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One Bitcoin at $34K now buys one Tesla after Elon Musk has a Dogecoin Christmas

Bitcoin (BTC) hodlers can now all own a Tesla electric car — as long as they have at least 1 BTC in their wallet.

As BTC/USD crossed $34,000 at the weekend and went on to hit $35,600 on Jan. 6, the brainchild of Elon Musk became more affordable than ever.

2021 exchange rate: 1 BTC = 1 Tesla

As per pricing on Tesla’s official website, the company’s entry-level offering, the Model 3, retails at $33,960 in the United States if no environmental fuel rewards are applied.

Musk, who has long taunted Bitcoiners with tweets and comments which leave it unclear whether he supports it, continues to face pressure to accept the cryptocurrency for Tesla purchases.

“A #bitcoin now buys you a Tesla. So, when will you accept it, @elonmusk ?” popular Twitter account Documenting Bitcoin wrote at the weekend.

Samson Mow, CEO of Blockstream, also noted the brand new price parity as Bitcoin hit new all-time highs.

“Would be a shame to buy model 3 now, when you can buy a roadster for 1BTC later this year,” added Juri Bulovic, director of Bitcoin mining at Fidelity.  

BTC/USD vs. $TSLA (orange) yearly gains chart. Source: TradingView

Musk gives the DOGE a bone

As Cointelegraph reported, Tesla stock has become a thorn in the side of the most committed Bitcoin proponents as the only stock to outpace its gains in 2020. From just under $90 on Jan. 1 last year, by the end of last week, $TSLA traded at $729, marking annual returns in excess of 700%.

At press time on Wednesday, Tesla was higher still, closing out the previous day’s trading at $735 while so far failing to match Bitcoin’s 2021 performance.

Musk himself meanwhile shows little sign of engaging with the idea, instead focusing his Twitter energies on Dogecoin (DOGE). After some characteristic tongue-in-cheek publicity for the meme-based altcoin, DOGE/USD shot up by over 125% in a week.

A Shiba Inu theme even graced Musk’s 2020 Christmas greeting to Twitter followers, while an additional helping hand from adult actress Angela White only added to the uptick in Dogecoin’s fortunes.

Slot machine manufacturer gets patent for crypto payment options

The largest manufacturer of slot machines in the world has just received a patent that would allow customers to access crypto payments for gambling.

According to records from the United States Patent and Trademark Office, International Game Technology, or IGT, received a patent today for a system that would enable gamblers to transfer crypto from their accounts into a “gaming establishment account.” The patent filing shows payments in Bitcoin (BTC), Bitcoin Cash (BCH) and Ether (ETH) as examples for users transferring crypto from their private wallets to wallets connected to casino accounts.

“IGT secured this patent to bolster its industry-leading patent portfolio in anticipation of any possible future direction in regulated gaming involving cryptocurrency,” said spokesperson Phil O’Shaughnessy.

The patent news comes the same day that IGT announced that it had gained regulatory approval in Nevada for players to use its Resort Wallet to make cashless deposits for playing the slots. The company referenced the current pandemic when explaining the system, claiming it offered a “reduced-contact, safer” gaming experience. This move would seemingly eliminate the need for many to use Bitcoin ATMs in casinos, as players wouldn’t have to cash out their crypto to play the gaming machines.

Las Vegas casinos were some of the earliest adopters of crypto. In 2014, The D Las Vegas Casino Hotel and the Golden Gate Hotel and Casino announced they would accept BTC in their shops, but not on the gaming floor. Last year, however, demand surged among Winning Poker Network players seeking Bitcoin payouts, with the network reporting that it was distributing more than $160 million monthly.

Based in the United Kingdom, IGT once controlled more than 70% of the U.S. slot machine market, but as of 2019 that lead had shrunk to 33.2%, which is still ahead of runners-up Scientific Games and Aristocrat. According to a Global Slot Machines Market Report filed in 2019, the slot machine market is expected to grow at a compound annual growth rate of roughly 5.5% over the next four years, reaching more than $4 billion by 2024.

Cointelegraph reached out to IGT, but had not received a response at the time of publication. This article will be updated should the company respond.

Bitcoin could hit $146K long-term by ‘crowding out gold,’ says JPMorgan

Drawing parallels between Bitcoin (BTC) and gold’s role as a hedge for investors has been popular for years. Until now, the stark discrepancy in the total market capitalizations of the two assets has limited these analogies to a significant extent. Gold, even after a major Bitcoin price rise in Dec. 2020, continues to command roughly 4.6 times Bitcoin’s current $5.85 billion market capitalization.

Yet strategists at the American multinational megabank JPMorgan Chase are forecasting a possible scenario in which Bitcoin can seriously take on its predecessor. On Jan. 5, a Bloomberg report cited a note from the bank’s strategists, led by Nikolaos Panigirtzoglou, in which they sketched out a path to the total private sector investment in Bitcoin coming to equal the value that is currently invested in gold via either exchange-traded funds or bars and coins. 

Yet such a path crucially depends on Bitcoin’s volatility converging with that of the precious metal, they stressed, and that is likely to take some time:

“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term […] a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”

As Cointelegraph reported yesterday, Bitcoin has weathered a couple of days of choppy and highly volatile price action, with a brief dive down to $27,700 on Jan. 4 followed by a bounce to almost $30,000. As of press time, the coin is trading closer to $31,5000. Yesterday’s plummet was the starkest since the coin recovered the $20,000 price point in December 2020.

Amid this backdrop of persistent volatility, the JPMorgan strategists nonetheless identified strong positive signs for the cryptocurrency — pointing to an accumulation of speculative long positions — yet warned that reading the investment landscape in the medium-term remains difficult:

“The valuation and position backdrop has become a lot more challenging for Bitcoin at the beginning of the New Year […] While we cannot exclude the possibility that the current speculative mania will propagate further pushing the Bitcoin price up toward the consensus region of between $50,000–$100,000, we believe that such price levels would prove unsustainable.”

On Jan. 1, Bitcoin reached an all-time-high against gold, surpassing its previous peak back during the winter 2017 bull market. In December of last year, the same team of strategists led by Panigirtzoglou was already suggesting that Bitcoin could eat into gold’s market share in the future, envisioning a major shift in institutional allocation towards the cryptocurrency. 

Meanwhile, an eventful trading climate has caused volumes on major cryptocurrency exchanges to hit record highs. On Jan. 4, Binance, the world’s largest crypto exchange by trade volume, reported an all-time-high of $80 billion in 24-hour trade activity. “To put this in perspective, from Nov 15, 2017 to Dec 15, 2017, the month leading up to the ATH [all-time-high] in 2017, Binance did $20 billion in trading volume in 1 month,” the exchange’s CEO wrote on Twitter.

Equally unprecedented, however, was futures traders’ loss of a total of $190 million on Binance alone in just one hour, the largest value of a mass liquidation to date on the platform. 

Russia’s Central Bank tries to stem the tide of rubles leaving bank accounts

Beginning investors in Russia will soon find themselves with fewer options to beat plummeting interest rates offered at Russian savings accounts. In addition to the investors themselves, the big losers are likely to be trading apps like Robinhood, which aim at first-timers.

Per a Dec. 30 announcement, the Central Bank of Russia is working to get securities trading platforms to toe the line on “risk-reduction” measures first passed in July. In the latest announcement, the CBR recommends securities platforms and applications have systems to “secure the impossibility of executing on-platform trades resulting in the acquisition of stocks or other securities from foreign issuers by unqualified investors,” except those approved by the CBR. 

The CBR is likewise working to stop firms from offering “complicated investment products” — a term that largely lines up with leveraged trading or derivatives — to unqualified investors unless the firms offering those investments provide guaranteed returns of at least two-thirds of the central bank’s key rate. With the key rate at 4.25% currently, platforms would need to guarantee 2.83% returns. 

There are major doubts that the actual intention is to protect investors. While 4.5% would be enviable for a U.S. savings account, the ruble’s instability since sanctions in 2014 and, more recently, the market crash in March 2020 has driven huge numbers of investors to the stock market for the first time.

In October, the CBR’s similarly issued guidance to limit unqualified investors from purchasing more than 600,000 rubles (as of publication, just over $8,000 U.S. dollars) worth of crypto in a year. That guidance was part of an explanation of the country’s law “On Digital Financial Assets,” which came into effect as of the new year.

All-time highs meet altseason: 5 things to watch in Bitcoin this week

Bitcoin (BTC) is almost unrecognizable as it starts the first working week of 2021, retaining $30,000 support and hitting astronomical new highs.

Hard to believe for hodlers, price action continues to wow as Monday gets underway, and attention is turning to what might be next.

Cointelegraph takes a look at five factors that investors might wish to monitor in the coming days in what is one of the most volatile Bitcoin trading markets in history.

Stocks hit highs as Bitcoin “flips” the Dow

It’s another curious week for stocks as last week’s all-time highs on several indices look set to continue.

As the first few days of the new year drew to a close, the Dow Jones and S&P 500 hit record highs — this despite the encroaching coronavirus sparking ever tighter lockdowns across the world.

For Bitcoiners, the Dow took on a different type of significance last week, with BTC/USD “flipping” its 30,600 points for the first time as it continued on to $34,000 and higher.

This week, analysts predict stocks to go higher still, part of a long-anticipated rebound which, much like last year, appears at odds with the situation on the ground.

“A strong vaccine-led recovery in global growth will provide a large boost to cyclical assets, including commodities, cyclical equity sectors and emerging markets,” Goldman Sachs told Bloomberg as part of its 2021 outlook survey.

“However, the path may be tricky as the market balances spot growth weakness with a forward outlook that is more supportive.”

Not everyone was so bullish. Fidelity, the asset manager well known for its pioneering pro-Bitcoin stance, countered:

“2021 is likely to be about capturing relative opportunities as investors price in economic and virus-related developments.”

Bitcoin vs. stocks correlation chart. Source: Digital Assets Data

Futures gaps may stay forever unfilled

After clinching $34,800 over the weekend, Bitcoin is looking decidedly in need of a consolidatory period as the week gets underway.

The highs, which still seem unreal to many investors, have plenty of hurdles to overcome in order to defend themselves and not allow Bitcoin to cave to the bears.

One of the most pressing issues for traders is the Bitcoin futures “gap” produced by the weekend’s volatility. Lying between $29,695 and $32,400, the gap joins the one left last week as one of the largest ever seen on the Bitcoin futures chart.

Bitcoin futures 1-day candle chart (CME) with gaps visible. Source: TradingView

As Cointelegraph has previously explained, “gaps” in futures are the differences in price between the end of futures trading on a Friday and the start on the following Monday. When heavy volatility hits in between, the resulting void often forms a short-term price target.

In this case, Bitcoin thus has an impetus to retest levels at just below $30,000. Should it wish to fill lower gaps which remain untested, the market may dip further still — the pit of last weekend’s gap lies at $23,800.

While previous months saw many a gap get filled, however, the idea of a $24,000 Bitcoin is now a remote possibility, according to popular statistician Willy Woo.

“We’ll never see $20k BTC again,” he forecast on Sunday.

“$24k support would need a black swan event to breakdown. Floor price supported by long term buyers is rising very fast.”

$20,000 itself forms a zone of interest for those studying gaps, with two large vacuums in futures markets still open below that significant level.

Difficulty, hash rate on track for fresh records

It’s all change for the better among Bitcoin’s core fundamentals, meanwhile. After a month of small decreases, network difficulty is once again set to push upwards to hit new record highs.

At the next automated readjustment later this week, difficulty is currently expected to increase by just over 5%.

The past two readjustments saw drops of 2.5% and 0.4% respectively, an interesting contrast to the rapid increases in spot price seen at the same time.

Difficulty is arguably Bitcoin’s most important technical aspect when it comes to its status as “hard” money, allowing the network essentially to govern itself and stay secure regardless of miner participation or price action.

In tandem with difficulty, hash rate is likewise challenging all-time highs. As of Monday, seven-day average values for the metric stand at 145 exahashes per second (EH/s), just 1 EH/s off record highs seen last October.

Hash rate refers to the computing power dedicated to participating in the Bitcoin network, and current data suggests that participation and desire to keep the network secure is stronger than ever.

Bitcoin 7-day average hash rate 6-month chart. Source: Blockchain

Ether returns to $1,000 after three years

Perhaps the most telling sign when it comes to price trajectory is coming from within cryptocurrency itself.

While Bitcoin alone is impressive, this weekend ended with an even more conspicuous surge in altcoins, and specifically Ether (ETH). The largest altcoin is up over 30% in the past 24 hours alone, bringing its weekly gains above 50%.

As Cointelegraph reported, Sunday saw it clinch a key level against BTC, and in dollar terms, the largest altcoin is back in four figures for the first time in three years.

Bitcoin vs. Ether year-to-date performance 2021. Source: Digital Assets Data

In the words of Cointelegraph Markets analyst Michaël van de Poppe, such a move suggests that a return of “altseason” — a period of rapid rises across altcoin markets while Bitcoin consolidates — has de facto arrived.

“Another week that Ethereum will close above the crucial threshold on the BTC pair,” he commented late Sunday.

“Most likely some sideways continuation before upwards continuation towards a new higher high. 2021 is looking bright for Ethereum.”

The token’s success was long in forming. Ether spent much of 2020 as the butt of jokes among Bitcoiners, as even the release of its long-awaited Ethereum 2.0 protocol transformation failed to have a noticeable impact on price.

Nonetheless, the altcoin was in fact the best investment of the year, outperforming Bitcoin versus its March lows when it traded at just $113 — one tenth of current levels.

ETH/USD 1-day candle chart (Bitstamp). Source: TradingView

Here comes altseason!

If Ether is dictating the reemergence of altcoins, such as THETA, for example, it is already evident if one examines the state of Bitcoin’s market dominance.

As ETH/USD surged overnight on Sunday, the share of the total cryptocurrency market cap owned by Bitcoin began to fall dramatically. Against 73.5% earlier on Sunday, press-time levels are more like 68.3%, data shows.

Bitcoin market cap dominance 1-day candle chart. Source: TradingView

That kind of behavior is a classic indicator of altseason, and will remind longtime hodlers of the events of January 2018. At the time, Bitcoin was coming down from highs of near $20,000, but altcoins exploded, ETH/USD hitting current all-time highs of $1,500.

Given that Bitcoin has managed to crush its own record from 2017, it is that pattern of behavior which is fuelling speculation that Ether and other altcoins will go much higher in the short term.

“Bitcoin and ether ETH are already the biggest hits of 2021,” Tyler Winklevoss, co-founder of exchange Gemini, summarized to Twitter followers.

It’s not just Ether. Litecoin (LTC), the fourth-largest cryptocurrency by market cap, has added 15% since Sunday, once more coming within a hair of flipping XRP to take the number three spot.

XRP, beset by problems thanks to legal action against Ripple, has still managed to put in some form of progress, rising by almost 10% overnight to reclaim $0.24.

IRS to transition from ‘education to enforcement,’ says former division chief

A former top investigator is warning that “a high-stakes game of chicken” between the Internal Revenue Service (IRS) and cryptocurrency holders who fail to properly report their earnings will be entering a new phase in 2021 as the tax collection agency begins to focus on pursuing “civil and, potentially, criminal penalties.”

In an article co-authored by Don Fort today, the former chief of the Internal Revenue Service’s (IRS) criminal investigation division said that while the agency until now has focused its resources on informing the public of proper reporting guidelines, it will now be turning to more stringent “enforcement.”

“The IRS has been not-so-quietly positioning itself for a smooth transition from education to enforcement in 2021 and beyond.”

The article notes that the trail starts with Coinbase, who answered a “John Doe” summons in 2018 and handed over account information on nearly 13,000 users — information which could soon lead to crackdowns. For instance, the article mentions the request the IRS made to Luxembourg-based exchange Bitstamp for information on one American user.

The focus on crypto holders is in part due to a widening “tax gap” — the rift between the total income from taxes that should be paid to the Treasury verses what it actually receives — a disconnect in which Fort and his co-author Lawrence Sannicandro believe crypto holders could be playing a major part.

“As of Dec. 10, with Bitcoin fresh off new record highs, the market capitalization of cryptocurrencies was $524 billion,” the article reads. “Assuming cryptocurrency-related tax liabilities of $25 billion and a 50% compliance rate, unreported cryptocurrency tax liabilities again account for around 3.2% of the $381 billion tax gap. Thus, it is likely that unreported taxable cryptocurrency transactions are contributing significantly to the tax gap.”

Ultimately, the article concludes that major trends — such as the addition of a question about cryptocurrency now prominently placed at the top of form 1040 — indicate that the IRS is gearing up for widespread efforts to root out underpayment.

“Even though the IRS has not yet announced many mainstream tax evasion or money laundering cases involving virtual currency, that trend should change in 2021.”

Moreover, crypto holders shouldn’t try to get cute when the tax man comes calling.

“History has shown that underestimating the government is a fool’s game.”

Bitcoin going parabolic toward $35K as Ethereum breaks $800: What’s next?

The price of Bitcoin (BTC) surpassed $34,700 to achieve a new all-time high after a strong overnight rally. Ether (ETH), the native cryptocurrency of the Ethereum blockchain, also surpassed $800 for the first time since May 2018.

Bitcoin’s sudden rally comes as a surprise because it corrected sharply to around $30,300 on Jan. 2. Within 24 hours, BTC rose from $30,300 to as high as $34,778, a 14% rebound.

BTC/USD hourly candle chart (Bitstamp)

What triggered the Bitcoin and Ethereum rally?

When the price of Bitcoin surpassed $33,000 on Jan. 2, some whales and high-net-worth investors warned that a 150 BTC sell order could retrace the market.

A pseudonymous Bitcoin trader known as “i.am.nomad” wrote:

“A 150 btc market sell would retrace this whole thing. lmao the higher price goes, the more retail gets prices out, the lower bid support will be.”

Within hours he pinpointed the risk of a Bitcoin correction due to thin order books, BTC sharply pulled back.

However, Bitcoin recovered quickly after the initial drop, rallying to a new record-high within 24 hours.

The main catalysts behind Bitcoin’s rally have been the institutional accumulation of BTC on Coinbase and the short squeeze on Binance Futures.

Throughout the past three days, Bitcoin has been trading much higher on Coinbase than on other major exchanges, as Cointelegraph reported.

This means that aggressive buyers on Coinbase were continuously accumulating BTC despite the premium.

Bitcoin surpasses past $34K with average trader returns at highs. Source: Santiment

In the meantime, many traders on Binance Futures were shorting BTC, possibly expecting Bitcoin to top out at around $30,000. When Coinbase buyers continued to push BTC upwards, a short squeeze occurred. Analysts at Santiment explained:

“For those expecting a #Bitcoin correction to kick off 2021, the $34,000 #AllTimeHigh achieved 10 mins ago is showing how painful it’s been being a $BTC bear the past 10 months. Avg. trader returns haven’t been this high across the board since June 2019.”

Ether price rallied off of Bitcoin’s strong technical momentum. ETH/USD rose past $800 for the first time since early May 2018, demonstrating renewed momentum after stagnating throughout December.

A pseudonymous cryptocurrency trader known as “Mayne” said on Jan. 2 before the Ether rally that ETH is likely heading to $800. He said:

“ETH thesis still on track, daily close thru $620 we’d head to $800. I built a large long position in December and assuming $ETHBTC can hold a higher low, I think it’ll play out nicely. I should have had more BTC long exposure vs ETH in December, hoping ETH outperform for Jan.”

What happens next?

Ethereum has another major catalyst on the horizon as the CME futures exchange plans to launch ETH futures in February.

Considering the high level of institutional demand for Bitcoin since the first quarter of 2020, the demand could also boost Ether upon the listing.

Google searches for “Bitcoin.” Source: Google Trends

Meanwhile, Bitcoin remains on an upward trajectory of price discovery, hitting new record highs on a daily basis. With a purported supply shortage and an institutional buying frenzy now spilling over into retail, the rally may still have a lot more room to run with $35,000 likely being the next psychological level to break. 

As Cointelegraph reported, six-figure predictions have become increasingly common in recent months, particularly as the rally has broken new all-time highs. 

Following delisting, Dash pushes back against ‘privacy coin’ label

A recent tweet from Dash’s official Twitter account has invited criticism that the cryptocurrency, which once advertised its privacy features, is wilting in the face of possible regulatory scrutiny. 

On Jan. 1, the US-based Bittrex exchange announced in a tweet that it would be delisting Monero, Zcash, and Dash:

The delistings follow a similar Dec. 29 announcement last week that Bittrex would be delisting XRP following a SEC lawsuit against Ripple, prompting speculation that the exchange preemptively delisted the privacy coins in anticipation of a wider regulatory crackdown. 

In response, Dash announced in a tweet that they had “reached out to @BittrexExchange to request a meeting,” and that referring to DASH as a “privacy coin” is a misnomer:

As recently as 2017, however, archived screenshots from the Dash Foundation website advertise DASH as “the worlds first privacy centric crypto-currency.” The current Dash Foundation website instead now says DASH is “the leading payments cryptocurrency.”

In a recent tweet about the delisting DashPay CEO Ryan Taylor also minimized the currency’s privacy features:

While the seeming about-face has prompted jeers and criticism on Twitter, proponents have noted that Dash released guidance on the cryptocurrency’s privacy features in August. In a blog on the official Dash website, Taylor wrote that “regulators are concerned that exchanges may be unable to comply with KYC / AML regulations when transacting coins with privacy features,” because DASH is “often found on lists of coins with privacy enhancements.” 

However, Taylor wrote that Dash has largely been successful in convincing exchanges and regulators that Dash is not a privacy coin.

“Through a process of education, we have been effective in explaining the technology and convincing regulators that accepting Dash poses no incremental risk compared to Bitcoin.”

The clarifications about Dash’s core focus follow an announced upgrade to Dash moving to the testnet phase, an upgrade which will include DashPay, a “social crypto payments wallet.” DASH is down 3% on the day to $87.71.

Congresspeople chastise the Treasury for rushing new crypto monitoring proposal

Nine congresspeople have signed on to a letter to Treasury Secretary Steven Mnuchin, telling him to hold his horses. 

The Thursday letter is in response to the Treasury’s recent proposal to make registered crypto businesses hold on to more customer information, especially when transacting with self-hosted wallets.

The proposal has been met with widespread outrage from the crypto community. Among grievances, many cite the fact that Mnuchin is pushing this rule out just weeks before the administration of Joe Biden comes into power, and with it his likely replacement, Janet Yellen

Accompanying new proposals for rules are invitations for public comment. This remains true in this case, but while the usual comment period is 60 days, the Treasury has here asked for just 15. The comment period expires on Monday, which is the point that the signatories to yesterday’s letter are fighting against: 

“The proposal in question was made public just before the Christmas holiday, and it announced that the public would be afforded 15 days to file comments. A comment period consisting of eight business days over two holidays is not appropriate for regulating any industry, and could result in in stakeholders being unable to meaningfully respond.”

The congresspeople who signed the letter include many of the usual suspects in crypto legislation. Blockchain Caucus members Warren Davidson, Tom Emmer, David Schweikert, Darren Soto and Ted Budd all signed, as did AI caucus leader Bill Foster. However, some figures less involved in the crypto industry have joined, including Tulsi Gabbard, Sen. Tom Cotton and incoming chair of the New Democrat Coalition, Suzan DelBene. 

Given that the formal period for open comments closes on Monday and today is, as you may have noticed, New Year’s Day, it’s unlikely that the Treasury is going to back down. There is, however, talk of a lawsuit against the department on the basis of a violation of procedure, should this rule come into effect. 

Bitcoin supply squeeze heats up as Grayscale buys nearly 3x the BTC mined in December

Institutional crypto investment giant Grayscale now has $20 billion under its control as its Bitcoin (BTC) buys outstrip production by almost three to one.

As noted by data analysis resource Coin98 Analytics on Jan. 1, Grayscale bought almost three times more BTC than that which was added to the market in December 2020.

It’s official: Miners can’t produce enough Bitcoin

Last month, the company added a total of 72,950 BTC ($2.132 billion) to its assets under management (AUM). During the same period, miners generated just 28,112 BTC ($821.7 million) — 38.5% of Grayscale’s buy-in.

The figures underscore what many have described as an ongoing liquidity squeeze in Bitcoin, where large buyers suck up any available supply and remove it from circulation, sending it to cold storage for long-term hodling.

As Cointelegraph reported, the phenomenon was already visible in November, but December saw a clear increase in demand from Grayscale and other institutional entities.

BTC mined vs. bought by Grayscale in December 2020. Source: Coin98 Analytics/ Twitter

Grayscale now controls $20 billion in crypto

As the clock chimed midnight on New Year’s Eve, meanwhile, Grayscale CEO Barry Silbert celebrated bringing the company’s total AUM across its various crypto funds to over $20 billion. Just one year ago, the figure stood at a mere $2 billion.

Grayscale crypto assets under management as of Dec. 31, 2020. Source: Grayscale/ Twitter

The company remains the largest institutional player on the Bitcoin scene, with its $17.475 billion in BTC far outstripping any other market participant. Newcomer MicroStrategy, while not an investment business, now controls 70,470 BTC ($2.06 billion).

Going forward, analysts predict that more demand for the fixed supply of “new” bitcoins from miners will only serve to create a bidding war and push up the price. Sellers already faced stiff resolve from buyers in December, when new all-time highs failed to produce significant long-lasting pullbacks.

At press time on Friday, BTC/USD continued to trade above $29,000, having hit a new record high of $29,500 overnight.

Close, but no cigar! Here are 2020’s worst Bitcoin price predictions

Pundits and crypto analysts love to issue Bitcoin (BTC) price predictions regardless of how volatile the asset class is. 

In 2017, there were calls for BTC’s price to hit $35,000–$50,000, and of course, a few brave souls predicted that the price would top $1 million before correcting.

No one will forget how John McAfee infamously promised to chomp off his genitals if BTC’s price didn’t hit $1 million by 2020.

While some of these lofty estimates are based on fundamentals, others are entirely baseless. Regardless of the analyst’s rationale, a handful of them are so far removed from reality that they have become memes.

Let’s review the most outrageous Bitcoin price predictions of 2020.

“Guesstimation” attracts attention because nobody follows them up

Guessing the future price of cryptocurrencies is so embedded in the community that many analysts don’t even consider evaluating their effectiveness. Keeping up with the endless flow of predictions issued on blogs, podcasts, Twitter and YouTube is almost impossible. Imagine the difficulty and energy it would take for a person to follow up with all these random guesses.

To further complicate matters, some of these predictions come from well-known Bitcoin bashers, such as renowned gold bug Peter Schiff, and New York University Stern School of Business professor Nouriel Roubini. Thus, in some cases, personal credentials sometimes matter less than working analytical models.

A month before the March 12 crash, which saw Bitcoin’s price plummet 50% to $3,750, PlanB, the creator of the stock-to-flow model stated that Bitcoin would not return below $8,200. At the time, no one expected the Dow Jones equities index to face its most significant drop since 1987, neither the WTI oil future contract dropping to negative $40.

Despite the outlandish claim, PlanB won’t be nominated to 2020’s worse predictions because hardly anyone expected the coronavirus pandemic to impact the markets in a way that would cause absolute havoc. Furthermore, famous chartist Peter Brandt also made the same error when he said that BTC would never revisit the sub-$6,000 level in January.

CryptoWhale’s quantum model calls for $24,000 BTC in mid-2022

On June 2, 2020, Twitter analyst CryptoWhale revealed a new “quantum” model that would predict Bitcoin’s price. According to CryptoWhale, the model had “effectively predicted every major move since 2018.”

Bitcoin’s price in USD. Source: TradingView

Things could not have gotten worse as the model predicted both a $2,000 bottom in 2020 and a “proper bull run to $24,000” only in mid-2022. Somehow, the quantum particles, molecules and atoms that were supposed to make it more accurate were, in fact, pure blasphemy.

Two lessons that can be taken away from the “quantum model” are: (1) Having a ton of social network followers doesn’t necessarily translate to better price estimates, and (2) complex models are prone to the same errors as humans. Evaluating a new asset class during a period of desperate central bank monetary easing is far from easy.

Ross Ulbricht predicts nine months of downside after Black Thursday

In April, Ross Ulbricht, the founder of the now-defunct Silk Road darknet market, wrote that Bitcoin’s volatility — particularly the March 12 bloodbath — would most likely lead to a bear market, which could last for three to nine months. At that time, Bitcoin had been hovering around $7,000 and was clearly still affected by the recent 50% intraday correction.

Ross Ulbricht’s chart annotations. Source: Medium

Precisely 17 days after that blog post, BTC soared over 30% to $9,000, thus completely invalidating Ulbricht’s analysis. To further show how far off that analysis was, Ulbricht added that a $14,000 bull run was “very unlikely.”

During Ulbricht’s so-called bear market period, Bitcoin’s price rallied more than 300% from December 2018 to June 2019. Furthermore, calling for such a lengthy correction doesn’t align with Bitcoin’s historical data because even during the darkest period of December 2019, Bitcoin’s price remained more than 100% above the previous year’s lows.

Gavin Smith says Bitcoin will close 2020 at $7,000

During a July 27 interview with Forbes, Panxora CEO Gavin Smith said that he expected a $7,000 Bitcoin price by the end of the year. Gavin further added that “a short term washout this year before the true rally takes hold.”

Panxora’s CEO explained that despite the appreciating tendency caused by inflation hedge, the broader impact of demand shock on the economy would potentially drive BTC lower.

This estimate happened after 80 days of Bitcoin’s price consolidating around $9,500. At the time, despite rising 100% from mid-March lows, there was still some doubt about BTC’s ability to break the $10,000 resistance.

Antoni Trenchev calls for $50,000 Bitcoin price in 2020

On Jan. 3, 2020, Nexo co-founder Antoni Trenchev stated that BTC could easily reach $50,000 in 2020.

Besides an overly optimistic estimate, the rationale behind it doesn’t seem to fit. According to Trenchev, Bitcoin had become “the new gold,” and he pointed to the lack of correlation to traditional markets as a potential catalyst.

Gold, USD/OZ (right) vs. S&P 500 (left). Source: TradingView

As shown above, gold traded in tandem with traditional markets for the larger part of 2020, but it should be noted that these asset classes have different volatility. Thus, oscillations in equities tend to be much stronger. Nevertheless, the overall direction of both markets until November has been very much alike.

This price movement creates the impossible task where BTC is expected to act as “the new gold” while simultaneously presenting a lack of correlation. This estimate went doubly wrong for missing its year-end target by a wide margin and also failing to correctly estimate gold’s correlation to traditional markets.

Now that Bitcoin’s price is a mere 7.4% away from $30,000, it will be even more interesting to see what type of extravagant bullish and bearish price estimates are issued for 2021.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Faulty data? Grayscale didn’t liquidate massive amounts of XRP and XLM

Bybt data apparently showing a massive liquidation of XRP and Stellar Lumen (XLM) by Grayscale Investments earlier this week is inaccurate, according to the investment company.

On Wednesday, a public Bybt data set suggested that Grayscale Investments reduced its exposure to XRP by roughly 9.19 million units and that the fund also cut its XLM holdings by over 9.74 million units. According to Bybt data, the net change in holdings occurred over 24 hours on Tuesday.

Cointelegraph accessed the data before Grayscale released its daily assets under management report for Tuesday and noted in an article that Grayscale had reportedly sold significant amounts of XRP and XLM.

Efforts to reach Grayscale on Wednesday were unsuccessful. However, on Thursday, a Grayscale spokesperson told Cointelegraph: 

“None of the Grayscale investment products operate a redemption program. The net holdings of our investment products only change as a result of inflows from the private placement, price of the underlying assets and accrued management fee.”

“Statements about large sales of underlying assets by any of our investment products are false and inaccurate. Any perceived large decrease in the USD value of Grayscale XRP Trust would have been a result of a decrease in the USD price of XRP.”

Bybt’s data feed still shows a large outflow of XRP and XLM from Grayscale over the past seven days, both in terms of AUM and actual units of XRP and XLM held. These figures appeared under the “24H Change” column on Wednesday. 

Bybt data still shows a large decline in Grayscale’s XRP and XLM holdings

The Grayscale AUM report for Wednesday was released on Thursday. It reads:

Grayscale’s official AUM report for Wednesday

Attempts to contact Bybt have not yielded any responses.