According to recent indices in a BofA report, Cryptocurrency volatility is still an elevated figure.

Bank of America, the second-largest bank holding company in the United States by assets, highlighted in a recent report that cryptocurrencies represent a risk rather than a store of value.

Bank of America explained in a statement that, while Bitcoin’s supply cap of just 21 million might be ideal understand and get more into this finite currency as an inflation hedge, the crypto gets marketed as a risky asset.

On January 31, the connections between Bitcoin and the S&P 500 stock index and between Bitcoin and the Nasdaq 100 index approached high peaks and the 99.73rd percentile. Various analysts guided by Alkesh Shah spoke about this matter on Tuesday. The bank also noted that the correlation between Bitcoin and gold, a metal often dealt with as an inflation hedge, remained almost at zero since June last year.

The Volatility of Digital Currencies

The digital asset has crumbled down from the highs experienced in 2013 but remains relative when it gets measured along with S&P 500, Nasdaq 100, and gold.

The volatility means that a currency like Bitcoin would not get accepted as an inflation hedge for investors in advanced nations. Many citizens in countries with a huge inflation rate could sense Bitcoin as an alternative to deal with inflationary seasons.  In simpler words, this digital asset appears to be a solution for the inhabitants of Latin American nations, like Venezuela or Argentina.

 What Happened in January

Likewise, the modest rally in crypto in recent days shows that is completely evident for Bank of America global crypto and digital asset strategist Alkesh Shah that January was not a crypto winter. Despite the price fall, Shah stated that his team might be waiting for crypto prices to reach high peaks in the second half of 2022.

Shah also highlighted that crypto and digital assets are risky methods, like stocks, commodities, or even real estate. Digital assets go through volatility due to their nature. Other economic factors, such as the Federal Reserve saying it may raise interest rates as soon as March, can impact the price of risky assets, and cryptocurrencies are no exception.

Shah and his team foresee seven climbs in 2022 and four next year. At the same time, it will keep going through temporary price decays for the next six months because markets have not fully calculated the potential interest rate increases.

Shah also explained that more investors would start showing more interest in blockchain networks like Ethereum, Binance Smart Chain, and Avalanche, which allow apps to get created on top of them. Each of these networks has its digital asset: Ether, BNB, and AVAX, that investors can purchase whenever they need to.

By: Jenson Nuñez

In 2021, the US managed to seize and sell at least 185,000 BTC. The 94,000 seized this year managed to surpass USD 4,000 million.

Along with the announcement of the seizure of at least 94,000 BTC in February, allegedly from the Bitfinex attack that took effect in 2016, the US government got back to the bitcoin super-whale list. Almost six weeks into 2022, the amount seized runs parallel with just over half of the 185,000 BTC in 2021.

These 94,000 BTC got migrated from various addresses in pieces of between 10,000 BTC and 20,000 BTC and got collected in a single profile. A week later, the United States Department of Justice revealed another prominent confiscation of BTC funds and the arrest of a couple of attackers that got subsequently accused of laundering the currencies extracted from Bitfinex in 2016.

On the other hand, with this seizure, the US government comes back as a super-whale again, as the term whale usually aims at holders than control more than 1,000 BTC.

In this regard, a study made by Glassnode the last year highlights that the holders of more than 1,000 BTC or whales are 2,200 entities. Of these super holders, the whales that carry more than 5,000 BTC do not exceed 220.

In a chart highlighted by Glassnode, the US government ranked third position due to the amount of BTC it has under control. Grayscale and MicroStrategy, the first two entities leading the first positions on the chart, are also public companies.  When it comes to private companies to get considered as super holders, Block. one would enter in second place with at least140,000 under control, which is equivalent to USD 6.2 billion.

Few Whales Exceed 100 Thousand BTC

If users consider that public and private companies have bitcoin under their control, along with the nations that have revealed that they manage BTC and bitcoin-based ETFs in their economies, there is a minimal list of those that exceed 100 thousand BTC.

There is just one representative for each division: MicroStrategy with an amount marked at 125,051 BTC, Block. one with 140,000 BTC, Bulgaria, that reached 213,519 BTC, and finally, the Grayscale, with at least 643,572 BTC.

The total of BTC under these four organizations control goes around 1,122,142 BTC, which shows a prominent agglomeration since it is 73.4% of the total held by the 61 entities that appeared in bitcointreasuries.org

According to an IRS report, In 2021, the US Internal Revenue Service (IRS) alone managed to confiscate at least eight times more bitcoin than in 2020. The total amount of digital assets confiscated by legal entities from August 2019 to August 2020 is marked at USD 137 million. Meanwhile, during the fiscal year 2021, an amount that shows USD 1.2 billion in confiscated bitcoin got approached by the country.

By: Jenson Nuñez

According to reports, this new law that will regulate crypto will appear in the Russian region soon, no later than February 18.

According to reports in the Russian press, and following a statement issued by the government, Russian authorities have been working hard to accept digital assets as a form of currency. Russian newspaper Kommersant revealed that the government and the Bank of Russia arranged an agreement to release a bill and amend existing laws to regulate digital currencies.

The government is now getting ready to launch a new law, expected on February 18, which will describe digital currencies as an analogy of currencies rather than digital financial assets. Russia will try to apply a new procedure to manage the circulation of digital currencies in the financial system while ensuring they have control over the cash flows of credit institutions.

The report highlighted that it would be possible to use digital currencies in the legal sector and market if users comply with total identification and go through the banking system or authorized entities.

According to Kommersant, in addition to dealing with crypto as currencies, the bill would set up that crypto transactions of more than 600,000 rubles must get declared to avoid being classified as a criminal offense. Fines would also fall on those who illegally receive digital currencies as a method of payment.

Russian Winds of Change

Interestingly, the news comes three weeks after the Central Bank of Russia issued a report, proposing to make cryptocurrencies illegal, from their mining to their trading and use in general. Later, President Vladimir Putin said he did not support the central bank of Russia and its position regarding crypto by explaining that such a strict position would be counterproductive to domestic innovation.

The idea of regulation instead of prohibition got justified by the government; it ensures all guarantees and the protection of the rights of citizens under a licensing regime aimed at cryptocurrency providers.

The Government Statement

The statement the government issued highlights that it has reached a conclusion about the future of digital currencies in Russian territory. The rotation of these financial assets will get tracked by the State with strict requirements; These requirements would be obligatory and would apply for all users in the market with a strong emphasis on the protection of the rights of investors.

The government notice also highlights that the goal is to fuse the circulation procedure of digital currencies into the financial system and control the cash flows in the highways of credit institutions.

The rights of citizens will get achieved by giving licenses to every single requirement that comes from cryptocurrency platforms. These, in turn, will get required to shield the platform in terms of liquidity and capital adequacy. The official financial entity, the Bank, and other prominent entities played a major role in the debate on the regulation of the cryptocurrency market.

By: Jenson Nuñez

According to Davidson, the lack of transparency of Tether in recent years is more than enough for the SEC to monitor its behavior with more attention. It indicates that it is more important than the legal dispute it has with Ripple.

The US congressman for the Republican Party, who has already sided on several occasions in favor of Bitcoin in many of his public appearances, Warren Davidson, assured during an interview that stable coins like Tether currently pose a worrying financial risk.

Davidson’s statements arrived at the fore during an interview led by The Block team. The congressman highlighted his concern about currencies whose value runs in parallel with the US dollar; he also referred to the case of the controversial stablecoin Tether.

Davidson’s comments come amid a strong emphasis by regulatory entities on cryptocurrencies, which have specially mentioned Tether and other stablecoins as a priority.

These regulatory entities mentioned Tether as a priority because of the risks some private companies pose by issuing these cryptocurrencies. The value that can compete with the USD gets supported by the use of Blockchain that enables low-cost cross-border transactions without being watched by third parties.

Increasing Concerns about Tether

Concerns about Tether are already very long-standing since, in 2017, the digital currency was applied as a tool to artificially inflate the value of Bitcoin during the bull run that took place at the end of that year.

In addition to the above, many suspicions pointed at the company for being the sole responsibility of using reserves to finance external projects. The company did not maintain the proper backing in US dollars to justify the amount of circulating USDT for that moment.

The situation became complicated for Tether since regulatory pressures and doubts from the community highlighted the opacity with which the responsible company has been managing the finances of the digital currency.

This situation opened the doorways for a legal process that lasted a long time, which led to the payment of fines of USD 18.5 million to the New York District Attorney at the beginning of 2021.

However, late last year, the Commodity Futures Trading Commission (CFTC) also imposed another $42.5 million fine on Tether, accusing Tether of misleading statements, precisely for failing to effectively prove that it owned the due backing of all currently circulating USDT.

The Elephant in the Room

Facing all these previously mentioned allegations and many others, Tether has been at the center of political discussions for various regulatory entities. The chairman of the Senate Banking Committee, Sherrod Brown, highlighted that he had struggles when contacting Tether executives and gaining access to precious data about their activities.

On the other hand, the parent company of Tether, Bitfinex, has had problems with certain media outlets, especially the case of CoinDesk, with whom they have come into conflict due to the coverage of various situations linked to the company and the stable coin.

By Jenson Nuñez

A lot has been going on lately and banks are taking a stand on Bitcoin. What do the analysts have to say about the cryptocurrency? Does it matter what a bank says?

According to analysts at Goldman Sachs, the growth of global adoption of Bitcoin does not necessarily increase its price. That statement obviously contradicts the assumption of many who claim precisely the opposite. Automatically, the public refuses to listen to such claims, because people prefer to hear what they want to hear. They seem to forget something very important: You learn from everything and it is always useful to hear divergent opinions. What does Goldman Sachs actually say about Bitcoin?

Goldman Sachs has said a lot on different occasions. The first thing to consider is that Goldman Sachs is made up of departments. Each department has its analysts, who write the reports aimed at customers. Two additional details to consider are that analysts earn their money on performance, and the client’s goal is to grow financially. The analysts at Goldman Sachs aim to build a career, and the client wants to make money. Therefore, seriousness and objectivity are required.

On Twitter, matters are completely different. In most cases, the priority is to increase the number of followers, as this adds to credibility, which in turn leads to greater opportunities. Some want a job, sell a course, meet important people, collect donations or live on advertising. Others simply want validation to feel popular. Now, to get an increasing number of followers, Twitter users have to stay very active and always on the look for controversy. The secret is to get the public’s attention. The short phrase, the clichés, the controversy, the promise, and the irreverence are the most used tools. In short: Radicalism sells.

On Twitter, everyone is a genius, and everyone understands the great conspiracy. In other words, everyone knows perfectly who the enemies are: the banks, the governments, the press, the experts, the corporations, and the Federal Reserve of the United States. The tribe consists of favorite influencers and people who think almost alike. The complaint is what unites. Inquiry into an evil system is the flag.

Despite the above mentioned, banks can be viewed as just another client interested in Bitcoins as one product among others. In this context, banks can have a say in regards to cryptocurrencies.

Goldman Sachs analysts Zach Pandl and Isabella Rosenberg have stated that “while adoption [of Bitcoin] may increase valuations, it also increases correlations with other financial market variables, which would reduce the diversification benefit of holding the asset class.” Adoption is a double-edged sword.

Analysts stressed that Bitcoin is not immune to macroeconomic forces, including monetary tightening by the Federal Reserve. They are obviously pointing to the positive correlation between the price of Bitcoin and other risky stocks like tech stocks. This is when things get complicated because here the evidence contradicts the dogma.

How can people interpret the Goldman Sachs analysts’ statements?

First, the claims are not false. Bitcoin, as it has grown in size, has also gained correlation and stability. In addition, Bitcoin is not a conservative, but obviously a risky asset. In other words, its high profitability is not free. What they are really saying here is that we will no longer grow at the same rate as before. There will be growth. However, this will be slower growth due to increased capitalization.

The Bitcoin of 2010 is not the same as the Bitcoin of 2013, as the Bitcoin of 2018 is not the same as the Bitcoin of today. The growth of a market of a couple of million dollars has no comparison to the growth of a market of three or more billion dollars. As the market grows, its behavior will change. Investors will gain something and lose something. It will be a much more consolidated asset in many aspects. However, it will lose much of its initial appeal.

By Audy Castaneda