Kategorie: Bitcoin News

• Pompliano argues that Bitcoin’s unique properties make it an attractive insurance asset for a variety of reasons.
• He says Bitcoin provides insurance against a variety of risks, including, currency debasement and sovereign default.
• Bitcoin critics however point to things like the volatile nature of crypto assets and meagre adoption as reasons why it might not be the global insurance company.

Anthony Pompliano, a venture capitalist and popular Bitcoin advocate, argues that BTC could be considered the largest insurance company in the world.

The investor says the idea was proposed to him at a breakfast meeting with two investors, whose point suggested that the world’s largest insurance company may not “look like” the typical insurance company.

Is bitcoin the largest insurance company in the world?

This was the question posed by two investors at breakfast yesterday. In this piece, I unpack why they may be correct in their analysis.https://t.co/nSS4xDnuou

— Pomp 🌪 (@APompliano) May 19, 2023

Why Bitcoin could be the insurance

Pompliano’s argument, published in the latest edition of The Pomp Letter, is based on the idea that Bitcoin provides insurance against a variety of risks, including, currency debasement, sovereign default, undisciplined monetary and fiscal policy, and economic censorship. 

He explained:

“Just as there are different insurance policies that serve different purposes, Bitcoin is different things to different people. And just as most policyholders don’t want to ever have to use their insurance, most bitcoiners realise that bitcoin’s success will likely come on the heels of major issues in the legacy financial world.”

On what exactly makes Bitcoin an insurance, the entrepreneur listed a number of reasons.

He says Bitcoin is a one-time purchase, and it comes with certain advantages. Unlike traditional insurance policies, BTC doesn’t require ongoing premiums. If you buy early, Bitcoin comes as a cheap premium and much more expensive when done later.

The second reason is that cryptocurrency is a decentralised asset that is not subject to the control of any one entity, which makes it more reliable than traditional insurance companies. It also has an inverse relation to catastrophe in traditional finance, the latest example being when BTC price rose amid the US banking crisis.

Also, Bitcoin is a global asset that can be accessed by anyone, anywhere in the world, which makes it more accessible than traditional insurance products. As an insurance, its programmatic nature means holders don’t need to submit claims and wait for someone to judge whether to honour it or not.

Bitcoin critics may disagree, but…

Although Bitcoin continues to see major adoption across the globe, the argument such as the one highlighted by Pompliano has not escaped crypto critics.  

For some, BTC remains too volatile to be considered a reliable insurance asset. Another argument is that the digital asset hasn’t achieved the adoption levels that would make it a practical insurance choice for most people.

Pomp says the idea is still a viable one, especially with the possibility that Bitcoin can be an insurance against events like inflation and economic collapse. Most of these events have largely been “uninsurable.”

“No insurance company is going to write you a legitimate policy against high inflation. They won’t write you a policy against government seizure of your assets. The insurance companies historically have not covered hyperinflation or economic collapse,” the investor argued.

He also thinks one doesn’t need to hold huge amounts of BTC to tap into the benefits. Putting about 1-3% of investment allocation into bitcoin can be an effective hedge against negative impact of economic risks.

The post Anthony Pompliano: Bitcoin may be world’s largest insurance company appeared first on CoinJournal.

• Bitcoin wallets with less than 1 BTC now hold an all-time high of 1.31 million coins.
• Shrimps have been adding an average of 26,000 BTC every month, data shows.
• The growth of the shrimp cohort is a positive development for the Bitcoin network.

The amount of Bitcoin held by “shrimps” – those wallet entities that currently hold less than 1 BTC) has reached a new all-time high.

According to data from Glassnode, shrimps have increased their total holdings to 1.31 million BTC. The cohort has witnessed the gradual increase in holdings over the past several months.

Shrimps grow holdings by +26,000 BTC every month

Per data Glassnode shared via Twitter, the shrimp cohort has experienced a significant expansion of their holdings in 2023. This followed a similar trend last year, with the buying among this group coming despite the greater volatility that hit the market.

Specifically, shrimps have added 26,000 or more Bitcoin every month. Since July 2020, only 202 (3.9%) trading days have recorded a larger monthly growth.

The suggestion from this is that retail investors have been aggressive in accumulating BTC, with the dips seen during the bear market providing investors with an opportunity to buy Bitcoin at low prices.

The chart below shows the growth in the amount of BTC held by wallet addresses with less than 1 bitcoin. As you can see, the amount held by these entities has increased significantly in June/July 2022 and again in November/December and January 2023.

Increase in small holders is a positive for the long-term health of Bitcoin’s network as the metric suggests retail investors are confident in the cryptocurrency’s growth and long term potential.

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Key Takeaways

• Bitcoin has been through many bear markets before, always surging back to higher highs
• Dan Ashmore, our Head of Research, cautions against naive extrapolation of past returns, however
• Until this past year, stock markets had done nothing but rise during Bitcoin’s existence
• Bitcoin was launched in 2009 as the stock markets bottomed, and the bull run afterward was one of the longest in history
• This needs to be considered, cautions Ashmore, whilst sample size of Bitcoin trading with any sort of liquidity is also small

Bitcoin is volatile. Also true: water is wet and the sky is blue. 

A quick glance at a Bitcoin chart will tell you all you need to know about the meteoric rises and bone crushing pullbacks that the asset has produced over the years. In truth, it should be plotted on a scale, too. 

When looking at Bitcoin markets, therefore, it is tempting to jump to the conclusion that “we have been here before”. Bull markets and bear markets, easy come and easy go. Or, as Jeff Bridges put it so poetically in the Big Lebowski, “strikes and gutters, ups and downs”. 

While Bitcoin has drawn down many times before and, at least previously, always bounced back, I believe it is naive to extrapolate past resurgences into the present. Because no, we have not been here before. 

To be clear, I am not saying Bitcoin will not rise to new heights again. It easily could (I hold Bitcoin as part of my portfolio, albeit via a monitored allocation and obeying the boring all adages of diversification and risk management, but hey – that is for another time). My point, however, is that we have zero point of reference for the current situation. Despite a surge of 75% in the last six months, Bitcoin is 60% off its high in Q4 of 2021, with many investors underwater if they opened positions in the past three years as Bitcoin truly established itself on the mainstream stage.  

Let me explain why things are different this time around, and why assuming with blind confidence that Bitcoin will surge upward imminently may be misguided. First, the below are the biggest peak-to-trough drawdowns in Bitcoin history (the recent/current one is highlighted in yellow): 

Clearly, Bitcoin has been here before. Right? 

Well, no it hasn’t. Look at the dates of the above: all these drawdowns are from 2012 onwards. This is because Bitcoin was only launched in 2009. Indeed, it didn’t really have any sort of liquidity or infrastructure (such as exchanges or a marketplace) until 2012 (and even then, liquidity was extremely thin). 

And consider what has happened in the wider economy since Bitcoin was launched in 2009. On March 9th 2009, two months after Bitcoin launched, the Nasdaq hit a low of 1268. The S&P 500 did the same, hitting a nadir of 676. 

Since then, markets have enjoyed one of the most remarkable, longest and explosive bull runs in recent history, as basement-level interest rates propelled asset prices to dizzying all-time highs. By late 2021 at their peaks, the Nasdaq hit a level of 16,057, the S&P 500 4,793. Since those aforementioned lows in March 2009, that represents returns of 12.7X and 7.1X respectively. A historic period of gains.

Presenting the returns of both the Nasdaq and S&P 500 since Bitcoin was launched in January 2009 (note – this goes back a couple of months before the trough of the stock market in March of that year and hence the returns are not as empathic as above) shows the run in markets visually throughout Bitcoin’s life:

Or perhaps the next chart is better, showing quite how boisterous the stock market throughout Bitcoin’s life during the period up to and including 2021. 

Therefore, every single dip in Bitcoin’s history took place whilst the wider financial markets were humming along swimmingly. This all changed in 2022, of course, when inflation spiralled and the world’s central banks began hiking rates at the fastest rate in recent memory. 

Suddenly, for the first time in Bitcoin’s existence, it was ticking along block-by-block while financial markets elsewhere were falling. And they were falling quickly, the S&P 500 shedding nearly 20% in 2022, the Nasdaq losing over a third of its value. Not only were these losses the worst of any period in Bitcoin’s life, they were, aside from minor falls in 2011 and 2018, the only losses it had ever seen. 

Therefore, this time is different. Blind faith in Bitcoin bouncing back aggressively because of the simple conclusion that it has done so before is a dangerous assumption to make. Again, Bitcoin could easily do exactly this, but it would be foolish to assume it is a guarantee because it has happened in the past. 

The reality is that, until this past year, the world had no idea how Bitcoin would trade outside of the zero-interest rate vacuum that we have been operating in for the past decade. There is no trade history for Bitcoin going back to previous recessions, no chart one can pull up to assess how it weathered inflation in the 1970s, no reference point to anything but a stock market printing green candle after green candle. 

Not only did all those previous resurgences come amid a period of cheap money and expanding central bank balance sheets, but Bitcoin markets were also incredibly illiquid. It took barely a drop of capital to move prices, as Bitcoin exploded from a fraction of a cent to thousands of dollars per coin. Bitcoin’s existence has been brief itself, at 14 years, but its status as a financial asset of any sort of liquidity is even briefer again. 

So, for one last time: this is not a piece making any forecasts about the future of Bitcoin. I don’t want to wade into such murky waters (not here, anyway!). Rather, it is a piece cautioning that we have such a small sample size to work with when it comes to Bitcoin, and it is important to be cognisant of that when assessing how it trades. 

Bitcoin has never experienced a bear market in the wider economy before. Until now. Overlooking that critical fact is a dangerous game to play.

The post No, Bitcoin has never seen a bear market before – This time it’s different appeared first on CoinJournal.

• The Ordinals Marketplace will offer features that include minting and trading of Bitcoin Ordinals
• OKX Wallet to support Lightning Network and staking for Stacks (STX) and BRC-20 tokens
• OKX to attend the Bitcoin Builders Conference in Miami

OKX, one of the leading cryptocurrency exchanges and Web3 technology company, today announced the launch of Ordinals Marketplace on OKX Wallet, making it the first multichain wallet to support BRC-20 trading. The new Ordinals Marketplace allows users to mint and trade Bitcoin Ordinals and BRC-20 tokens.

“OKX has always believed in the power of Bitcoin and we’re proud to be constantly at the forefront of bringing Bitcoin technologies to a wider market,” said Jason Lau, Chief Innovation Officer at OKX. He added:

“Whether it’s Ordinals, BRC-20, or Lightning, we see the potential of these technologies as they expand the design space and deliver new use cases. OKX Wallet is the best way to explore the world of Bitcoin Ordinals and BRC-20 tokens, and we can’t wait to launch even more features for the community.”

Mint and trade ordinal inscriptions and BRC-20 tokens

The new Ordinals Marketplace includes the following features: a “now live” that will allow users to view and transfer Ordinals; an “available this week” feature enabling trading of BRC-20 tokens (users will be able to buy, sell, and list). 

Also accessible will be a “coming soon” feature that allows for minting of Ordinal inscription NFTs and BRC-20 tokens and a “coming soon: Trade Ordinals (buy, sell, and list)

In addition to the new Ordinals Marketplace, OKX has also announced additional support for Bitcoin. 

This includes support for Lightning Network to enable cheaper and faster bitcoin transactions. There is also staking support for Bitcoin Layer-2 token Stacks (STX) and BRC-20 tokens, and OKX BTC Explorer for BRC-20. With the latter feature, users can now validate BRC-20 transactions in real-time

In addition to the above announcements, the company also revealed its team will attend the Bitcoin Builders conference, the first-ever conference focused on Bitcoin’s Layer-2 ecosystem. The event is set for May 17 in Miami, where OKX’s Chief Innovation Officer Jason Lau will speak on a panel alongside other industry leaders.

The post OKX Wallet launches Ordinals Marketplace to support BRC-20 trading appeared first on CoinJournal.

• Retail investors would prefer Bitcoin over the dollar in case of a default, a new survey says.
• A US default could be here as early as June 1, experts have warned.
• Standard Chartered analyst Geoff Kendrick previously predicted a 70% jump for Bitcoin price in case of a US default.

A new survey has found that retail investors would prefer to buy Bitcoin (BTC) over the dollar in the event of a US default.

According to the report, while gold and Treasury’s ranked higher on the list of trusted safe haven assets in case of a US default, BTC was seen as the third best asset, ahead of the US dollar.

Retail investors would buy BTC over the dollar

The results were from a survey conducted by Bloomberg’s Markets Live Pulse. The researchers had asked investors to indicate what they would buy were the US government to spiral to a debt ceiling.

Gold was the top pick as 51.7% of professional investors and 45.7% of retail investors going for the precious metal. A significant percentage chose Treasurys, with 14% and 15.1% of professionals and retail investors respectively showing faith with the asset class.

Meanwhile, Bitcoin ranked third among the responses as 7.8% of professional investors and 11.3% of retail investors picked it over the dollar. Per the survey, about 7.8% of professional investors and 10.2% of retail investors said they would still buy the dollar.

Bitcoin price predictions in case of US default

The US faces a default that could hit as early as 1 June 2023 should lawmakers fail to strike a deal to lift the $31.4 trillion debt limit. Stock investors were on Monday upbeat on a possible deal. However, stocks were mainly weak as reports of no consensus on the cards yet emerged.

Bitcoin on the other hand remained poised above $27,400 as analysts projected a potential decline to support levels seen last week or lower. However, with the BTC price having rode the banking crisis to break above $31,000, it is possible a default could provide fresh fuel for more gains.

As CoinJournal recently highlighted, this Bitcoin price prediction had been put forth by Standard Chartered analyst Geoff Kendrick. In his prediction, the head of FX research at Standard Chartered said the BTC price could explode by 70% in the event of a default.

While he suggested an initial drop on the day, or two or week, of the default would likely clip bulls by $5k or so, the analyst believes the price of the digital gold could see a new $20,000 leg.

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