Bitcoin is on the cusp of a bull market that could run into the end of the year, even with this week’s meltdown: Kraken

Bitcoin
Bitcoin

  • Bitcoin appears to “be back in a bull market” despite this week’s sell-off, according to a Kraken report Tuesday.
  • Futures open interest and other measures of activity have picked up but are well below the highs of April.
  • Weekly fund flows, Google searches and Reddit data suggest there’s scope for interest to pick up.
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Bitcoin has skidded to its lowest in around a month this week, after El Salvador’s adoption of the cryptocurrency as legal tender unleashed a tidal wave of forced selling, but trading exchange Kraken said there’s another bull run in the making.

In a research report on Tuesday, Kraken noted that investor interest has picked up over the summer, but is well below the peaks seen earlier this year, while interest from the retail community also has scope to improve.

Bitcoin plummeted by as much as 20% over Monday and Tuesday this week, briefly falling below $43,000 at one point for the first time in around a month, after El Salvador made the coin legal tender, prompting a “buy the rumor, sell the news” effort to take profit among traders that snowballed into mass liquidation across various exchanges.

But this does not change the optimistic outlook, according to Pete Humiston, manager at Kraken Intelligence.

“​​While these moves look dramatic, they can be a sign of a healthy market. Because many market participants use derivatives to speculate on price, market leverage can get to a point where it needs to self-correct and reset. This results in a sudden jump in market volatility, much like the one we saw yesterday,” Humiston told Insider.

Bitcoin lost roughly 50% in value over the early part of the summer, but rallied steadily throughout July and August. “Signs suggest overall market interest has yet to return to the levels seen in April/May, when BTC and altcoins were setting new all-time highs,” the report said.

Open interest for bitcoin futures rose $10 billion in August to reach $33.2 billion, but it has “not yet returned to the market in the size we saw in April,” the report said, suggesting there was room for derivatives investors to come back into the market.

The report noted that there is room for an upswing in buying from institutional investors. For example, bitcoin-backed products logged eight straight weeks of outflows from crypto funds until last week, when they saw their first inflows, according to data from CoinShares.

“Assuming the market remains in an uptrend, we could see a resurgence in institutional demand that could fuel the market to all-time highs,” the report said.

Retail investors have also shown less appetite for bitcoin lately. There has been a reduction in the numbers of Google searches and subreddit subscriptions, which has left overall interest below where it was in the second quarter, when bitcoin and ethereum’s ether hit record highs, the Kraken report said.

“All things considered, one could argue that while we’ve seen the market post generous returns, interest has yet to return to ‘mania’ like levels, and interest in the market is starting to pick up again. That said we ought to brace for a surge in demand as we head into the year-end,” the report said.

Kraken is the 5th biggest exchange by volume according to CoinGecko.

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How to mine cryptos like bitcoin, ether, and doge: Your complete guide to getting set up and earning profits

Bitcoin
Crypto mining is seeing a surge in interest as people scramble to participate in the market.

The surge in cryptocurrency prices over the past year has spurred renewed interest in the multiple ways to profit from the asset class.

Crypto mining remains one of the most viable ways to participate in the upside of digital currencies without buying them directly. In practice, miners’ computers compete by solving complex mathematical equations that help verify digital currency transactions and update the shared ledger called the blockchain. Their reward for solving these problems is a share of the cryptocurrency that’s associated with the blockchain they are part of, such as bitcoin or ethereum.

Since cryptos are decentralized, meaning that no appointed intermediaries are recording each transaction, miners are essential to keeping the crypto ecosystem alive.

But mining is not without current and future roadblocks. The environmental impact of its electricity usage is a hotly contested issue. Miners are fleeing China, a historically important location for facilities, after the government banned mining in some provinces. And the infrastructure bill making its way through the US Congress could introduce more stringent tax-reporting requirements for miners.

Additionally, mining is not a guaranteed golden ticket for crypto: payouts vary and are subject to the volatility that’s synonymous with this budding asset class.

Despite these hurdles, crypto mining could continue to grow as digital currencies stretch further into the mainstream. The global market-research firm Technavio estimated that the market for ASIC hardware and graphic processing units (GPUs) will grow by $2.80 billion at a compounded annual rate of over 7% from 2020-2024.

Insider has interviewed several miners who explained their processes from start to finish. We learned how they initially got smart on cryptocurrencies, the specific equipment they got started with, how they manage electricity costs, the amount of crypto they earn as rewards for maintaining the blockchain, and much more.

Bitcoin

Mining the world’s most popular cryptocurrency is one way to earn it at a potentially lower cost while participating in its upside.

The practice may conjure up images of long LED-lit rows of computers, similar to the high-frequency trading systems that are out of the financial reach of most retail investors. But these facilities do not represent the full spectrum of bitcoin mining.

Insider has interviewed mining experts who run the gamut, from the founder of a company with facilities in three states to a TikToker who went viral for his $875 mini rig.

Read more:

Ether

The second-largest crypto by market cap recently underwent a software upgrade called the London hard fork that contained five Ethereum Improvement Proposals, or code changes. The most important one for miners was arguably EIP-1559, which mandated a minimum base fee that all users must pay to execute their transactions. Under the new system, these fees will be burned from the network instead of being rewarded to miners.

In short, the upgrade means that ether miners, whose revenues had surpassed that of bitcoin miners, will be paid less. We’re tracking the unfolding impact of this new development, as well as how ether miners continue to earn passive income.

Read more:

Other altcoins: Doge and helium

Altcoin mining has become a hobby for people like Dason Thomas, who became interested after seeing TikTok videos of others and recognizing mining as an avenue to build wealth.

Thomas’ equipment includes 12 Antminer l3+’s that mine scrypt algorithms, a type of cryptography used in hashing various altcoins including dogecoin and litecoin. He also has a mini dogecoin miner that he bought for $699. This relatively cheap entry point illustrates how easy it can be to get started earning cryptos without buying them directly.

Read more:

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Bitcoin bull Michael Saylor says the cryptocurrency’s volatility will always hurt those who invest purely to trade

Michael Saylor, CEO of MicroStrategy
Michael Saylor, CEO of MicroStrategy

  • Michael Saylor said bitcoin’s volatility will always be disappointing for some investors.
  • In an interview with Sven Henrich, Saylor said anyone who invests purely to trade could run into trouble.
  • The MicroStrategy CEO also said he views his bitcoin holdings as long-term tech and savings investments.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin bull Michael Saylor said the cryptocurrency’s volatility will always hurt those who invest purely to trade or based on speculation in a recent interview with Northman Trader’s Sven Henrich over the weekend.

“The people that invest in bitcoin as traders – and they don’t, they don’t have a technology view or the macro view – they’re always going to be disappointed because of volatility,” Saylor said.

He urged investors not to put more money than they can lose into bitcoin and crypto markets, especially if they were basing trades on speculation and said he is not in a place to give advice to anyone planning to invest or trade with bitcoin over a short timeframe.

“If on the other end you have a 10-year technology conviction and a 10-year macroeconomic conviction, or if you have an ideological conviction, then take money that you can hold for ten years,” Saylor said, adding that the volatility of bitcoin does not impact him personally as he has invested money he can afford to lose and can wait for the cryptocurrency to pick up from bigger sell-offs.

MicroStrategy CEO Saylor is a key figure in the online bitcoin and crypto space, who has consistently said the cryptocurrency is a form of investment. He sees it as a way to store value in place of traditional assets like gold and a way to protect his investments from increasing inflation and taxes.

In recent months, he has made bitcoin part of his company’s financial. Just last month MicroStrategy sold shares worth $1 billion, in parts to purchase more bitcoin, after having already completed a $500 million bond sale to raise cash for more crypto buying.

At the time, the company owned 92,079 bitcoin – currently worth over $3.2 billion based on the most recent price of bitcoin according to Coingecko data.

In comparison to those who buy bitcoin to trade with it or based on speculation, Saylor told Henrich that he is focused on the long-term and views himself as somewhat of a tech investor – not least because of bitcoin’s functionalities including ease of transfer and bitcoin applications.

“I am on the tech long-term tech investment, like the decade-long trend, and on the savings side,” Saylor said.

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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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A 33-year-old Dogecoin investor says he became a millionaire in 2 months after Elon Musk inspired him to pile into the meme currency

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Glauber Contessoto.

Glauber Contessoto, a 33-year-old Los Angeles resident, claims to have become a Dogecoin millionaire on April 15.

He said he invested over $180,000 into Dogecoin when its price was about $0.045 cents, on February 5. He detailed his reasons for buying the meme currency in a YouTube video and posted on the Dogecoin subreddit two months later about his new millionaire status.

“Hey guys I just became a Dogecoin millionaire,” he wrote, attaching a screenshot of his holdings on Robinhood.

Insider could not independently verify Contessoto’s Dogecoin holdings.

doge

Contessoto, who works in the music business, said the billionaire Elon Musk was a key inspiration behind his decision. He claimed in his YouTube video that the Tesla boss owned about a third of the Dogecoins in circulation.

Retail investors have pumped up Dogecoin’s price this year, taking their cue from Musk’s tweets describing it as “the people’s crypto.” It’s unclear whether his tweets were in jest or whether he was being serious.

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“I think the guy is a genius,” Contessoto said of Musk in a CNBC interview last week. He said that he strongly believed in Dogecoin’s potential and that it could help him build wealth to pass on to his family.

Contessoto told CNBC that he grew up poor and that his gain from the meme currency was a “huge deal” for him. He said that he took a huge risk to buy Dogecoin by using all his savings and sales from his shares of Tesla and Uber and that he invested on margin from Robinhood.

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

He said that he stuck to his plans despite warnings from friends and that he’d decided to take out 10% of his holdings once he hit $10 million.

Dogecoin surged by 8,000% last week, trading near $0.42. It was trading at $0.28 on Monday, with a market cap of about $36 billion.

Several experts recently told Insider why they thought the meme asset had been surging in popularity. “Bitcoin is for the wealthy, Ethereum for the middle class, and Dogecoin is for the people,” one said.

Despite the slide in Dogecoin’s value, Contessoto said his investment was still worth just over $1 million.

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JPMorgan could make its first bitcoin fund available to private rich clients as soon as this summer, report says

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JPMorgan CEO Jamie Dimon.

JPMorgan is in the process of offering an actively-managed bitcoin fund to its private wealth clients for the first time, CoinDesk reported on Monday.

The fund could roll out as soon as the summer of 2021, the report said, citing two sources. Crypto-focused financial services company NYDIG is said to serve as the bank’s custody provider.

An actively-managed fund implies that money managers would supervise specific decisions about how the fund’s investments are carried out. Passively-managed funds, like those offered by Pantera Capital and Galaxy Digital, simply track a crypto market index without being touched by a money management team.

JPMorgan, the largest US investment bank by assets, has gradually shifted its stance on cryptocurrencies after labelling them as fraudulent four years ago.

CEO Jamie Dimon said in a 2018 interview he doesn’t “really give a s–t” about the digital asset and didn’t expect it to rival fiat currency. More recently, he listed fintechs as one of the “enormous competitive” threats to banks in an annual shareholder letter released this month.

The bank now frequently publishes research reports about bitcoin, and said last week the worst of the recent liquidation have likely passed. “Bitcoin liquidity is likely to remain robust and resilient; depth on major exchanges has continued to drop less and recover faster than other asset classes,” JPMorgan strategists said in a note.

Bitcoin rose 10% on Monday to trade near $53,000 after tumbling to its lowest level in nearly two months.

JPMorgan declined to comment on the report when contacted by Insider.

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Bitcoin’s momentum will end and it will be ugly – regulation will kick in and countries likely won’t ignore its huge carbon footprint, an investment advisor says

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Bitcoin has ushered in a movement hailed by investors for its ability to decentralize the financial system.

But one investment advisor just highlighted two key factors that pose big risks to bitcoin’s momentum: the threat of regulation and its impact on the climate.

The world’s most popular cryptocurrency broke its mini-slump on Wednesday by rising 1% to above $55,000. It tumbled as much as 17% over the weekend, partly driven by an unverified report that said the US Treasury may soon crackdown on financial institutions using digital assets to launder money.

“We’ve got a whiff over the weekend of what could happen if regulation comes to this product – I’m not going to call it an asset class,” Stephen Isaacs, chairman of the investment committee at London-based advisory firm Alvine Capital, told CNBC on Monday.

“I don’t know where it will end, or how it will end, but it will end,” he said. “And when it ends, it will be ugly, because there will be nothing there.”

Isaacs further added that bitcoin’s energy usage will be its downfall “if anybody’s serious about climate change.”

“This is a very dirty product, and it’s getting dirtier by the minute, because the amount of energy that is required to mine additional supply is going up,” he said.

Analysis by Cambridge University shows bitcoin consumes more electricity annually than the whole of Argentina, BBC reported in February. Energy consumption is said to have a linear relationship with its price.

Research by Bank of America shows each $1 billion in inflows is equivalent to the same amount of energy used by 1.2 million cars. Conversely, digital currencies proposed by central banks are believed to not have the same negative impact.

Isaacs said the currency is rising in value because of speculation and a “buy-everything” inflationary environment, but it has no fundamentals, or intrinsic value.

“It’s almost a victim of its own success, that if this product allows the transfer of vast amounts of money between individuals who have complete anonymity, it goes against a whole generation of regulation,” he said.

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The SEC’s ‘crypto mom’ says it would be foolish for the US government to ban bitcoin since people can’t be stopped from trading in it

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Bitcoin advert on a London bus during the third lockdown of the coronavirus pandemic.

  • The SEC’s “crypto mom” Hester Peirce said it would be foolish for the US government to ban bitcoin.
  • It’s hard to stop people from trading digital assets even if the government restricts efforts, she said.
  • Peirce is optimistic that the SEC’s new chairman will make a key difference to crypto ETF approval.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

SEC commissioner Hester Peirce said at a virtual event on Wednesday that the possibility of a bitcoin ban has passed and governmental attempts to do so would be pointless.

“I don’t see how you could ban it,” she said at an “Investing in Crypto” event hosted by MarketWatch. “A government could say it’s not allowed here, but people would still be able to do it,” she added, saying it would be hard to stop anyone from trading in digital assets. “So I think it would be a foolish thing for the government to try to do that.”

Peirce, who hopes 2021 will mark a turning point for crypto regulation, said she wasn’t sure whether a bitcoin exchange-traded fund would be approved just yet since the SEC is in a period of transition. She won the nickname “crypto mom” in 2018 after disagreeing with the SEC’s decision to reject a bitcoin ETF application by the Winklevoss twins.

Regulatory veteran Gary Gensler’s nomination for SEC chairman was approved by the Senate Banking Committee last month. His confirmation will make a big difference to whether a crypto ETF gets approved, Peirce said.

Peirce thinks the US is behind the curve in regulating digital assets in comparison to other countries. But she’s optimistic about Gensler’s knowledge of crypto, and expects to have productive conversations about the space with other regulators soon enough.

“Our approach has been much more of a ‘say no and tell people to wait’ approach, so we need to turn that around, be willing to work to build a framework that is appropriate for this industry,” she said.

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The world’s largest crypto fund manager is offering new trusts that invest in 5 different cryptocurrencies

Photo illustration of visual representations of digital cryptocurrencies
  • Grayscale Investments is offering new trusts that invest in five different cryptocurrencies.
  • The new trusts will invest in Basic Attention and Decentraland tokens, Chainlink, Filecoin, and Livepeer.
  • Investor demand for digital currencies has never been higher, Grayscale CEO Michael Sonnenshein said.
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Digital currency asset manager Grayscale Investments announced Wednesday that it is offering five new investment trusts, bringing its single-asset lineup to 13.

The new trusts are launching into fairly niche segments of the crypto space, with three investing in Chainlink, Filecoin, and Livepeer, which are blockchain-based digital payment systems. One will invest in Ethereum-based Basic Attention tokens, while the fifth will hold coins in the virtual reality platform Decentraland. These trusts are among the first of their kind to solely invest in the digital currencies underlying each investment product.

“Digital currencies have reached an inflection point,” Grayscale CEO Michael Sonnenshein said in a statement. “Investor demand has never been higher, and every day we’re seeing new entrants to what has surely become a bona fide asset class.”

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Decentraland is an Ethereum-based blockchain platform where users can operate VR applications.

Grayscale said all five trusts are open for subscription by eligible individual and institutional accredited investors. The decision to launch them was based on assessment of investor demand and the integrity of each cryptocurrency, Sonnenshein told Bloomberg in an interview. The asset manager’s biggest product is still its $34 billion Grayscale Bitcoin Trust.

The new cryptocurrencies it has chosen have much smaller market values in comparison to bitcoin. Basic Attention tokens are known to track consumers’ time and attention on websites, with the goal of understanding how to efficiently distribute advertising money.

Chainlink runs on the Ethereum blockchain, with a technology that enables delivery of price feeds into decentralized finance applications. Filecoin is a storage service provider that enables anyone to rent spare storage space on their computer, creating a huge source of data storage.

Livepeer is a decentralized video-streaming network for those who wish to add live or in-demand video to their networks. Meanwhile, Decentraland tokens can be used to buy up virtual plots of land and goods and services within its virtual-reality space.

Grayscale said it plans to continue a tradition of creating “novel pathways” for investors to access the opportunities that digital currencies may offer.

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