This week turned into a complete rollercoaster for the cryptocurrency market following yet more FUD coming from China.
There are no boring days in crypto, and this week, like a lot of others, has managed to definitively prove it. The past seven days have been an absolute rollercoaster in the cryptocurrency market, so let’s start with Bitcoin.
BTC’s price was sitting comfortably at around $47,500 last Friday and started improving slowly throughout the weekend. On Saturday, we saw an attempt at $49K, which was unfortunately rejected. On Sunday, the price retraced a bit, but nothing spelled major signs of trouble.
Then came Monday. Throughout that day, the price of Bitcoin started plummeting, and the trend continued throughout the next few days, as it reached a low of around $40,000 on Wednesday. The bulls stepped in and started the recovery process, bringing Bitcoin’s price up to about $45,000 today. But then China happened.
An announcement of more negative regulatory efforts sent BTC back to the lows of $40K as the entire market lost billions in a matter of hours. At the time of this writing, the cryptocurrency recovered to about $42K.
This was the faith of almost all altcoins as well. Looking across the board, most of them are charting notable weekly losses. Ethereum is down about 19%, Cardano is down 7%, BNB is down 18%, XRP – 15%, Solana – 10%, and so forth.
It’s interesting to see how the market is reacting to news that shouldn’t have such an impact. China has clamped down on cryptocurrencies multiple times in the past, and almost every time it does – the price goes down. Meanwhile, other important developments fail to make such a sharp difference.
For example, Twitter announced this week that users can now send tips over the social media using BTC – a huge use case for the cryptocurrency, which didn’t have a serious reflection on the market.
In any case, it’s very exciting to see how the next few days will shape up. Today’s dip was significant, but it’s worth noting that the long-term on-chain data remains firmly positive, potentially turning this into a buy-the-dip opportunity.
Market Capitalization: $1,894T | 24Volume: $131B | BTC Dominance: 42.2%
This Week’s Crypto Headlines You Can’t Miss
Bitcoin Dipped to $40K Amid Global Stocks Pullback. Bitcoin, as well as the entire cryptocurrency industry, pulled back amid the tumble of global stocks. This was seemingly a consequence of the Evergrande debt crisis going on in China. It causes uncertainty throughout the entire financial market.
Bought The Dip: El Salvador Purchased Another 150 BTC as Bitcoin Dipped to $45K. The first country to formally recognize Bitcoin as legal tender, El Salvador, bought this week’s dip, adding 150 new bitcoins to its stash. This happened as the price pulled back from over $48,000 to $45,000 towards the beginning of the week.
Crypto Trading Now Official in Dubai Following Regulators’ Agreement. The Dubai World Trade Center Authority (DWTCA) announced this week that it has struck a partnership with the United Arab Emirates Securities and Commodities Authority, making cryptocurrency issuance, trading, and regulation completely legal within the DWTCA freezone.
Buying Spree: Third-Largest Whale Buys $170M Worth of BTC in Two Weeks. The third-largest Bitcoin wallet took full advantage of the adverse price actions this week. The entity added over 700 BTC to its collection as the price was decreasing. Now, its total holdings stand at around 112,202 BTC.
Trading and Mining Crackdown in China Escalates: Bitcoin Plunges $3K. Yet another wave of regulatory efforts aimed at furthering the cryptocurrency crackdown came from China this week. The country, once again, reiterated that digital assets are illegal, while also adding that financial organizations and payment companies are banned from facilitating cryptocurrency trading.
PayPal Announces New App That Includes Crypto Services. The leading online payment processor, PayPal, announced a new application that allows for multiple financial services previously foreign to the platform. This also includes certain cryptocurrency capabilities, hence furthering the company’s foray into the world of digital assets.
Bitcoin Senator Rallies For Support Against Powell’s Renomination As Federal Reserve Chair, Here’s Why
Popular Bitcoin Senator, Senator Cynthia Lummis is reportedly soliciting for the support of her fellow Republicans in her stance against Jay Powell after the latter got renominated to chair the Federal Reserve.
Bitcoin Senator Wary of Crypto-unfriendly Nominees
As reported by Decrypt who first broke the news, a source in Lummis’ office says her reasons border on her belief that there is an unlawful treatment of crypto-based institutions in her home state, Wyoming.
Meanwhile, the Bitcoin senator is not only against the nomination of Powell. The source still claims that Senator Lummis is also asking her Republican colleagues to help block Leal Brainard’s nomination as well. Brainard is another nominee of President Biden’s for the Fed positions.
Lummis’ skepticism might be as a result of the Special Purpose Depository Institutions or SPDIs as they are otherwise called. They are a new type of crypto-based bank that Wyoming lawmakers granted a special operational license to, just last year.
Two crypto-based companies that received the license in 2020 include Kraken exchange and Avanti — the stablecoin issuer. However, the Federal Reserve’s decision to not approve their applications for central bank-issued accounts has placed a hold on their banking ambitions.
Speaking about the Federal Reserve’s delay in a Wall Street Journal feature article by Lummis on Wednesday, she says it is an intentional and unlawful obstruction. She added that the Fed’s reasons are ambiguous at best. According to the Bitcoin Senator, Lummis claimed that the Wyoming entities have met all requirements for being a bank under the Federal Reserve Act.
Lummis insists that Powell and Brainard are only avoiding their legal obligations in their continued treatment of SPDIs and like many other U.S lawmakers, she wants to know why.
Could Lummis’ Pressure Affect Powell’s Confirmation?
As Lummis continues to apply even more pressure on her colleagues, the possible extent to which this pressure can truly go in affecting the confirmation process of both Powell and Brainard, remains to be seen.
But with the chair of the Senate Banking Committee, Sherrod Brown, reportedly holding a vote on the pair sometime this month, both of them could be confirmed.
Also, there’s a possibility of a potential tight vote now that some progressive Democrats — most notably Elizabeth Warren — are saying they will not be voting for Powell.
PlanB’s Floor Model First Miss: Bitcoin Price Closed Way Below $98K In November
PlanB’s floor model was wrong about BTC’s November closing price. The stock-to-flow model, though, is still on track.
Bitcoin’s closing price for November below $60,000 meant that PlanB’s floor model, which was particularly accurate until now, was finally broken.
At the same time, though, the analyst confirmed that the more popular stock-to-flow model was still valid as BTC is on track towards $100,000.
PlanB’s Floor Model Fails
PlanB is among the most popular analysts in the cryptocurrency space, predominantly known for the Bitcoin stock-to-flow model, which he published in early 2019. However, he also posted another model, which he referred to as the “worst-case scenario,” in July this year.
Also known as the floor model, it’s based on technical aspects, such as the 200-day moving average, and saw BTC closing August at $47,000, September at $43,000, and October at $63,000.
The first two months were spot on. BTC closed in October at $61,000, which was still very near to the model’s predicted price, and PlanB said it was “good enough” for him.
However, November’s closing actual closing price of way below $60,000 was quite different from what the model envisioned – $98,000. As such, the analyst admitted that this was the model’s first miss after nailing the previous few months.
Floor model first miss (after nailing Aug,Sep,Oct). No model is perfect, but this is a big miss and the first in 10y! Outlier/black swan? I will give Floor model 1 more month.
S2F model unaffected and on track to $100K.
Watch out for trolls confusing Floor and S2F model! https://t.co/tj6SSwSzKR— PlanB (@100trillionUSD) December 1, 2021
S2F on Track
As mentioned above, the floor model works separately from the stock-to-flow model, which sees the stock as the size of existing reserves (or stockpiles) and the flow as the annual supply of new bitcoins to the market.
It’s actually even more bullish as the original version sees bitcoin tapping $100,000 by the end of the year. The upgraded stock-to-flow cross-asset model, which introduced different phases of bitcoin’s development, predicted a price tag of $288,000 until 2024.
Although bitcoin still struggles below $60,000 at the time of this writing, PlanB believes that the original S2F hasn’t been broken as the asset is on its way towards $100,000. If BTC is indeed to go into a six-digit price territory, it would have to increase its USD value by more than 66% in the next 30 days.
CashApp Added Bitcoin Taproot Support, Here’s Why It Is Important
CashApp now supports the updated version of Bitcoin
The widely known Cash App mobile payment service developed by Square, which is being used to transfer money with the usage of a mobile app, now fully supports the Bitcoin taproot update.
The mobile payments service is currently available in the U.S. and the U.K. but is still reporting 70 million annual transactions between users and generating $1.8 billion in gross profit.
The taproot upgrade was highly anticipated by the Bitcoin network and the cryptocurrency community in general. Previously, the update went into effect on Nov. 14, 2021, at block 709,632.
Previously, the announcement appeared on the app’s website that has described numerous benefits that users will experience after the implementation of the update. One of the main advantages is increased privacy and reduced transaction fees.
The two-week period has been chosen to confirm the functionality of the updated version of the currency. As for now, the update has been activated for all customers. Taproot-enabled wallets are now available for both receiving and sending.