- Bitcoin balance on Coinbase has decreased by $8 billion since the beginning of 2021.
- More of these were likely loved to external wallets for HODLing.
Many Bitcoin investors are becoming long-term holders or are playing by the rule “not your key, not your coin.” Data shared from Glassnode, a digital currency analytics platform, showed that a significant number of Bitcoin has been leaving Coinbase, a leading US-based cryptocurrency exchange, since the beginning of the year.
Less Bitcoin balance on all crypto exchanges is likely to set the BTC market in a bullish rally.
Coinbase’s Bitcoin balance reduced by nearly $8 billion
Early January, the crypto exchange had a balance of over 970k BTC, according to Glassnode data. However, in less than three months, Coinbase‘s Bitcoin balance has decreased by over 150,000 BTC. This means about $8 billion in Bitcoin has been transferred off the exchange at today’s price of $53,678. It could be that Coinbase users may have withdrawn some BTC to other exchanges. However, it’s more likely to transfer to external wallets or cold wallets.
Amid the recent spike in the market value of Bitcoin, many investors had preferred moving their coins to external wallets for security reasons. For instance, millions of dollars in Bitcoin were transferred off the Coinbase exchange yesterday.
— The Wolf Of All Streets (@scottmelker) March 25, 2021
This becomes more evident as Bitcoin balance on all exchanges has been decreasing for months now, according to CryptoQuant. This is somewhat indicative that BTC investors are turning to long-term holders.
All exchange BTC reserve is dipping
From May 2020 till date, the number of Bitcoin had in all crypto exchanges decreased from as high as 2.9 million BTC to about 2.3 million BTC.
Bitcoin: Here’s what you can expect over the next 12 months
Bitcoin has come a long distance since its inception. A year ago it traded at the $10k mark, fast forward to 2021, it stands just above the $43k mark. Needless to say, a lot has changed since then. With countries as well financial institutions adopting it, there’s a mass adoption factor at play.
Where do we currently stand with Bitcoin?
Well, popular trader Pentoshi took to Twitter to reflect on the broader state of Bitcoin in a series of tweets. At the time of writing, Bitcoin stood at its “early majority” phase on the S curve. The graph below highlights the same.
What can we expect over the next 12 months?
Firstly, in terms of adoption-here’s what the analyst stated, “I think it’s important to realize how scarce it really is when you talk about the adoption that is likely to happen over the next year. Scarcity was programmed by design and this next year is where people mess up. Institutions are buying your coins” He further predicted a bullish scenario for the largest token.
“In the next year: We go from 1 to 3 countries adopting it Twitter doesn’t just integrate it but puts it on their balance sheet Multiple ETF approvals that allow all companies access to BTC 10 Publicly traded companies add it Adoption next year > this year It’s happening”
However, some correction is bound to kick in. He eyed $37,000 as a potential floor.
We can see bids have been stacked on exchanges at those levels with the intent to fill, but the sheer size of them is something I've never seen before across most exchanges. The bottom is closer than you think, and the top is likely a number you can't comprehend at this time— 🧸🔫🐧Pent◎shi Wont DM You (@Pentosh1) September 25, 2021
BUT consider this, significant buyer bids are in place in the area between $36,000 and $41,000. Here’s how it looks.
Moreover, he added, “We can expect multiple ETF approvals,” as well.
Headwinds from China- will it destroy this build-up?
Since 2009, China and Hong Kong have “banned” or otherwise caused FUD in the crypto space on 19 separate occasions and counting. The events have a ring to them — in September 2017, the original “ban” announcement sent Bitcoin tumbling, only to recover to its original levels within weeks and set a new all-time high of $20,000 less than three months later. Even though the weak hands liquidated their holding due to fear, strong HODLers remain unfazed. Consider this tweet.
The same thing happened in September 2017. China said they were banning #Bitcoin and it dropped by over 30%. But #BTC made a full recovery in few weeks then hit new all time highs in December that year.
As the saying goes ‘history doesn't repeat itself but it sure does rhyme’ pic.twitter.com/Xi8euPK916— John Satoshi Wick (@JohnSatoshiWick) September 24, 2021
Bitcoin Is Salvador: 2.1 Million Salavadorans Are Using Chivo Wallet
You are probably aware of the massive popularity that El Salvador has seen since the country accepted Bitcoin as legal tender.
Now, news is about the nation and the use of BTC there.
Check out what the president posted:
2.1 million Salvadorans are ACTIVELY USING @chivowallet (not downloads).
Chivo is not a bank, but in less than 3 weeks, it now has more users than any bank in El Salvador and is moving fast to have more users that ALL BANKS IN EL SALVADOR combined.
This is wild!#Bitcoin🇸🇻— Nayib Bukele 🇸🇻 (@nayibbukele) September 25, 2021
Bitcoin is a great shot of diversification
The prestigious publication The Economist posted a piece on diversification and how Bitcoin can help. The article begins with the following words.
“Diversification observed and sensible; a rule of behaviour which does not imply the superiority of diversification must be rejected both as a hypothesis and as a maxim,” wrote Harry Markowitz, a prodigiously talented young economist, in the Journal of Finance in 1952.
The continue and note the reasons for which Bitcoin is worth adding to an investment portfolio.
El Salvador in the news – No Bitcoin taxes for foreigners
El Salvador is a nation that supports the mainstream adoption of Bitcoin.
The mass adoption of Bitcoin and digital assets has been set as the main goal of the crypto space.
Bitcoin magazine online publication notes that foreign investors will not be required to pay taxes on profits from Bitcoin, a government adviser told the AFP this week.
Javier Argueta, the legal adviser to President Nayib Bukele, told the news source, “If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment.”
“There will be no taxes to pay on either the capital increase or the income,” Argueta said. Stay tuned for more news.
China’s Long History of Bitcoin FUD: Timeline
Even after more than a decade of continuously banning cryptocurrencies, China has still not learned that bitcoin always triumphs.
Right from the very first year bitcoin came into existence, the Chinese government has gone after the primary cryptocurrency, hammering it with bans after bans while citing countless risks supposedly associated with it.
In over a decade, the Republic of China has also managed to increase its FUD (short for fear, uncertainty, and doubt) in the industry, and each time, crypto had seen a massive hit. Just last week, bitcoin’s price fell by more than 5% within hours, owing to another regulatory reiteration from the Chinese authorities to ban cryptocurrencies.
Before we dive into the long history of China FUD, there is good and bad news to this story. The bad news is that this kind of Chinese FUD is likely to continue, at least over the next years. However, the good news is that the effect on the price of Bitcoin seems to be decreasing over time, as BTC is becoming more and more resistant.
China FUD Vs. Bitcoin
With the endless bans and unnecessary repetitive threats, one might think it’s a well-coordinated effort to bring bitcoin’s price down. But that is perhaps a story for another day.
For now, let’s walk down memory lane and see all the times China has raised FUD levels in the crypto market through its endless hostile stance and vows to end crypto activities and how the industry continues to triumph.
2009 – Ban on Digital Currencies
In June 2009, just a few months after bitcoin was launched, China’s Ministry of Commerce and Ministry of Culture banned the use of digital currencies in making payments for real-world goods and services.
The move, however, was not explicitly targeted at bitcoin, instead, it was to curtail several video-game currencies that were supposedly devaluing the yuan.
2013 – China Pops Following Bitcoin’s First Major Bull-run
Four years later, in December 2013, the world’s most populated nation made its first direct attack on the use of bitcoin, calling it ‘a currency without real value.’
The People’s Bank of China (PBoC) and the IT Ministry published a note mandating every Chinese financial institution to stop processing bitcoin transactions.
The effect of that notice was immediate, forcing bitcoin’s price, which had just crossed the $1k mark, to plummet massively – the first price impact out of many to follow.
2014 – The Bear Market Driven by China FUD
After bouncing back from the 2013 China FUD, the crypto industry was once again struck with another devastating report that the “PBoC has placed an outright ban on Bitcoin transactions.”
While that news, which was published in March 2014 by Weibo, turned out to be false, its effect on the market was catastrophic. Thousands of traders and investors liquidated their positions, and bitcoin’s price took a nosedive. BTC, which was trading above the $1k mark by end of 2013, was heading towards $400 just three months after.
2017 – Exchanges Forced to Leave China
2017 will always remain a memorable year in the history of crypto. It was the first time that bitcoin hit $20,000 in December, yet, it was ridden with more FUD from the Chinese government than in previous years.
In mid-2017, the PBoC dropped two regulatory bombs in the same month. The first ban was on Initial Coin Offerings (ICOs), which were trending at the time. The second was targeted at cryptocurrency exchanges.
The authorities insisted that every ICO actively going on in the country should immediately be discontinued, citing that they were illegal forms of public financing and were not authorized by China’s financial regulators.
By mid-September, the PBoC hit the crypto market with the notice of yet another ban. Every cryptocurrency exchange operating in the country was mandated to discontinue its services by end of September 2017, citing risks of their use in facilitating criminal activities like drug trafficking, money laundering, and smuggling.
Several top crypto exchanges, including Binance – which was operating from China back then, had no other option but to relocate and crypto traders across the country had to move their trading activities to overseas platforms via VPNs.
The prices of the leading cryptocurrencies suffered. But as always, the market recovered within three months, and it even turned out to be a breaking point for crypto worldwide as BTC hit its then all-time high (ATH) of $20,000 in December 2017.
2018 – Targeting Mining
In early 2018, Bitcoin suffered one of its biggest price crashes in history. Shortly after ending 2017 with highs of $20,000, the value of the primary digital asset fell by more than 65% against the USD around February of that year.
While there was no solid reason for the decline, several reports suggested that the plunge was closely tied to the Chinese New Year and rumors of a new crackdown on crypto mining.
In August 2018, China reportedly issued another document officially banning all crypto activities in the region. The paper focused on communication channels as it prohibited commercial venues like WeChat accounts, media outlets, and others from hosting any crypto-related events or activities.
2019 – Bitcoin Mining Ban Confirmed
Rumors of a massive crackdown on bitcoin mining were confirmed in April 2019, when a draft warning from the country’s National Development and Reform Commission (NDRC) noted that the regulator was planning to eliminate these activities in China.
The draft argued that bitcoin mining did not adhere to relevant laws and regulations set in place and polluted the environment. BTC’s price, once again, dropped significantly.
2020 – Power Stations Ordered to Halt Power to Miners
With the outset of the COVID-19 Pandemic, several Chinese miners liquidated their crypto holdings, resulting in the massive bloodbath in March, which saw bitcoin and almost all altcoins losing more than 50% of their value.
Despite the global pandemic, in May 2020, local government authorities in the Chinese province of Sichuan were seeking to ban cryptocurrency mining operations in the region.
In October, the market was struck again by a ban on crypto trading. Offenders were threatened with fines that were five times the value of their crypto funds.
In December, power stations in the Yunnan province, where many of the largest crypto mining hubs in China were located, received mandates from the local authorities to stop providing power to miners in the city. This resulted in a sharp drop in bitcoin’s hash rate.
However, bitcoin was able to break the $20,000 mark and end 2020 with a new ATH of over $30,000. The hashrate also recovered somewhat rapidly.
2021 – Miners Leave China: Crypto is ‘Illegal’
2021 started off for bitcoin and the crypto market at large. After ending the previous year with a high of 30,000, BTC continued to chart new records until it peaked at around $65,000 in mid-April.
However, things quickly became dark for crypto traders as the Chinese government embarked on a nationwide campaign against crypto mining and trading. It reiterated its warnings for the 20th time to citizens about the risks associated with investing in such “speculative” assets.
Even though every financial service provider and payment gateway in the country has already been prohibited from working with crypto entities since 2013, the news resurfaced in May 2021 and sent the crypto market crashing down the hill. Bitcoin lost nearly half its value in weeks.
Within the last four months, China has intensified its fight against crypto activities like never before. In June, officials reiterated the bitcoin mining ban (again) and went on a massive crackdown on bitcoin mining facilities, forcing miners to shut down their machines.
The clampdown on such operations not only affected several key on-chain metrics and caused prices to drop but also prompted the still-ongoing Great China Mining Migration, as miners in the region started moving to other crypto-friendly locations.
In July, another report emerged that the PBoC shut down a tech firm allegedly providing software services to local cryptocurrency entities. Bitcoin’s price immediately fell as soon as the news broke.
In August, China went after crypto influencers, and the government shut down the website and social media handles of the country’s high-profile blockchain center.
On September 24, the market took another hit as the PBoC supposedly declared that all crypto-related transactions in the country are illegal. Even though the news was from September 3, it did not stop bitcoin’s price from shredding $4,000 within hours, causing massive liquidations.
Verdict: Bitcoin Always Triumphs
For the past years, the Chinese authorities have often tried to bully bitcoin and force it out of existence, but all its efforts – so far – have always proved a failure. The crypto industry continues to thrive as the market usually recovers from whatever blows it receives from the giant Asian nation.
Bitcoin has retained its position as the largest cryptocurrency, with an influx of large institutional investors fueling its adoption rates.
Judging by the patterns of the previous cases caused by the Chinese government, bitcoin often goes on a massive bull run within a few months after suffering the effects of the same old regulatory song from China.
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