Following the accusations against the BitMEX exchange, the price of Bitcoin dropped by 4%. Bitcoin shows its strengths as money in contrast to the weakness of the US dollar.
In recent days, the CFTC accused BitMEX of violating anti-money laundering regulations and operating illegally in the United States. That accusation had an impact on the market that was reflected in the withdrawal of more than 48,000 BTC from BitMEX in a few hours. Additionally, the main cryptocurrency exhibited a drop of close to 4%, down to USD 10,480.
Larry Cermak, director of research at Decrypt, said on Twitter that the implications of this accusation would be “massive.” He states that there are major exchanges outside of the United States that allow US users to trade without KYC rules.
Analyst Willy Woo said that what happened to BitMEX could have a bullish impact on Bitcoin. “The CFTC has just announced that it is downgrading unregulated futures exchanges and their dominance in price. BTC is going up.”
Ray Dalio, Founder of Bridgewater Associates, the world’s largest hedge fund, believes that capitalism “does not divide the economic pie well” and that it is not working “efficiently and effectively enough for everyone.”
The investor stresses that the United States should make adequate decisions to provide better opportunities for its citizens. He considers that, in this way, there would be “no painful consequences for the country.”
Intrinsic Value of Bitcoin
The analyst team at the Kraken exchange recently published a study on the intrinsic value of Bitcoin. In it, they examine diverse approaches to the inherent value of the main cryptocurrency. Likewise, they explore how the different definitions of value could extend to Bitcoin.
The study highlights that it is necessary to take into account intangible aspects within Bitcoin when evaluating its intrinsic value. The study particularly notes cryptography-based computational security, resistance to censorship, and its immutability and verifiability, among others.
The analysts explain how Bitcoin meets the seven characteristics that fiat money complies with, according to the St. Louis Federal Reserve: durability, portability, divisibility, uniformity, limited supply, and acceptability. Furthermore, they add that a robust network, with the aforementioned intangibles, backs Bitcoin.
Gold no longer backs the US dollar, but the latter “is desirable because of confidence in its sovereign status.” Kraken’s study argues that Bitcoin is desirable because of the strength of its network or “ecosystem.” The authors say that “Bitcoin has built its reputation as the most cryptographically secure, decentralized, and widely adopted digital asset to ever exist.”
Tweet of the Week
Blockchain data analytics firm Glassnode highlights the percentage of BTC supply that BTC hodlers held three years ago, two years ago, and one year ago.
The percentage retained, for at least 3 years, is just under a third of the supply of Bitcoin, about 5.8 million coins. That percentage grew to 8.2 million BTC in one year. At the moment, the percentage of BTC that users have not moved, for at least a year, reaches 63.3%, that is, more than 11 million coins.
Bitcoin’s Resilience and the Fall of the US Dollar
Bitcoiners recently commented on the coincidence of events that could potentially push down the price of Bitcoin. To what happened to BitMEX, some added the news about the millionaire robbery at the Kucoin exchange.
Although these factors are potentially negative for Bitcoin, the price recently concluded at the USD 10,600 level and a 69-day record above USD 10,000.
According to an up-to-date economic report, the apparent gradual decline in the value of the US dollar strengthens Bitcoin as a store of value alternative. Recent money printing measures and the massive aid scheme that the Fed launched appear to have led to that loss of power. In the short and medium term, these measures could accelerate the devaluation of the US dollar, which would translate into a revaluation of Bitcoin.
By Alexander Salazar
