.

In a response to Saylor’s tweet, Texas-based miner Blockcap highlighted its use of clean energy, saying that “56% of our electricity comes from carbon-free sources, & we will continue to work together with energy innovators & providers to constantly increase that amount.”

Marathon Digital Holdings Executive Chairman tweeted , “As a founding member of the Bitcoin Mining Council, @MarathonDH will do our part to contribute to sustainable mining and transparency.”

Bitcoin mining consumes over 113 terawatt hours per year, slightly more than the country of the Netherlands at 110 terawatt hours, according to a real-time estimate from the University of Cambridge’s Bitcoin Electricity Consumption Index.

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Bitcoin rebounds 15% to top $38,000 after vicious weekend rout

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Bitcoin rebounded as much as 15% on Monday to trade around $38,683 per coin after a vicious sell-off over the weekend. The cryptocurrency slipped 18% to $33,674 at intraday lows on Sunday.

The crypto space has faced a tough few weeks of risk-off sentiment causing the total industry market cap to fall over the weekend to $1.57 trillion from record highs of $2.56 trillion on May 12, according to data from CoinMarketCap.com.

Mark Cuban called the sell-off the “Great Unwind” in a tweet on Sunday, arguing crypto traders were forced to unwind their leveraged trades amid falling prices in the space.

“Traders borrow to buy Eth, used eth to borrow alt/stable coin, used that to LP a high APY Pair, took the SLPs and staked them to maxout yield. The minute Eth drops to their Tragic Number, they had to Unwind. Unstake, Remove Liqudity, Repay,” Cuban wrote.

Some bitcoin experts believe the recent downturn may be over, however. Pankaj Balani, the CEO of Delta Exchange, a crypto derivatives exchange, told Insider that he believes “most of the leverage is out of the system now and bitcoin should start to form a base here.”

On the other hand, Paul Krugman, a noted economist and Nobel Laureate, published an op-ed titled “Technobabble, Libertarian Derp and Bitcoin” last week where he compared the crypto craze to “a natural Ponzi scheme.”

Krugman was roundly mocked by the crypto community for his comments, with bitcoiners pointing out the economist had previously said the fax machine was going to have as much impact on the economy as the internet.

“By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s,” Krugman wrote in a 1998 Red Herring article.

In other bearish news, JP Morgan analysts said in a note to clients on Monday that it was “too early to call the end of the recent bitcoin downtrend.”

The JPMorgan team said there is “a significant risk of further de-risking given continued decay in our lookback period momentum signal and given the absence of buying in either the bitcoin fund space or the regulated bitcoin futures space.”

Despite the falling price of crypto assets, over the weekend bitcoiners celebrated Bitcoin Pizza Day.

The holiday pays homage to Laszlo Hanyecz, who paid for two pizzas using 10,000 bitcoins in the first-ever transaction using the currency 11 years ago.

At the time the 10,000 bitcoins were worth roughly $41, now they are worth more than $3.8 billion.

Read more: ‘Wolf of All Streets’ crypto trader Scott Melker breaks down his strategy for making money using ‘HODLing’ and 100X trade opportunities – and shares 5 under-the-radar tokens he thinks could explode

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