Bitcoin in January: $42,000, Elon tweets about BTC, riot over whitepaper
The month of January is over again, time for a quick look back. What all happened? The price peaked, regulations in America were tightened with requests and Lightning got a boost from news about Strike and OKCoin. But there was much more:
January 3: Proof of Keys
The year of Bitcoin began in style: Proof of Keys. With this event, the community calls attention to the fact that you don't have to store your bitcoin at a trade show.
Exchanges are not always happy with this phenomenon. For example, in 2019, the exchange HitBTC stopped bitcoin withdrawals, and Bitfinex had problems in the same year. Presumably there were problems with the cold wallets. Exchanges hold a small portion of bitcoin in hot wallets. These hot wallets contain the readily available bitcoin.
We owe this date to Satoshi himself : on January 3rd he breathed Bitcoin life into the very first Genesis Block.
January 5: rules in US
The U.S. wants more control over Americans' bitcoin ownership across the border. The Financial Crimes Enforcement Network (FinCEN) published another proposalon New Year's Day .
They now want to make a change to the Bank Secrecy Act regarding the reporting of foreign financial accounts with digital currencies. In the note, FinCEN states that it wants to change these regulations. As a result, U.S. citizens would be required to report accounts to foreign crypto companies if they are worth more than $10,000.
A few days later, the Office of the Comptroller of the Currency (OCC) communicated that U.S. banks may use stablecoins to make payments or link other services. This was even stated in a binding opinion of the OCC, part of the US Treasury Department.
6 January: Strike comes to EU
The year and month started well: Strike by Jack Mallers announced that they will be coming to the Netherlands (and Europe) in the first part of the year.
You can use the Strike app to make and receive both euro and Bitcoin payments via the Bitcoin (and Lightning) network. The traditional infrastructure has been completely disregarded.
This new technology is also coming to Europe. To this end, they work together with Bittrex Global, a trading platform regulated in Bermuda. In The Inventors Podcast, Mallers said they are expanding to 200 countries. According to the blog post, in addition to bitcoin, the app also supports USDT, USDC, EUR, GBP and CHF.
January 11: moon and dump
January was also the month in which Bitcoin reached a new record high of as much as $42,000. However, the share price also fell 23% to $32,350.
Around the same time, bitcoin had to do with numerous records: never before hash has been so high, and volumes at exchanges were also at record highs. The number of active addresses also increased over the previous high from 2017.
January 20: investigating criminal transactions
According to a research blockchain analytics company Chainalysis there is less and less criminal money circulating in cases related to cryptocurrency such as Bitcoin (BTC). By 2020, the number will have fallen by more than 53%.
According to the company, only 0.34% of all cryptocurrency activities are related to criminal behavior. These would be transfers with a total value of $10 billion.
It is a percentage and also an amount that has decreased enormously compared to previous years. The figures on criminal activity reported in 2019 were still around 2.1% of the cryptocurrency's total transaction volume, or $21.4 billion.
January 21: Whitepaper
January was also the month of the riot around the white paper. Craig Wright sued two domains on which satoshi's document was hosted. They claim the document violates copyright because 'CSW' would have written it.
After a brief discussion on GitHub and Twitter between developers and other Bitcoiners, Bitcoin only came out stronger. Because although it was considered to listen to Wright, the white paper has now been posted on hundreds of other (new) websites.
The most special places: government websites of Estonia and Colombia participated! And the mayor of Miami also did his bit.
This internet riot was the last straw for lead maintainer Wladimir van der Laan: it is time for more decentralisation and less Wladimir. In a blog post, he explained how Bitcoin Core can become even less central in his eyes.
January 21: Crowds at Skybridge
Skybridge Capital's Bitcoin fund has grown to $360 million in its first weeks. That's what operations director Brett Messing told Decrypt. The value of this fund soared due to increasing interest and the rising bitcoin price: "We have a position that is valued at about $360 million dollars."
A few days later, 6,000 interested parties wanted to know more about the fund through a Zoom call. The attention was so great that the system couldn't handle it. The company was forced to schedule a second call.
January 21: double spend
We also saw FUD pass by. There was misrepresentation about a double-issue, also known as a double spend. In the end, it all turned out to be not so bad and it is more nuanced.
A stale block was built, which allowed two sides of the network to verify a block containing the same transaction at the same time. In the end, the payment was not duplicated and was an RBF transaction, while the shortest chain became invalid.
Long story short: Someone sent two different transactions of the same origin, and they were included in two different blocks at the same time. Soon the shortest chain was deemed 'worthless' by the network, and therefore only the other transaction became valid. BitMEX concludes this as follows:
January 23: Lightning
OKCoin announced that they will support the Lightning Network before March 2021. This way, their customers can take their satoshis off the platform cheaper, faster and easier.
A payment via the Lightning Network is literally lightning fast. You can move your Bitcoin within seconds and for a few pennies. For people who trade on OKCoin, this is a perfect way to take 'sats' into your own hands.
After Bitfinex, OKCoin is the second major exchange to implement this scalability layer. Kraken has also indicated that it will be completed by summer 2021.
January 27: Bitonic
Bitonic went to court at the end of January because of an overly strict requirement of regulator De Nederlandsche Bank(DNB). The bitcoin company announced this in a press release. The provider wants the so-called wallet verification requirement to be suspended.
The Netherlands is so far the only European Member State to make this requirement to the market. Companies that are not yet included in the register also carry on the additional requirements, as recently as Bitstamp.
January 29: Twitter hype
At the end of January there was a real hype on Twitter around Bitcoin. Elon Musk, the richest man in the world, put the hashtag #Bitcoin in his bio on the social media platform. He sent a cryptic tweet about the same time:
More prominent namessoon followed - from Mr.Beast, the founder of Reddit to Russell Okung and Anthonu Scaramucci. The price of Bitcoin shot up a few thousand dollars, after which it also corrected again.
January 29: more Bitcoin for MicroStrategy
MicroStrategy wants to continuously expand its bitcoin stock and is looking for "various ways" to do so. This was made up of the quarterly report of the AMERICAN ICT company. Although they already have more than 70,000 BTC in their coffers, it's not enough, according to CEO Michael Saylor.
3 reasons why Bitcoin (BTC) is still in a bull market
The bitcoin ( BTC) rate consolidates around the levels $33,000 and $34,000 after the price up on Friday morning. The sudden bump to $38,260, by the Elon Musk news, turned out to be a short-lived 'pump'. The record of $42,000 set earlier this month seems a long way off. Are we still in the bull market?
Bitcoin miners continue to sell
One of the reasons the price doesn't rise any further is that miners continue to sell above $30,000. That keeps the sales pressure high, and that pressure doesn't get out of the way for buyers. The sales peaks are visible in the chart below from CryptoQuant.
For example, on Friday, January 29, miners moved 16,600 BTC out of their wallets at an average spot price of $34,200. A day later, on Saturday, January 30, 10,700 BTC was shifted at an average spot price of ~$34,300.
That leads pricetechnically to a rather boring, predictable period for bitcoin concepts. Monday 25 January started with a price of $32,580 and we are at almost the same level one week later. The expiry of a large amount of options last Friday has also led to few price fluctuations. You can also say that despite the sales among miners, the price remains relatively stable.
Why we're still in a bull market
On-chain analyst Willy Woo, usually well-introduced, comes up with an interesting thread in which he highlights a number of market trends. We are in a consolidation phase, but we are still in a bull market (more copper than sellers, more greed than fear).
First of all, investors are still on a profit. Woo uses, among other things, the SOPR indicator, which measures how many bitcoin addresses are on profit after they are created on the blockchain.
This value is currently still above 1, which means investors can sell at a profit. If the indicator falls below 1, that is a sign that investors are selling at a loss and there is a bearish cycle. That is not the case.
Looking at the RSI values, Woo speaks of a reset where the market is no longer overheated, according to Woo.
But who will buy those coins from the bitcoin miners? According to Woo, they're long-term investors he calls "strong hodlers." The bitcoin owners who simply save BTC and don't want to capitulate no matter what.
Woo foresees consolidation above $29,000 and no levels below that. If the market picture changes in favour of the bulls, the ceiling is currently at $56,000 in the medium term
In addition, the analyst sees the number of bitcoin addresses growing rapidly. In fact, this growth is higher than ever.
Subreddits popular
This growth is reflected in the influx to social media and bitcoin exchanges, which were flat more than once last week.
One of the explanations is general dissatisfaction with the current money system and public administration. The news surrounding the Tesla chief executive and the Gamestop exhibition soap opera is a result of this, where social media such as Reddit and Telegram, where the revolution is digitally expressed. It gives these platforms a huge boost.
The communities where bitcoin is discussed also see a remarkable influx of new interested parties. The subreddit r/bitcoin alone allows 20 - up to 30,000 new people every day. This group now has over 2 million users.
Is this the tentative beginning of a revolt against Wall Street capital, as an exponent of the intertwined interests of incumbent politics, state and market? 'Gamestop' has made it clear that the mix of social media, lockdown and activist tech entrepreneurs is a deadly one.
With the future capital transfer from baby boomers to millennials, that explosive mix gets an extra injection. Whether the case for a more transparent way of price discovery and less intervention by the government wins, must be shown in the coming years. Some of the millennials can make their voices heard through their wallets after this transfer, but the question is whether that will happen.
Tim Draper: 'Elon, ik koop de Tesla Cybertruck met Bitcoin'
Tim Draper is there as the chickens now that Elon Musk has joined the bitcoin (BTC)camp. Not only is Draper an early investor in the car brand, he's also sitting on a huge mountain of BTC, reportedly 30,000 Bitcoin.
Elon Musk and Bitcoin
On Friday, the Tesla chief executive #bitcoin his Twitter profile, giving the price a short-term boost but also further piqued interest in Bitcoin among precoiners.
Draper responded on Twitter to the action of the world's richest man on paper. He would like to buy the Tesla Cybertruck, a kind of hip truck series, but with Bitcoin and with an open source payment protocol.
Hi @elonmusk , I would like to buy a @tesla cybertruck. Although I personally would rather keep my own #bitcoin, you can accept #bitcoin through our @drapervc company @OpenNodeCo .
— Tim Draper (@TimDraper) January 29, 2021
In a recent interview, Draper once again reveals his bullish sentiment. He sees bitcoin as the 'money of the future'. The serial investor, who comes from a well-known wealthy family in California, continues to buy BTC. Through the Lightning Network, the bitcoin community is working hard to make payments faster and cheaper.
Bitcoin Billionaire @TimDraper Says "I'm Actually Just Buying More [Bitcoin]... I have no interest in ever selling my #Bitcoin for dollars. Why would I take the currency of the future and sell it for the currency of the past?" pic.twitter.com/HvLlYxZJPi
— Bloqport (@Bloqport) January 29, 2021
Long-term 'believers' like Draper buy up the coins mainly from bitcoin miners, who are selling precisely. Hodlers accumulate BTC as soon as miners sell, as the chart below shows.
The entities behind these Bitcoin addresses have not moved their BTC for more than 12 months, the so-called '1 year HODL wave'.
source: Cointelegraph, Lookintobitcoin
Draper himself thinks a price of $250,000 for 1 BTC is possible and expects millennials to get into the cryptocurrency en masse. They inherit the money from their parents, usually baby boomers, who have paid off their home and are left with overvale value. Savings no longer yield, which paves the way to gold and also Bitcoin as long-term havens for purchasing power preservation.
As early as 2018, Draper told Bitcoin Magazine NL that he very much believed in the strength of this asset.