Daily Archives: January 29, 2022

Bitcoin (BTC) cracked $37,000 at the Jan. 28 Wall Street open as traders watched and waited for a resistance retest.

Data from Cointelegraph Markets Pro and TradingViewshowed BTC/USD returning to form after dipping to $36,175 on Bitstamp earlier in the day.

As part of the range-bound behavior, hopes were held high that momentum would continue to challenge resistance levels closer to $40,000, whether or not the ultimate outcome would be a fresh correction.

"The bearish scenario seems most likely, which is exactly the reason why I think we'll see a surprising move," popular trader Crypto Ed said as part of comments on the immediate outlook.

Fellow trader and analyst Anbessa reiterated previous demands for $38,500 to hold to proclaim the corrective phase as complete for Bitcoin.

As Cointelegraph reported earlier, low funding rates are combining with an improving picture across derivative markets, something that could, ultimately, spark a timely squeeze upward.

On Jan.24, Rekt Capital highlighted the area for Bitcoin to reclaim to rekindle bullishness on longer weekly timeframes. As reported, this would come in the form of $39,600 as a weekly close price.

Crypto Ed, however, was not alone in his feeling of foreboding over a possible fresh breakdown.

Related: Bull or bear market? Bitcoin losses from panic selling mount in 2022

Despite taking liquidity during its brief dip below $33,000 earlier in the week, Bitcoin has not convinced everyone that the floor is truly in.

Discussing the issue, Twitter analyst TXMC Trades, concluded that BTC/USD "still needs to go lower" from the current spot price. History, it seems, supports the theory.

"It seems wrong that BTC would bleed straight down from the ATH without a relief rally, only to have the reversal be front-run without properly testing the range low," he argued.

TXMC nonetheless noted that the bounce from $33,000 had liquidated more short positions than at any point since Bitcoin's $69,000 all-time highs last November, citing data from on-chain analytics firm Glassnode.

Original post:
Bitcoin returns to $37K amid warnings that BTC price 'needs to go lower' - Cointelegraph

A regional bank in Western New York is going to provide a Bitcoin product for investors.

Five Star Bank, which is based in Wyoming County and has branches throughout the area, has announced a partnership with NYDIG, a Bitcoin company. It will allow Five Stars customers to take part in Bitcoin investments, which is part of a broader class of cryptocurrencies.

Five Star Bank CEO Martin Birmingham said that his bank wanted to offer this product after getting feedback from their customers.

Theres a very high interest generally in Bitcoin, said Birmingham. We see it reported every day in the financial press, and theres a big following. So, from a younger demographic, as well as a more affluent demographic, we heard feedback in terms of interest.

Bitcoin and other cryptocurrencies can be a volatile investment, so Chinmay Jain, an assistant professor of finance at SUNY Geneseo, said it may be something a younger investor as opposed to someone close to retirement might consider.

He also noted the banking industry is starting to explore offering Bitcoin type products, even when some executives, like the head of JP Morgan Chase, have expressed skepticism.

A good example is JP Morgan CEO Jamie Dimon, said Jain. But they changed their stance completely, JP Morgan started investing in Bitcoin itself in 2018, so I think that trend is going to change.

Five Star Bank says it will be one of the first financial institutions in the U.S. to offer Bitcoin to its clients, and it said it will do that through a secure online environment.

Read more here:
Five Star Bank to offer Bitcoin product - WXXI News

Charts suggest the selling in the world's two largest cryptocurrencies may run its course soon, CNBC's Jim Cramer said Monday, leaning on analysis from veteran technician Tom DeMark.

"When the charts, as interpreted by Tom DeMark, say that both bitcoin and ethereum could be looking at downside trend exhaustion bottoms this week, if not today, I think you need to take him seriously," the "Mad Money" host said.

"To me, that says it might be too late to sell and you need to consider buying. I know I am, especially if we get a final leg down," added Cramer, who personally owns some ether, which runs on the ethereum blockchain. He previously owned bitcoin, as well.

Bitcoin earlier Monday reached its lowest point since July when it fell to $32,982.11 per token, according to Coin Metrics. However, bitcoin reversed course during the trading day, ultimately moving higher to around $36,000. The cryptocurrency remains well off its all-time high of nearly $69,000 reached in the fall.

Ether also touched its lowest level since July on Monday, falling as low as $2,176.41 before paring some of those losses, according to Coin Metrics. It's down about 50% from its all-time high.

While there's a risk that bitcoin's steep decline in recent weeks could cause structural damage to the cryptocurrency, Cramer said DeMark is betting that will not happen just like bitcoin's roughly 56% drawdown from April to June 2021 didn't prevent it from setting new highs in the fall.

Technical analysis from Tom DeMark showing bitcoin's angle of descent.

Mad Money with Jim Cramer

In fact, DeMark notes that bitcoin's current angle of descent is identical to its 2021 plunge, Cramer said. "In other words, there's a good chance that history continues to repeat itself."

Looking specifically at bitcoin's recent trading, Cramer said the cryptocurrency is at No. 11 of DeMark's well-known 13-session countdown pattern, which the technician uses to identify when a rally or decline will be exhausted.

Tom DeMark's 13-session countdown pattern for bitcoin.

Mad Money with Jim Cramer

"We need two more negative closes before his buy trigger fires," said Cramer, who added that DeMark also would like to see bitcoin test his downside price targets.

If Monday's intraday turnaround ends up leading to only a brief rally, "DeMark wouldn't be surprised to see bitcoin getting hit with a two- or three-day panic selling climax, which could briefly take it all the way down to 26,355," Cramer said.

Tom DeMark's technical analysis for ether, including two downside price projections.

Ether "has already hit 13 on his buy countdown for the first time since the peak. That tells DeMark that we could be looking at a trend exhaustion bottom," Cramer said, noting that "fortunately" ether also fell beneath DeMark's downside price projection of $2,434.

Despite these positive technical indications, DeMark cautions that ether may still fall further. "If we get another panicked breakdown, he could see [ether] temporarily dipping to $1,859 in a selling climax, but that would be your moment to buy, not sell, into the teeth of the panic," Cramer said.

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Charts suggest the selling in bitcoin and ether may be over soon, says Jim Cramer - CNBC

After seeing a 50% drop in price from its peak last year, Bitcoin has been down the recovery road. It has gained close to 4% in the last 24 hours and has been hovering near $37,800 at the time of writing. While it is yet to breach the crucial support level of $40,000, the Bitcoin Fear & Greed Index seems to have stabilized at 24 from 28 January.

Having said that, 40% of BTC investors are not making profits off the current price levels. So, will the $100K price prediction be fulfilledany time soon?

As per estimates by industry specialists, a recent Finders report note that Bitcoin can be worth $76,360 by the end of 2022. It stated,

Bitcoin (BTC) is expected to peak at US$93,717 this year before dropping to $76,360 by the end of 2022, according to Finders panel of 33 fintech specialists. This is roughly 60% higher than the price of Bitcoin at the beginning of 2022.

Therefore, $100K is not on Finders cards as well. Having said that, the token can breach the level over the coming years. The report further notes,

By the end of 2025, the panel predicts BTC will be worth $192,800 and climb to $406,400 by the end of 2030.

Furthermore, the report pointed out that the conservative predictions are on the back of potential interest rate hikes. This was also believed to be one of the contributing factors to Bitcoins price weakness earlier this year. We can recall that the market mayhem and low investor confidence followed Federal Reserves Tapering announcement during that time.

Panxora Group CEO Gavin Smith, who had an end-of-2022 prediction of $70,000, said

[The] first half of 2022 will be dominated by concerns over higher interest rates, which will impact all risk assets including Bitcoin. We wouldnt be surprised to see Bitcoin decline a further 30% from current levels.

Having said that, JP Morgan has also lowered its earlier long-term price target of $150,000 for Bitcoin. Now, on the back of the assets volatility and market size of gold, the bank has placed the new price prediction on $38,000. JP Morgan stated,

Our previous projection that the bitcoin to gold volatility ratio will fall to around 2x later this year seems unrealistic. Our fair value for bitcoin based on a volatility ratio of bitcoin to gold of around 4x would be 1/4th of $150,000, or $38,000.

Meanwhile, University of East London associate professor in law Dr. Iwa Salami is seeing growth in retail and institutional interest in the crypto space. Therefore, he is making crypto a crucial asset class that cannot be overlooked.

With that being said, Bitcoin has indeed broken the five-week streak in terms of investment outflows. Coinshares weekly fund flow report noted that Bitcoin saw inflows totaling $14 million in the week ending 21 January.

See more here:
Experts change their 2022 Bitcoin price prediction, and no it's not close to $100K - AMBCrypto News

Bitcoins ecosystem had witnessed an immense rise since its inception. Factors such as institutional adoption, demand, etc gave way to more bullish scenarios. Despite, BTCs on-going poor run, proponents within the community were buying the dip at a discounted price. Many, who once hated BTC, had dipped their toes in the BTC pond as well.

Dave Portnoy, founder and CEO of sports and pop culture blog Barstool Sports is currently trending within the crypto community. No, not for a Barstool Pizza Review, but instead a BTC one. The famed celebrity took to Twitter to announce his latest buying spree. Hebought 29.5 bitcoins for $1.1 million on Friday.

He took advantage of Bitcoins 40% decline from its 10 November all-time-high of $69,000 to jump back into the market. Different Bitcoin renowned proponents praised this move. MicroStrategy chief executive officer Michael Saylor lead the pack of those that did so, tweeted: Welcome back to Team Bitcoin.

This was indeed an interesting story considering his love-hate relationship with the flagship coin. In August 2020, Portnoy said he did not trust this [Bitcoin] market at all after he lost $25,000 and threatened never [to] come back.

Although, he did acknowledge the digital asset. He opined: I do think its profitable. I think with enough steam, that it may just continue to go up forever, but I dont buy the underlying junk behind it.

Fair to say, heregretted the move (to short his BTC position then).

Now, the aforementioned executive wasnt the only one. Many such individuals had a change of heart. For instance, US Global Investors CEO and once a Gold enthusiast, Frank Holmes saw BTC asan appealing investment

Link:
This Bitcoin opponent, who swore to never touch it again, buys BTC worth $1.1 million - AMBCrypto News

While bitcoin and other coins arent yet considered securities, the regulators will dig into finding ... [+] out if there are instances of money laundering, pump-and-dump schemes, shady business practices, wash sales and market manipulations. This would be a complete game changer if Bidens administration goes full throttle on this matter.

President Joe Biden is planning an executive action for federal agencies to regulate cryptocurrencies, digital assets and bitcoin, as he contends this is a matter of national security. Hes striking at a time when the crypto sector, along with the stock market, is going through a tumultuous time, losing large amounts of value, as the Federal Reserve said it will start raising interest rates to cool down inflation. His sights arent only on bitcoin. Regulators will look intostablecoins and NFTs. The Biden administration will also coordinate efforts with regulators and global leaders.

Regulatory agencies, such as theSecurities and Exchange Commission (SEC),the Commodity Futures Trading Commission, Internal Revenue Service and the self-regulation Financial Industry Regulatory Authority, will likely coordinate their investigations. Theyll also review whether or not tokens should be considered and registered as securities.

Usually, when there is concern over a sector in the financial industry, the regulatory bodiesconduct extensive, invasive examinations and audits. Theyll grill executives and key players of the platforms and brokerages that offer customers to buy, sell and trade securities. Trading activities will be highly scrutinized to search for any patterns of potentially illegal or unethical behavior.

While bitcoin and other coins arent yet considered securities, the regulators will dig into finding out if there are instances of money laundering, pump-and-dump schemes, shady business practices, wash sales and market manipulations. This would be a complete game changer if Bidens administration goes full throttle on this matter.

An underlying, unspoken reason for the seemingly sudden interest by Biden may be all the money that is sloshing around in the crypto space. Bidens multitrillion-dollar infrastructure and other plans are creating a huge amount of debt for the country. The digital asset world is now too big to fail, but it's not too big to extract a lot of money from it.

If the regulators find irregularities, substantial fines and tax levies may be extracted from everyone involved in the crypto ecosystem. The United States Treasury Department is already looking into what entities will be considered a crypto broker under the infrastructure bill Congress passed last year, and the reporting of any capital gains or losses to the IRS.

Gary Gensler, the newly appointed chairman of the SEC, the premier regulator of financial services firms and Wall Street, has previously voiced his concerns over digital assets.

Gensler took office when Wall Street had gone wild. During the pandemic, young, novice investors fell in love with meme stocks and aggressively traded on Robinhood. Cryptocurrencies became all the rage and a number of digital asset exchanges and platforms emerged to service the overwhelming demand for buying, selling and trading bitcoin, dogecoin, ethereum and other cryptocurrencies.

There was a boom in underwriting IPOs and SPACs. Questions arose over Chinese stocks listed and traded on U.S. exchanges and the practice of payment for order flow. Investors complained of activities that suspiciously looked like pump-and-dump schemes and attempts at market manipulations.

Gensler shared his concern with CNBC, stating about the regulatory agency, We are short-staffed. He added, It might sound odd to say that [about] an agency with 4,400 remarkable, dedicated staff working remotely during this challenging pandemic. But thats 4% to 5% less than we had just five years ago.

The lack of staffing and proliferation of new types of firms and products shouldnt be too surprising to industry insiders. In the aftermath of the financial crisis, compliance and regulations were made a top priority. The carnage created during this period created the need for greater oversight of the securities markets, bankers, brokers and traders.

Regulators cracked down on money laundering, insider trading, Ponzi schemes and other types of abusive and violative practices. The need for risk, audit, legal, compliance, privacy, regulatory and related professionals was insatiable. Compliance went from a sleepy back-office type of job into one of the hottest and fastest growing professions on Wall Street.

Things quickly changed when President Donald Trump took office. His administration made deregulation of the financial markets and Corporate America a top priority. Trump contended that with fewer rules and regulations, the animal spirits of companies will kick into gear. Companies, unencumbered by onerous regulatory burdens, would be set free to aggressively pursue bold business pursuits. Along with high taxes, regulations were viewed by Trump as an anathema to corporate growth and profits. He ordered that new rules will not be needed and existing ones should be scrutinized and thrown out, as he famously proclaimed, For every new rule, two must be revoked.

Regulatory budgets were cut and regulatory personnel felt that they weren't appreciated or adequately supported. Many left to pursue other opportunities. Savvy Wall Street players noticed the shift in policy and weve now seen the results.

The SEC and other financial regulators, such as the Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, Commodity Futures Trading Commission, Federal Reserve Bank and FINRA, a self-regulatory organization, are likely to request and receive funding from President Joe Bidens administration, especially as Senators Elizabeth Warren and Bernie Sanders have been outspoken with their dislike and distrust of Wall Street.

It's reasonable to believe that there will be an aggressive hiring campaign at the SEC and other regulatory agencies. Strict examinations, audits and reviews of the securities and cryptocurrency industries will occur. To keep the banks and financial institutions safe and out of the crosshairs of the regulatory bodies, there may be a substantial increase in hiring of compliance, risk, audit, legal and regulatory professionals.

Read the rest here:
President Joe Biden Is Going After Bitcoin, Other Cryptocurrencies And NFTs - Forbes

The first day of Keyfest 2022, a virtual Bitcoin conference hosted by Casa, was focused on the future of Bitcoin exciting applications currently being developed and others that are growing in user base and the continued growth of the Bitcoin network as it relates to on-chain metrics and global socio-economic impact on the adopting world.

In one panel for select attendees, titled the Casa Annual Summit, Nick Neuman, CEO of Casa, was joined by Casas CTO Jameson Lopp, its client services manager Andrew Yang and its head of security, Ron Stoner.

Before getting into specific details about Casas 2021, they discussed some fascinating statistics around Bitcoin that are quite telling for the networks future expectations and latest achievements.

The segregated witness upgrade of 2017 separated the witness from the list of inputs which prevents transaction malleability, or the ability to change information provided in a transaction. With limited access, the witness doesnt allow this malleability to occur. SegWit also allowed the soft fork to accomplish an increase in block capacity without needing a hard fork, or new chain.

SegWit was not instantaneously picked up by every node, and adoption takes time. One of the statistics Casa discussed was that 86% of Bitcoin network transactions are now SegWit.

The speakers then drew an obvious comparison to the adoption of Taproot. Four years later, 14% of transactions are accomplished without SegWit. Similarly, the adoption of pay-to-Taproot addresses, as well as other changes that come along with Taproot, will take time.

But isnt it an encouraging thought to imagine the network in four more years? What new applications will we be exploring because of Taproot?

Throughout Keyfest, speakers addressed the immense growth we have seen as the Lightning Network, the Layer 2 Bitcoin protocol built to handle smaller, everyday transactions, continues to push the boundaries of adoption.

Lightning launched in June 2018 with capacity that would reach 1,104 BTC just 11 months later. From January to September 2021, that total capacity went from 1,058 BTC to 2,968 BTC, representing a 181% surge!

The total number of public Lightning channels hit more than 70,000 by September 2021. Nodes, channels and capacity all seem to be pointing up and to the right. Its amazing to watch this happen in real-time as an opt-out financial system allows for permissionless wealth accumulation. Now, for Casa.

A number of newly-added Casa features were talked about during this first session of Keyfest. First, Casa announced it would be supporting Taproot addresses an obvious choice for a platform trying to look down the road toward future adoption.

It also announced integrations for Keystone and Foundation hardware, and added a QR code transfer for encrypted keys, as some people have had issues with the cloud backup previously used which allows the user to store keys locally, rather than requiring cloud use. This change allows the user more choice in recovery options.

Also, changes to inheritance features allow for a streamlined process and in some cases will not require assistance from a Casa employee by use of automation, and in other cases will not require any contracts. Customers are now offered a referral program, as Casa stated that a lot of its users are referrals. A dollar-cost average (DCA) feature was also added, as well as Specter support. Specter allows users to utilize their personal nodes to verify the processes of Casa with their own machines, and Casa actually provides guides on how to do this. This allows users to have more control of their keys within Casa, as they can watch the balance from their own node.

Casas engineering team has doubled, which has allowed it to make its microservices more modular and adaptable to change while creating higher levels of efficacy. It was also able to continually test and isolate attempts of attack on its internal system.

The second session of Keyfest focused on the question, what does the future of Bitcoin look like?

Neuman returned for this panel and was joined by Peter McCormack from the What Bitcoin Did podcast, as well as Obi Nwosu, cofounder of Coinfloor.

Harkening back to the Lightning conversation, there was much focus put on the growth and accessibility of the network. The creation of Lightning allowed for the emergence of Bitcoin Beach, a local community of opt-out citizens in El Salvador who decided Bitcoin worked better for them than the local currency. The world began to take notice, and so too did the government in their home country.

Nwosus hopes pointed to Nigeria as he discussed the continued adoption of Bitcoin, stablecoins and altcoins in that region. The naira has become deeply inflated, losing an absurd amount of value over the course of the past 30 years. Many people there look to anything that allows them to opt out of the naira. Stablecoins like tether are allowing them to at least maintain certain amounts of currency instead of having the government cannibalize its value, and bitcoin, as well as altcoins, provide hope to building wealth outside of their existing system. Now, obviously, we want the people of Nigeria on a Bitcoin standard, but their look to outside assets is the beginning, the spark.

Nueman spoke to Casas hopes of ensuring greater security for Casa users and accomplishing smoother on-ramps in the future. This becomes an inherent part of the conversation as we ruminate over the thought of other countries adopting a Bitcoin standard. We can see the countries that need it the most are those most likely to struggle finding an on-ramp with ease of use or accessibility. When the topic of adoption in these areas of the world arose, Neuman said that it starts with the fact that mostly everyone has a smartphone of some kind, meaning thats where the application layers need to be, but he deferred to a more granular exploration from Nwosu.

Nwosu then discussed the need to further decentralize and strengthen the network. With B Trust, one of its goals is to onboard and educate developers of the world that are located in these areas. Few people are more apt to design solutions for a people than those who experience the issues themselves. As Nwosu said, Einsteins dont only exist in North America and Europe.

Nwosu went on to explain that most people in these parts of the world are still relying on exchanges for storage purposes. This need to decentralize and strengthen the network leads to the obvious, yet elegant solution of collaborative second-party custody, which is currently being utilized in El Zonte, El Salvador. Essentially, this is where multiple people get together and, through a shared wallet using multisig, each user pools their bitcoin, effectively creating a local bank or credit union.

Nwosu also voiced his opinion that nation states have proven to be the best educators on Bitcoin (insert coy smile). This happens when we have places like China or Turkey come smashing down with a ban hammer and trying to prevent adoption. In both cases, people opted out of their current systems and found something that actually worked for them. The banning of an asset like bitcoin leads to further curiosity and increased conviction. Its getting to the point that we almost want countries to ban Bitcoin, isnt it?

The future of Bitcoin is set on furthering decentralization by increasing nodes for both Bitcoin Core and Lightning, while drilling down on education as organizations and individuals like Nwosu focus on bringing in new development talent from the places that need help. Meanwhile, we look to the world of increased Taproot adoption and the furthering of applications, which took us to the final conversation of the day.

This part of the conversation focused largely on applications that the panel were excited for and why these different applications matter. John Tinkelenberg, content marketing manager for Casa; Matt Hill, CEO of Start9 Labs; and Lamar Wilson, cofounder of Black Bitcoin Billionaire led this session.

The beginning of the conversation started with the understanding that nodes have long been the backbone of the Bitcoin network. They serve as necessary validators in the process of making sure blocks continue to accurately represent the data within them. As Bitcoin has progressed, these nodes also allow a purpose of furthering decentralization by running your own server. Having your own server means being in control of your data. This is a personal responsibility.

The theme of this conversation was: the more free you want to be, the more responsible you need to be. There was a strong focus on creating your individual sovereignty by taking responsibility for your existence in the network by running your own node. Becoming immersed and learning each aspect of what it takes to be on the network and have responsibility to it is what allows many Bitcoiners their continued conviction and their ability to innovate within the space.

When asked to explain the differences between Umbrel and Start9, Hill continued to express these values as he explained that one, hes clearly biased, and that two, that people should do their homework on a platform before becoming involved with it. While there are similarities in these different platforms that make running a node more accessible, there are also stark differences between them. It is the responsibility of each sovereign individual to do this research and find the platform that is best suited to them. Here are some fun applications that were discussed:

The sessions on the first day of Keyfest served as a great introduction into what Bitcoiners and Casa want the future of Bitcoin and application development to look like. There is a clear focus on providing greater security and knowledge to the community at large and furthering the decentralization of the network with continued progress that will allow higher levels of adoption in the places that need it the most.

This is a guest post by Shawn Amick. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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How Lightning Network, Taproot Growth Signal The Future Of Bitcoin - Bitcoin Magazine

What happened

The cryptocurrency market is getting hit with more sell-offs today. Most top-100 tokens have seen valuation slides, and Bitcoin (CRYPTO:BTC), Ethereum's (CRYPTO:ETH) ether token, and Dogecoin (CRYPTO:DOGE) were down roughly 0.8%, 2.9%, and 2.5%, respectively, over the last 24-hour period as of 5 p.m. ET Thursday.

Rising bearish pressures are gripping the market, and investors have generally become more risk averse lately. Federal Reserve Chairman Jerome Powell made comments yesterday indicating the central bank will raise interest rates soon, and it looks like the increase may be one of many. Uncertainty continues to shape valuations in the crypto space.

Image source: Getty Images.

While many top tokens are backed by decentralized ownership and governance structures, it's clear that the cryptocurrency market does not exist in a valuation vacuum. Amid the backdrop of aggressive stimulus spending initiatives and basement-level interest rates, valuations for cryptocurrencies made big gains over the last few years. However, the market is getting hit with volatile sell-offs on the heels of some recent shifts.

Yesterday's comments from Powell point to an interest rate hike in the next couple months and additional increases later in the year. Rising rates and reduced stimulus initiatives signal a less favorable backdrop for high-risk growth investments, and the shift arrives at a time when regulatory pressures could also be increasing.

The Biden administration is reportedly eying an executive order introducing new regulations on cryptocurrencies that could be rolled out as early as February, and China, India, and Russia are among other countries signaling tougher stances on digital tokens. If that's not enough negative valuation catalysts for you, the crypto market has also been impacted by underwhelming performance updates from growth-dependent companies including Peloton, Netflix, and Tesla.

Even after recent sell-offs, Bitcoin, Ethereum, and Dogecoin have all managed to post substantial gains over the last year of trading.

Bitcoin Price data by YCharts

However, the gains also exist in the context of some dramatic volatility. Looking at the market's two most valuable cryptocurrencies, Bitcoin now trades down roughly 48% from its high, while Ethereum's ether token is down 51.5% from its peak.

The valuation gulf for Dogecoin is even more staggering. The popular dog-themed token is up an incredible 1,830% over the last year of trading, but it's also down a staggering 81% from the high it hit last May.

While the macroeconomic backdrop is shifting, top cryptocurrencies have been feeling the squeeze lately, and pressures could continue in the near term. The cryptocurrency market has been highly volatile across its relatively short history, and investors will have to weigh the potential for explosive returns against the possibility that a more pronounced bearish cycle could push token valuations lower.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Why Bitcoin, Ethereum, and Dogecoin Are Falling Today - The Motley Fool

Gold has historically been the best hedge against inflation. But there is a new kid on the block. As a nascent asset, Bitcoin (CRYPTO:BTC) has been around for 13 years and has already demonstrated consistent staying power and positive price movement. Having started at an approximate price of $0.003 in 2010, it has risen more than 13 million percent to around $37,000 per bitcoin at the time of writing.

But the price of bitcoin is not what makes it a better inflation hedge than gold. It is Bitcoin's adherence to a finite supply of 21 million coins. Similarly, a limited supply has long been surmised as a dominant reason for gold's status as the world's store of value, but I argue that Bitcoin has something more to offer.

Image Source: Getty Images.

The supply of gold is not truly finite. At least not in practical terms. Imagine the day wherein we travel to other planets and mine for metals and minerals. We may discover a gold mine within an asteroid, and at that point, the relative scarcity of gold could completely be destroyed. Gold is only scarce because of our current spatial and technical limitations.

Also, if the price of gold were to shoot up overnight due to market forces, it would become profitable to mine more of the gold that is already beneath our feet. Gold miners would add more supply to the market and drive the price back down to levels where it is not as profitable to mine more gold.

Despite bitcoin's name of "digital gold" their supply and inflation are nothing alike. Bitcoin has a finite supply of 21 million coins that can never be changed. Unlike gold, no amount of technical innovation or space exploration can increase (or decrease) the supply of bitcoin. Price fluctuations will not result in miners bringing more or less bitcoin into circulation.

Instead, the supply of new bitcoin coming into circulation is decided by an algorithm which is enforced by the miners running the network. This means that the supply of new bitcoin is detached from movements in price.

The supply of bitcoin is not regulated by any one individual, entity, or organization. It is regulated by an algorithm that began in 2009, and will end sometime around the year 2140 when the last bitcoin is mined. The algorithm is actually relatively simple to understand.

Here's what you need to know: a single bitcoin block is mined approximately every 10 minutes, and the computer that mines the block earns a reward, which is some amount of bitcoin. In 2009, that reward was 50 bitcoin per block (which meant 50 new bitcoins were brought into circulation roughly every 10 minutes). For every 210,000 blocks mined (roughly every four years), that reward is cut by 50%. The block reward became 25 in 2012, 12.5 in 2016, and 6.25 in 2020. This effectively means that the inflation rate of bitcoin is slowing down and will eventually reach zero.

In 2022, the inflation rate of bitcoin is below 2% and decreasing with each passing block. This is below the target inflation for the USD, and below the average inflation rate of the supply of gold (13% in 2021). The inflation rate of bitcoin doesn't depend on the price of bitcoin (like gold) or central bank or government policy (like the USD). The only thing that the inflation rate depends on with bitcoin is the blocks being produced.

Bitcoin's inflation rate predictably and reliably decreases over time, giving investors like me a high degree of certainty that there will be fewer new bitcoins coming into circulation as the years go by. Today, more than 90% of all bitcoin (18.9 million) is already in circulation with the remaining 10% (2.1 million) set to be mined over the course of the next 120 years. After all of the bitcoin has been mined, the miners that maintain the security of the network will have to derive their paycheck entirely from fees paid on transactions.

At the end of the day, I'm trusting that the bitcoin supply schedule will remain on track and undisrupted. The only thing that could disrupt it is a globally catastrophic event such as a devastating solar storm or asteroid impact. Otherwise, the bitcoin network and its supply schedule is as resilient as the internet itself. The supply schedule of bitcoin is based purely on math, whereas gold and the USD are based on humans and the decisions they make. I have a much easier time trusting that the computers running the math will continue to do as they are told. It is bitcoin's strict limited supply that makes it a superior inflation hedge than gold against the ever increasing supply of the USD.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Why Bitcoin Is the Best Inflation Hedge Against the USD -- and Gold - Motley Fool

Perhaps a few years ago when cryptocurrencies weren't regulated and were going under the IRS' radar, Bitcoin had a better appeal to people. Those who mine this cryptocurrency now know that they definitely have to file taxes of every earned Bitcoin they get. If you are a miner who just started in the cryptocurrency world, you should start getting ready for tax season and take prep seriously. Otherwise, the Internal Revenue Service might be out to get you if you ignore your responsibilities. Reporting taxes on any crypto you earn throughout the year is already an obligation and nobody is an exception to this. Perhaps they didn't care before but so much income influx due to crypto was eventually going to have an impact and make a statement.

In recent years, the IRS has been putting their people to work on the best approach towards cryptocurrency. People who aren't ready to file their taxes who are miners should beware of the ramifications this entails. If they don't want to lose both money and time reconciling their tax liability, they need to get on that as soon as possible before tax season begins in 2022. What we are doing here is offering you a specific guide on what exactly you need to report to the IRS in regards to your cryptocurrency earnings. We'll give you the details on which crypto activity is reportable, how the IRS taxes it and how you can be ready for it.

First of all, you need to know that the IRS is treating cryptocurrencies as property, this means they will be taxed in similar fashion as stocks get taxed. If for example, you only purcased crypto with U.S. dollars and those assets have only been sitting there in your wallet, there's no need to report anything in 2022. However, you will get taxed by the IRS if you trade one cryptocurrency for another. If you sell crypto for fiat dollars (givernment-issued cryptocurrency). Or also if you use crypto to buy goods or services such as paying for coffee with your own crypto.

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Tax season 2022: Do I have to report my bitcoin profits when filing my taxes? - Marca English