An eyebrow-raising week in the world of cryptocurrency
Data from CryptoCompare shows that the price of Bitcoin started last week at around $46,000 and saw a significant sell-off throughout the seven days, to at one point test the $40,000 mark. At the time of writing it recovered to trade close to $42,000 per coin.
Ethereum’s Ether – the second-largest cryptocurrency by market capitalisation – moved in a similar way, dropping from $3,800 to a $3,000 low throughout the week, before recovering to now trade at $3,150.
Headlines in the cryptocurrency space last week focused on celebrating Bitcoin’s 13th anniversary, as on January 3, 2009 the cryptocurrency’s pseudonymous creator, Satoshi Nakamoto, minted the Bitcoin network’s first block, known as the genesis block.
Bitcoin celebrated its anniversary with a new all-time high in its hashrate, which then stood at around 203.5 exahashes per second (EH/s), up 49% from the 136.5 EH/s recorded in January 2021, even after China cracked down on cryptocurrency mining within its borders.
Hashrate refers to the combined computational power used to mine and process transactions on the network. The higher the hashrate, the more secure it is as the computing power necessary to attack it also grows.
Over the week, an Italian bank with more than $87 billion in assets, Banca Generali, revealed it’s set to allow its over 300,000 customers to buy and sell Bitcoin through an integration with crypto firm Conio. The firm’s customers will be able to create a BTC wallet directly in their bank accounts.
Banca Generali is a major investor in Conio, and the two companies formed a partnership in December 2020 to launch the new offering. Using the wallet, customers will be able to directly buy and sell Bitcoin with their account balance, without having to rely on payment cards or third-parties.
In a report, Goldman Sachs analysts have estimated that Bitcoin’s rise could cost gold additional market share of the so-called “store of value” market, of which Bitcoin currently accounts for 20%. If BTC were to grow to 50% of that market, the analysts wrote, its price could soar to $100,000.
Adoption hasn’t moved up over the week as much as it could, however, as the nonprofit organisation behind the Firefox browser, Mozilla, announced it’s halting cryptocurrency donations following significant backlash from the community and a Mozilla founder, Jamie Zawinski.
Zawinski, who helped build the Mozilla Project that was released in 2002, responded to a tweet from Mozilla late last year touting it accepted cryptocurrency donations saying that everyone in the project “should be witheringly ashamed of this decision to partner with planet-incinerating Ponzi grifters”.
Mozilla first started accepting Bitcoin donations in 2014, but over the last few months, cryptocurrencies have come under significant scrutiny over environmental concerns.
Notably, Nasdaq-listed blockchain infrastructure and technology firm BTCS has announced it will become the ‘first-ever’ company listed on the exchange to offer a dividend payable in bitcoin to its shareholders.
According to an announcement with the US Securities and Exchange Commission (SEC), BTCS is set to pay a $0.05 per share dividend in Bitcoin, based on the cryptocurrency’s price on its ex-dividend date of March 16. Shareholders will be paid on March 17 and can choose to instead receive the dividend in cash.
El Salvador Moves Forward with Bitcoin Bond Issuance
El Savaldor’s Finance Minister, Alejandro Zelaya, has said this week that the government is moving forward with the issuance of its Bitcoin bonds, and is now set to send Congress around 20 bills to get the process started.
According to Zelaya, the bills will “provide legal structure and legal certainty to everyone who buys the Bitcoin bond”. The country is set to issue $1 billion in bonds this year, with half of the funds set to be converted into Bitcoin and half set to be used for infrastructure and Bitcoin mining.
Estonia’s Ministry of Finance has meanwhile clarified that new draft legislation for virtual asset service providers (VASPs) won’t ban cryptocurrencies in the country and will allow their customers to own and trade cryptoassets.
The prices of most cryptocurrencies dropped over the week after minutes from the Federal Reserve’s last meeting in December showed that officials discussed shrinking the central bank’s swollen $8.3 trillion balance sheet and raising interest rates sooner than expected.
The Federal Reserve’s new potentially hawkish stance – in which it allows interest rates to rise and shrinks its balance sheet to control inflation – has seemingly put downward pressure on the price of most cryptoassets. Equities markets also slid on the Fed’s stance.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
Featured image via Unsplash.