The first full week of 2021 is drawing to a close and things are pretty much as crazy as when we left you in 2020. A man dressed as a bird attempted a coup in the US, bitcoin has stormed to over $40,000. With Joe Biden set to take over the presidency, talk is abound as to what the crypto community can expect from his administration. Excitingly, Bitcoin and Ethereum have celebrated historic gains, offering a serious bout of optimism for the year ahead.
Let’s take a look at what happened in the cryptosphere this week.
Crypto goes parabolic
The total global market cap of all cryptocurrencies yesterday hit $1 trillion for the first time, according to CoinGecko. This marked a major milestone for the 6,124 digital assets tracked on the platform.
Bitcoin is still the dominant force, accounting for $717,893,611,191 billion market cap at the time of writing after its recent price explosion to over $40,000. Today, it surpassed social networking giant Facebook’s market cap and is now comfortably ahead of the likes of Visa, Alibaba and Tencent on the list of the world’s top 100 assets.
Ethereum has also been on a good run of late, and its $137 billion market cap has seen it become the second cryptocurrency to join the top 100 assets by market cap. The price of ether has risen more than 62% in 2021 alone. It’s still not reached its all-time high of $1,432.88, set in January 2018.
The value of all money in the world is estimated at around $95 trillion, with crypto representing around 1% of that. While not a perfect comparison, since bitcoin is more of an asset than money, it helps to contextualise how pervasive crypto has become and how much more there is to come. Some analysts believe this is just the beginning as more and more individuals are expected to look at novel ways to preserve and increase their wealth.
Investors are coming
Amid the flurry of market excitement, a number of prominent figures are flashing bull signs. Fund manager Bill Miller, for one, this week wrote in a letter to investors that bitcoin’s performance over the past year shows promise, and predicted that if more companies decide to move portions of their balance sheets to bitcoin, wider adoption could occur very quickly.
Commenting on Warren Buffet’s famous labelling of bitcoin as “rat poison”, Miller wrote: “He may well be right. Bitcoin could be rat poison, and the rat could be cash.”
Also shifting their position is JPMorgan, whose CEO’s infamous classification of bitcoin as a “fraud” may well again come back to haunt him. Not forgetting the time he called bitcoin “worse than tulip bulbs” and “not a real thing” that will “eventually be closed”, JPMorgan has now predicted a long-term price target of over $145,000.
Strategists led by Nikolaos Panigirtzoglou wrote in a note on Monday that: “A crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term.” They continued, “Bitcoin’s [current] market capitalization of around $575 billion would have to rise by 4.6 times – for a theoretical bitcoin price of $146,000 – to match the total private sector investment in gold via exchange-traded funds or bars and coins.”
Joining the pack, US Federal Reserve Governor Kevin Warsh said during a Squawk Box interview on CNBC that he believes “bitcoin does make sense as part of a portfolio in this environment where you have the most fundamental shift in monetary policy since Paul Volcker ... I’m not surprised bitcoin is doing what it is doing.”
— Squawk Box (@SquawkCNBC) January 6, 2021
Finally, Newsweek has also changed its tune and published positive coverage of Bitcoin for the first time ever. This could represent a paradigm shift in the mainstream media’s generally bearish position on crypto. Scott Reeves wrote: “All that glitters is not gold–but it might be Bitcoin”, which is a pretty big deal considering around tens of millions of Americans who’ve possibly never been exposed to crypto before are expected to read those words.
Privacy groups advocate against FinCEN crypto surveillance
On 18 December 2020, FinCEN announced new rules that would require crypto exchanges to record any transactions to private wallets worth $3,000 or more and to report transactions of $10,000 or more.
Due to what seems like a paperwork mixup, the deadline for public comments was “quietly extended” to today. Staff members for crypto advocacy organisation Coin Center, digital rights advocacy group Fight for the Future, membership group Blockchain Association, and pro-privacy organisation Electronic Frontier Foundation took part in a Reddit AMA to coordinate efforts to stop the proposed rule.
Blockchain Association Executive Director Kristin Smith implied the chaotic and rushed process could be part of ongoing efforts to ram through reforms before Donald Trump’s presidency ends in two weeks.
Smith explained: “In the short term, we want to prevent this from going final until the Biden Administration. But if it does, the Blockchain Association plans to file a preliminary injunction or a temporary restraining order to prevent it from going into effect then will challenge on process grounds.”
At the heart of the matter is a simple and fair question: Why should crypto exchanges be held to a different set of standards than banks? Coin Center Research Director Peter Van Valkenburgh explained that “Coin Center does not object to equal treatment with traditional financial institutions. The problem with this rule-making is that it imposes a stricter set of surveillance and reporting obligations for crypto institutions only.”
What Georgia’s elections mean for bitcoin
On Tuesday earlier this week, runoff elections in Georgia saw a strong win for Democrats, with Raphael Warnock and Jon Ossoff taking their state senate seats. With the Democrats having achieved a 50-50 split, effectively taking control of the US Senate once Vice President Kamala Harris is officially sworn in, many are wondering what implications such a win will have for Bitcoin.
Outgoing Georgia senator Kelly Loeffler, also the former CEO of Bakkt, a digital asset management platform, was initially expected to be a champion for bitcoin and crypto in the senate, but ironically did little in her short political career aside from aggressively peddling Donald Trump’s divisive rhetoric.
Loeffler’s suspicious stock sell-off following her attendance of a COVID-19 briefing back in January attracted even more scrutiny and disdain over the prioritisation of personal interests and profit above her governmental duties. Suffice it to say, Loeffler was far from the Bitcoin advocate the community anticipated her to be.
But with fresh leadership in the form of a Democratic majority, many are hopeful we’ll see the implementation of progressive and forward-thinking regulations with regards to general monetary policy and cryptocurrency. It’s unclear at this stage exactly what we can expect from the Biden administration, but considering the Democrats’ inclusion of a digital dollar proposal in their first COVID-19 relief plan, it’s fair to say we could be looking at a more fertile crypto environment.
What are your predictions? Let us know on Twitter.
Ripple CEO answers questions around SEC lawsuit
In a thread of tweets on Thursday, Ripple’s CEO Brad Garlinghouse and his general counsel Stuart Alderoty responded to questions surrounding the SEC’s unregistered securities lawsuit, which was filed against the company last month.
Garlinghouse said the firm tried to settle with the SEC and plans to continue settlement discussions into the new administration.
Q: Why didn’t Ripple settle with the SEC?
Can’t get into specifics, but know we tried - and will continue to try w/ the new administration - to resolve this in a way so the XRP community can continue innovating, consumers are protected and orderly markets are preserved. 2/10
— Brad Garlinghouse (@bgarlinghouse) January 7, 2021
He didn’t clarify whether or not Ripple incentivised exchanges to list XRP, and in the days since the SEC suit became public, many now have halted transactions or delisted XRP altogether.
It appears Garlinghouse is hopeful the new administration will usher in a wave of regulatory clarity.
We’ve moved from lack of regulatory clarity to regulatory chaos in the U.S. This is why regulation by enforcement is such bad public policy. With the new administration, we expect #DCEA to be reintroduced - common-sense legislation providing clarity to the entire industry. 5/10
— Brad Garlinghouse (@bgarlinghouse) January 7, 2021