Bitcoin price reverses gains on New Year’s Eve; hodlers continue stacking sats

Bitcoin price reverses gains on New Year’s Eve; hodlers continue stacking sats

BTC price dipped below $46,000 after seeing highs north of $48,500 earlier in the day. Leading altcoins also turned lower.

Bitcoin (BTC) and the broader cryptocurrency market turned lower later in the day on Dec. 31, erasing intraday gains to cap off a highly successful year on a weaker note. 

Market Update

BTC price fell below $46,000 on Dec. 31 and was last seen hovering below that level, according to data from Cointelegraph Markets Pro and TradingView. The flagship cryptocurrency is down over 5% from its intraday peak and 2.9% on the day to trade at $45,933. 

Bitcoin's price is back on the defensive as the year draws to a close. Source: Cointelegraph Markets Pro

Altcoins faced a similar downward trajectory as Bitcoin, with the likes of Ether (ETH), Binance Coin (BNB) and Solana’s SOL each falling more than 2%. Cardano’s ADA declined over 4% on the day.

The combined market capitalization of all cryptocurrencies shed over $100 billion from its intraday peak, falling from a high of $2.4 trillion to $2.27 trillion, according to CoinGecko.

The crypto market cap was down more than $100 billion from its intraday peak. Source: CoinGecko

The sudden reversal followed a modest relief rally for BTC and other cryptocurrencies that took place early on Dec. 31. As Cointelegraph reported, Bitcoin’s price appreciated by more than $1,500 in less than an hour — a rally that may have been aided by a December options expiry event worth roughly $6 billion.

Related: Price analysis 12/31: BTC, ETH, BNB, SOL, ADA, XRP, LUNA, AVAX, DOT, DOGE

Crypto OGs keep on accumulating

Bitcoin is bracing for a year-to-date return of less than 60%, which is well below what many, if not most, prognosticators were calling for at the start of 2021. Although BTC never came close to achieving lofty six-figure valuations, the leading cryptocurrency continues to attract investors with a low time preference. (Investors with a low time preference place more emphasis on their financial well-being in the far future as opposed to the present.)

BTC’s recent price correction has been largely driven by so-called crypto tourists who entered the market in the summer. As Cointelegraph recently reported, veteran holders are still selling record-low amounts of BTC as of late December. Meanwhile, buying activity on Coinbase appears to have picked up substantially toward the end of the year. 

Earlier this week, UTXO Management analyst Dylan LeClair said “The true OGs are holding tight,” in reference to Bitcoin’s long-term holders having a much lower on-chain cost basis than those who are currently selling. The average on-chain cost basis for long-term BTC holders is $17,825 compared with $33,890 for those currently spending their coins.

Related: Top 5 bullish Bitcoin stories of 2021

In addition to the retail-oriented class of long-term hodlers, the crypto market saw an influx of sophisticated institutional investors in 2021. Net proceeds into crypto funds exceeded $9.3 billion in 2021, with Bitcoin accounting for over two-thirds of that total, according to CoinShares data. These funds registered 16 consecutive weeks of inflows through Dec. 13.

How Bubbles, Price And COVID-19 Changed Bitcoin for Me

How Bubbles, Price And COVID-19 Changed Bitcoin for Me

Bitcoin is not a bubble. It’s the monetary escape hatch we need now that the COVID-19 cat is out of the bag.

I trained as a financial historian. My academic work focused on banks and financial markets in the past, and I was always fascinated by iconic bubbles of financial history — the tulip mania, the financial boom of the 1690s, the South Sea Company and Britain’s many financial panics in the 19th century.

I wrote a thesis on the 1847 commercial crisis. I analyzed financial returns on London’s stock market in the Victorian and Edwardian eras, and showed that returns then squared well with the first round of factor analyses developed a century later. I investigated the Bank of England's role in the 1857 crisis, the 1866 Overend, Gurney & Company collapse and the 1890 bailout of Baring Brothers. (If you are under the impression that financial crises, government mismanagement and central bank bailouts only happened in the post-1971 era of modern monetary debasement, you are sorely mistaken).

You could, Ray Dalio-style, say that nothing is new under our financial sun: many of these past crises map well onto more modern ones — perhaps, because there are only so many ways to make losses or catastrophically ruin monetary arrangements.

While the concept of “bubbles” runs freely across the chronicles of financial history and those who study it, I was less convinced. The hand-waving arrogance with which well-established financial historians would denounce something as a bubble, delusion or financial madness would be familiar to most bitcoiners reading The New York Times or The Economist today. Mostly, these otherwise astute academics meant to launch derogatory remarks on the sorts of people who handled assets, and implied that real-world plebs in trading pits or exchanges couldn’t possibly possess knowledge of the superior kind with which their own university libraries embodied them. Worse, when pushed, the idea of bubbles never seemed to mean much else than “what goes up must come down.”

What fascinates me about Bitcoin is the questions it poses for monetary economics — monetary rules, macroeconomic stability, regression theorem, Gresham's law and the classification of fiat-commodity money. When I first heard rumblings of this technological solution to overthrow the state’s monetary monopoly, I mostly denounced it as hopeful technobabble. My orange-pilled friends couldn’t explain why it mattered monetarily, how it improved much on what we had (or with better central bankers, could have). The use value seemed altogether superfluous in a fintech world where moving value was easier than ever and central banks couldn’t even hit their inflation targets, let alone shove us over the brink of hyperinflation.

Then, two things changed: price and COVID-19.

To many laymen, reasoning from a change in asset price seems like an asinine and bubble-fueled reason to change one’s mind — the quintessential herd mentality. To convince you that it’s not, I return to the idea of bubbles before I argue that Bitcoin is the monetary escape hatch necessary in a less free world.

Prices Know Something You Don’t

At the base of economics lies an information and calculation argument: real market prices, emerging in trade between willing participants, generate information about the world. It allows us to calculate profits and losses, to see if what we make is worth more than what we put in. It allows market participants (i.e., all of us) to grasp what’s going on — not, mind you, in the news agency way of broadcasting highly-curated pictures from afar, but by informing your economic decisions. Shortages and price declines tell us what’s scarcer and more plentiful, what’s in high demand and what is better used elsewhere.

Financial markets and assets do the same thing for society’s current and future allocation of savings. The prices of securities vary more than market prices because the (far-off) future and how to assess it is less knowable than the immediate present or recent past. The “trouble with bubbles” is that nobody knows the future.

Asset prices incorporate the knowledge that exists about the present and forecasts the future in the best way that we know how. If owners of securities are wrong about that future, they lose money or miss out on profitable investments. Scott Sumner of the Mercatus Center at George Mason University explains this well for the two most recent bubbles in U.S. financial history: the dot-com bubble in the late ’90s and early 2000s, and the housing bubbles a few years thereafter:

“I think asset prices are usually relatively efficient based on fundamentals. I'm very dubious of people who claim that such and such a market is obviously overvalued. Most experts, I think, believe that the tech stocks in 2000 were obviously overvalued, or housing prices in 2006 were obviously overvalued… people [were] saying things like ‘those stock prices only make sense if you think American internet firms will eventually dominate the global economy.’

"Well, they do now. Or the 2006 housing prices would only make sense if you think interest rates will get lower and lower and NIMBY [not in my backyard] regulations will stop new construction. Well, both of those things have happened and we’re now at a new normal of much higher housing prices in America. I think these markets we're picking up some long-term trends that really did change the traditional fundamental price earnings ratio or rent price ratio in housing.”

Knowing that something is “obviously overvalued” is the kind of extreme hubris that opponents of Bitcoin suffer from in outsized amounts. The fundamental value is zero, says economist Steve Hanke; as renowned and astute a writer as Nassim Taleb wrote some mathematical equations and proved (“proved”) that bitcoin’s fundamental value was nil. How could they possibly know that?

Perhaps they ran a model, mentally or computationally, plugged in some values, and out popped a bubble verdict. Could be, but when you’re testing market (ir)rationality, you’re also implicitly testing the model: “Irrational bubbles in stock prices,” concluded the father of the efficient market hypothesis, Eugene Fama, in the 1990s, “are indistinguishable from rational time-varying expected returns.”

Fundamentals, and our confidence in them, change, which is reflected in asset prices moving up or down. Against Taleb, Nic Carter had the pithiest rebuttal: No sir, it’s $34,500 — or whatever the market priced it at when he said it.

When prices fall after a rally — say, internet stocks from 200 to 2001, home prices from 2007 to 2009 or bitcoin in April 2021 — laymen and professionals alike say that it’s a bubble. But what if the price increases captured something real, and were then validated by future events?

U.S. median house prices recouped their losses four years later, and today stand about 60% higher (that’s nominally; deflated by CPI, house prices are about 16% higher in 2021 than at the peak of 2007). Internet stocks, including some of those ridiculed as hopelessly overvalued in 2001, dominate the U.S. stock market — their products and services have conquered the world.

The chattering classes’ case against Netflix, just a few years ago, was similarly overwhelming: This hopeful tech company couldn’t possibly monetize its overextended services. It would have to conquer the world for the stock’s then-valuation to make sense… and then it did exactly that. Netflix expanded services, upped its margins and offered original content. Few are the analysts today yapping about Netflix as an obvious bubble.

Bitcoin's scope and promise is larger than any of them. What is its future value?

For the next year, I predict that bubble charges against bitcoin, of which we saw plenty this year, will fade away. Both because angry nocoiners tire of making them when they’re received with ridicule, and because the longer something stays alive, expands and flourishes, the less sense the etiquette makes. Nobody calls Amazon a bubble anymore, nor Netflix. Even Tesla’s haters have largely surrendered, accepting that what propelled it to the fifth-largest U.S. company by market capitalization is something other than bubbling madness.

No Bitcoiner takes the bubble attack seriously. Price matters, and only bubbles that fail (i.e., don’t recover) are relegated to history’s dustbin as “bubbles”; the successful ones are just promising ventures, deemed as such by a future that has hindsight as a guide.

An Escape To Freedom

Every society that collapsed into turmoil — economic, monetary, military, social or other — has had individuals contemplating when to leave. It’s not an easy decision, forecasting doom and deterioration for one’s country of birth. Many are the migrants who can tell painful stories of uprooting their lives, made increasingly impossible by authorities, famine, war or hyperinflation, for an uncertain existence elsewhere.

When staring down the "unending path to unfreedom that we’re experimenting with these days" as I argued earlier this year, what else is there but escape? When rule by the people is replaced by ruling the people, escape hatches are crucial. COVID-19 measures all over the world — and the agitated tenacity with which troves of people embodied them — showed me that lines of privacy and tyranny drawn in the sand could be approached, flirted with… and then crossed by about a mile.

Seeing the writing on the wall, I, like many others, wanted an out. In an uncertain future, you never know which place becomes a beacon of freedom (two years ago, who would have bet on Sweden? And now that it, too, is conforming — whereto?) and who will confiscate your assets. The idea of a monetary escape hatch clicked with me.

"When in doubt,” wrote Ray Dalio in his new book, “get out”:

“If you don't want to be in a civil war or a war, you should get out while the getting is good... History has shown that when things get bad, the doors typically close for people who want to leave. The same is true for investments and money as countries introduce capital controls and other measures.”

If history is any guide, you won’t be able to peacefully and in organized fashion be able to take your assets with you: “When the flight of wealth gets bad enough,” concluded Dalio, “the country outlaws it.”

Plenty of Americans have taken that advice, though so far, only in a regional sense — the exodus from California speaks volumes. Others living under oppressive regimes, in the West and elsewhere, have taken similar actions, departing their domiciles for freer pastures elsewhere.

Bitcoin facilitates the monetary component of that shift, to move value from an unfree jurisdiction to a freer one. When fleeing a sinking ship, you need your body, your health and your loved ones. Ideally, you want your most treasured belongings too, which, thanks to bitcoin, you can now carry without anybody knowing. It comes with the more important shift of holding funds outside the purview (and control!) of your invasive government. Dan Held’s Thanksgiving wishes stated it clearest:

“With governments restricting more of our rights, what would be our light at the end of the tunnel? And with COVID, this trend has accelerated, with our movement and access to goods and resources diminished all for the sake of public safety.”

You never know what you rely on until it’s abruptly taken away. When your assets are confiscated, your money devalued, your transactions declined and your bank decides to freeze your account for whichever made-up reason it’s trumpeting next, it’s too late. Backups and escape hatches must be put in place before they’re needed.

I never saw the need for a monetary or financial escape before: I had access to inflation-protection and developed financial markets. I could move my funds wherever I wanted, whenever, for a sliver of what it would have cost just decades ago. Except for the occasional technical glitch or misadventures in poor countries, my transactions were never declined. I had not, to put it bluntly, checked my financial privilege. The last decade or so, culminating with COVID-19, convinced me that the unproblematic and worriless existence I had taken for granted might not always be that way.

Measures against this public emergency probably won’t be what ultimately does in freedom, collapses societies and ushers in the authoritarianism of dystopias. But the COVID-19 cat is out of the bag now, and the power play that rulers experimented with this year and the last is from now on available at every political negotiation table like it never was before. With only vague references to public safety and astonishingly low barriers, locking up people in their homes is now a feasible option.

The ability to escape — to get out — hasn’t been this important in generations. This time isn’t different, but this time we have Bitcoin. Perhaps that’s enough.

This is a guest post by Joakim Book. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Cointelegraph Consulting: Crypto events of 2021 in retrospect

Cointelegraph Consulting: Crypto events of 2021 in retrospect

With 2021 coming to a close, it might go down as the year that brought the most mainstream attention to cryptocurrencies.

The year 2021 is coming to a close, and if there’s one way to describe how the cryptocurrency industry fared in the past 12 months, it would be momentous growth. 

Major cryptocurrencies shattered previous records, adoption grew, new sectors sprouted and novel blockchain use cases made significant breakthroughs.

The Market Insight’s latest edition recalls the events covered in past issues as well as deep-dive topics in Cointelegraph Research’s industry reports.

DeFi and Altcoins

Two of the top gainers of 2021 were Solana (SOL) and Terra (LUNA). SOL gained 9,500%, while LUNA gained 13,000%. Significant investments and ecosystem growth catalyzed the immense gains for the two tokens. One could also argue that the two being billed as potential “Ethereum killers” had a part in contributing to their massive rallies.

In the decentralized finance (DeFi) scene, the two tokens sit among the top five in total value locked (TVL). Solana is at No. 5 with $11.45 billion, and LUNA has recently surpassed Binance Coin (BNB) for the No. 2 spot with $18.9 billion, according to Defi Llama. Moreover, the emerging ecosystems of Solana and Terra deserve a deeper look, which is why they are the subject of Cointelegraph Research’s upcoming reports.

DeFi followed a similar growth trajectory as the broader crypto market in 2021. 

Competition has undoubtedly increased for Ethereum. Its TVL share was 97% in January but is currently down to 62.54%, per Defi Llama. The next phase of development for the sector comes into question in 2022, especially since the growth of DeFi this year has been so substantial that authorities have switched from denying the industry to grappling with ways to deal with it. 

The DeFi market capitalization remains a small fraction of the overall cryptocurrency market cap, but it underwent the same growth trajectory. Some believe that integration with legacy banking could be one of the main focuses for DeFi in 2022.


Nonfungible tokens, or NFTs, found their breakout year in 2021 despite existing since 2014. The bulk of sales came in the past 12 months, surpassing $14 billion in December. Digital art collections and digital collectibles dominate 91% of these sales volumes, which is one of the key data revealed in this report.

The sales in the first half of the year were driven primarily by individual artists joining the space with their respective collections and some high-profile sales, while the second half brought in more mainstream brands.

For instance, Coca-Cola auctioned a wearable bubble jacket skin in Decentraland, and Visa purchased its first NFT. Such participation from these brands enabled the NFT market to come into full bloom. The report also revealed that the most profitable NFT collection in 2021 was “CryptoPunks.” A “CryptoPunk” NFT offers a better all-time average return on investment compared to NFTs on other popular collections, such as “CryptoKitties” and “Bored Ape Yacht Club.”

NFTs have also disrupted the gaming industry and become key to fully realizing the concept of metaverses through their blockchain properties. However, some critics doubt that the parabolic surge in 2021 will play out in 2022, especially with more regulatory scrutiny. 

Nonetheless, this year’s amount of venture capital investments funneled into NFT companies is beyond sizable. NFT funding in 2021 is already at $2.1 billion as of Q3, yet nearly 40% of VC deal activities involve only a single firm in Andreessen Horowitz, according to PitchBook. Therefore, as sales and interest for NFTs continue to grow, it may be difficult for firms with a thirst for high growth potential to resist NFTs.


2021 has been progressive in the cryptocurrency regulatory front. The 117th United States Congress has introduced 35 bills that focus on cryptocurrency regulation, blockchain policy and central bank digital currencies. Federal Reserve Chair Jerome Powell expressed his views that cryptocurrency is not a significant threat to the U.S. financial market’s stability. However, a likely discussion that could seep into next year is the regulation on stablecoins.

The President’s Working Group on Financial Markets has stated in a report that stablecoins could be a beneficial alternative payment option but are “subject to appropriate oversight.” Currently, there are no regulations on stablecoins, even as their market capitalization passed $162 billion as of this writing, but a bill proposed by Wyoming Senator Cynthia Lummis could be a step in that direction.

Lummis plans to introduce a comprehensive bill in 2022 that will provide regulatory clarity on stablecoins, guide regulators around asset classes and offer consumer protections. Cryptocurrency regulation will be a talking point in 2022 and will also be a topic that the Cointelegraph Research team will be examining further.


It is almost certain that everyone in the space agrees that Axie Infinity revolutionized gaming. The play-to-earn model was a massive hit, as it added real income potential to playing video games. Data shows how play-to-earn decentralized applications (DApps) dominated the latter half of 2021 in terms of connected, unique, active wallet addresses. And since September, gaming tokens such as The Sandbox (SAND), Axie Infinity (AXS), Enjin (ENJ), Illuvium (ILV) and Ultra (UOS) have even beat out Bitcoin in gains, as revealed in this newsletter’s previous issue.

The gaming sector took the helm from DeFi that saw the most addresses connected in the first seven months of the year. The two DApp categories birthed a new sector, GameFi, which is believed to be the next logical step in blockchain development. Crypto-based games already enable users to have control over their in-game assets via NFTs, but the elements of DeFi could take it to another level. Incorporating DeFi would mean that features such as staking would be available to users where they can earn interest in their tokens.

Yet, the sector is still in its early stages, but its appeal lies within its attractiveness to users who may not necessarily be cryptocurrency holders. Attracting such users could further contribute to more cryptocurrency adoption, which will likely be its focal point for GameFi in 2022.


With the developments in 2021, cryptocurrencies were able to captivate a much broader audience compared to the year before. In just the second quarter, global adoption has grown 880% since 2020, Chainalysis data shows. And the key events mentioned above are likely contributing factors to cryptocurrencies going more mainstream. The NFT venture capital activities stated earlier represent only 7% of the $30 billion poured into crypto-related investments in 2021.

But despite the apparent growth, cryptocurrency ownership remains relatively low. TripleA estimates the global cryptocurrency ownership rate to be at an average of 3.9%. Ukraine, Russia and Venezuela are the top countries, with at least 10% of their population owning cryptocurrencies.

Despite growing adoption, cryptocurrency ownership remains relatively low worldwide. 

The low ownership rates imply substantial room for growth, which is why a CAGR of 60.8% from 2021 to 2026 for the cryptocurrency market may have some merit. This year, the value of the cryptocurrency market has already grown from $364.5 billion last year to more than $2.5 trillion — a 586% surge. And in the coming year, the new sectors in GameFi and perhaps assets related to Web3 could possibly be new avenues for continued growth. 

Tokenization of certain securities could also happen on a much larger scale, and it is even predicted to be the norm by 2030. Furthermore, the prevalence of cryptocurrencies for payments could also be another area with untapped potential, which will be explored further in another upcoming report.

Predicting what sectors in 2022 are poised for the same breakthrough that NFTs had this year would be difficult, if not, impossible. However, reports that carefully study and go in-depth about certain topics would offer a better way of understanding the nuances of a specific sector.

Cointelegraph’s Market Insights Newsletter shares our knowledge on the fundamentals that move the digital asset market. The newsletter dives into the latest data on social media sentiment, on-chain metrics and derivatives.

We also review the industry’s most important news, including mergers and acquisitions, changes in the regulatory landscape, and enterprise blockchain integrations. Sign up now to be the first to receive these insights. All past editions of Market Insights are also available on

NFTs find true utility with the advent of the Metaverse in 2021

NFTs find true utility with the advent of the Metaverse in 2021

Nonfungible tokens have one of the biggest innovations that have spread across the cryptoverse in 2021. The Metaverse is set to push its utility further in 2022.

The growth of NFTs has shot to the next level in terms of popularity and finding acceptance from the crypto community and the mainstream alike. Nonfungible tokens (NFTs) that were initially thought to be a bubble are now expanding their coverage across the cryptoverse.

According to a report by DappRadar, the NFT market has had its best year, generating over $23 billion with the floor market capitalization of the top 100 NFT collections standing at $16.7 billion, as of Dec. 17, even before the year closed out.

The biggest move for NFTs and the metaverse space has been Facebook’s announcement of being rebranded to Meta on Oct. 28 in a bid to expand its reach beyond social media and into the Metaverse. In fact, in the last week of October, it was revealed that over $106 million worth of Metaverse land was sold in 7 days.

Within the cryptoverse, the NFT collectibles frenzy first began in 2017 with the launch of the CryptoKitties game and the subsequent demand for these digital cats. At its peak, the blockchain game recorded a maximum of 140,000 daily users and 180,000 daily transactions in Nov. 2017, but this traction was quickly lost over a few months. Since then, the collectibles domain has gone on to have renowned collections like CryptoPunks, Bored Apes Yacht Club and NBA Top Shots.

The initial interest around NFTs in the mainstream came from the digitization and tokenization of artworks by renowned artists like Beeple through auction sales hosted by traditional art galleries like Christie’s and Sotheby’s.

Since then, the scope of NFTs has expanded to include art, music, games, sports and Tweets — just about any digital or real-world asset — that can be tokenized while still holding their value and providing unique ownership.

GameFi is the game-changer

The prime watershed moment for NFTs that followed the Metaverse narrative is through GameFi protocols. GameFi is defined as the combination of gaming and decentralized finance (DeFi) within a single ecosystem. According to Huobi Research, the research arm of the cryptocurrency exchange, GameFi has revived the interest in blockchain gaming.

The leading protocol in this regard in 2021 has been Axie Infinity, a game universe where gamers can collect Axies as pets in order to battle, breed, raise and build kingdoms for their pets. The game ecosystem is powered by AXS and SLP, the native tokens of the ecosystem.

The Ethereum-based game was released back in March 2018 and has been developed by Vietnamese game developer Sky Mavis. Due to the hype that surrounded the game this year, the Axie Infinity collection has quickly risen to become the most traded NFT collection ever in the short history of NFTs. The collection has clocked nearly $4 billion in all-time sales. Axie Infinity has surpassed other blockchain games by a mile with the current in-game trading volume.

The daily active users of the game grew from 20,000 users in March of this year to 2.5 million users in December of this year, marking a 125x increase in less than nine months — a remarkable feat for a game that gained hype only this year. The game has recorded $9.72 million in a single day in June, surpassing a record Tencent held at the time. In the third quarter of 2021, the game accounted for 19.5% of the total NFT trading volume in the same period and $2.08 billion of trading volumes.

While this game is based on Ethereum, blockchain-based games have spread across blockchain networks like Solana and the Binance Smart Chain. There have been several games that have gained popularity across blockchain networks like Splinterlands on Hive and Wax, Alien Worlds on Wax, Upland on EOS, and MOBOX based on the Binance Smart Chain.

The investment raised with the blockchain gaming domain has well surpassed over a billion dollars in 2021, led by the $930 million raised by the gaming company Forte Labs.

Pushback from traditional gaming and regulations

Even though GameFi has been disrupting gaming with the introduction of blockchain technology, the traditional gaming industry hasn’t exactly been receiving this innovation well. Steam/Valve banned all blockchain-based games from its platform earlier this year. In response, however, over 26 companies and advocacy groups have called on the company to reverse the ban.

Additionally, the South Korean government has now blocked the release of new play-to-earn (P2E) games and asked the existing blockchain games with a P2E model to be removed from Apple Store and Google Play Store. In contrast, Epic Games, the creator of Fortnite, has said that the company is open to blockchain-based games that support cryptocurrency and blockchain-based assets.

Even Elon Musk, the CEO of SpaceX and Tesla, recently stated in an interview on Dec. 22 that he believes his company’s technology, Neuralink, is better than the Metaverse in the long term as he doesn’t see “someone strapping a friggin’ screen to their face all day.” Musk added: “In the long term, a sophisticated Neuralink could put you fully into virtual reality. I think we’re far from disappearing into the metaverse, this sounds just kind of buzzwordy.”

Related: Concerts in the Metaverse could lead to a new wave of adoption

Despite the pushback from the traditional gaming industry and some regulators, GameFi has been growing at an incredibly fast pace. The company behind the first Bitcoin-based ETF in the United States, ProShares, has announced its plans to launch a Metaverse-focused ETF that will include companies like Apple, Meta and Nvidia. The company has filed for the ETF with the United States Securities and Exchange Commission (SEC) under the name ProShares Metaverse Theme ETF, which will track the performance of the Solactive Metaverse Theme Index (SOMETAV).

Even one of the consulting Big4 firms, PricewaterhouseCoopers (PWC) Hong Kong, have dipped their toes into the Metaverse. The company purchased a land plot in a metaverse game Sandbox. Even the Italian luxury sports car manufacturer Ferrari hinted at NFTs after a deal with the Swiss blockchain startup Velas Network.

Enterprises as such can utilize blockchain technology to create business models in the Metaverse and achieve efficiency and cross-compatibility with the real world. If 2021 can be considered to be the year of DeFi and NFTs, it is almost certain that 2022 will be the year of GameFi and the Metaverse.

Bitcoin Is A One-Way Hash Function

Bitcoin Is A One-Way Hash Function

Bitcoin offers an irreversible digital property function that prior to its invention simply did not exist.

Understanding Bitcoin is a one-way hash function should make sense because a hash function cannot be reversed. Once you understand that, it is hard to go back to thinking otherwise. The secure hash algorithm or SHA-256 puts Bitcoin in a different lane, where you can share your bitcoin address without risking the security of your funds. But there is so much more.

A one-way hash function is a mathematical function that generates a fingerprint of the input, but there is no way to generate the original information twice. The genius around a secure hash function is a topic I will touch on, but Bitcoin and the whole inception behind it are akin to scrambling an egg. It is a one-way function; once the egg is cracked, the yolk cannot be placed back into the egg and sealed. Once the yolk is cooked on a hot skillet, the egg scramble cannot be turned back into the yolk. The Bitcoin algorithm is no different. The core code is essentially set in stone in cyberspace and still functions without an administrator at the helm of its creation.

In the past, the process of trade and money was complicated and bequeathed with ethical dilemmas. Africans saw cowrie shells and glass beads as revered money, so Europeans flooded the market with these beads. The implications were vast. The increase of counterfeit beads debased the value, which made it easier to manipulate for trade. The Romans clipped bits from the existing coins in circulation and then used the leftover clippings to mint new coins.

The coins kept getting smaller. Yet, the empire kept expanding. Prices went up while the purchasing power of the currency went down. Which ultimately, over time, collapsed the Roman economic system. America is doing the same on a grander scale by expanding the money supply via the money printer, although not having the dollar pegged to a gold-backed currency after the Nixon shock. It encourages an ever-increasing weak currency where printing worthless paper notes are just as damaging.

The first Age of Enlightenment arose as a result of the separation of church and state. The second Age of Enlightenment will emerge as a result of the separation of money and state. History has shown that any monetary currency clipped, removed, manipulated, or altered will always be exploited by human hands. Bitcoin removes these motives that have corrupted emperors, politicians, investors, and bankers alike, facilitating the road to serfdom. The hash function of SHA-256 and RIPEMD-160 aids in completely removing levels of exposure and seizure through public and private keys.


Each part of the hash function plays a vital role, from managing Bitcoin addresses to bolstering the proof-of-work process. The RIPEMD-160, which is short for RACE Integrity Primitives Evaluation Message Digest, is used to help turn public keys into bitcoin addresses. There are five Ripe Message-Digest functions, but 160 is used in the Bitcoin network because it is highly secure and functional. RIPEMD-160 is used in the Bitcoin standard, which creates an alternative to lengthy public addresses. It is a more robust version of the RIPEMD-128 algorithm, which produces a 128-bit output. The process of hash function construction is challenging, especially given that it must accept strings of arbitrary length as input.

How this all works under the hood is a 65-bit private key is formulated, which generates an uncompressed public key. This public key is essentially your Bitcoin address, but it is a long series of digits after its initial inception. Padding is implemented to strengthen and prevent length extension attacks. For ease of use, the key is shortened or compressed with RIPEMD-160 down to 20 bits. This is where a compressed function comes into play. The protocol uses a checksum to check for mistakes via SHA-256, which hashes twice to validate the address is secure and correct.

Using RIPEMD-160 when creating Bitcoin addresses reduces the address space. This means that instead of having to type in very long addresses, they are reduced to a more manageable length. This process is a one-way function. Each public and private key is mathematical unique and cannot be duplicated, only shortened and compressed.


Bitcoin uses the SHA-256 hash function in its proof-of-work process. Proof-of-work is considered the original cryptocurrency consensus mechanism. Bitcoin is the original and best example of that mechanism. At one point, difficulty adjustment was so low that mining could be achieved on computers with low hash power, such as a home computer. Over time, as the demand for more mined Bitcoin increased, the difficulty adjustment to earn one increased.

The difficulty to acquire Bitcoin has gone beyond what home computing power can accomplish. Mining computing hardware equipped with ASIC chips is the best choice to mine bitcoin. Currently, there is a lot of competition for hash rate, making it almost unprofitable to mine unless you have a high-end mining rig being fed off of cheap renewable energy. In comparison, if you are considering getting into mining bitcoin, do not forget you will be in competition with high-end major mining companies like Final Hash, Marathon Digital, and Riot Blockchain, Inc.

The cool part about SHA-256 is security and the ability to encrypt sensitive blockchain information that otherwise could be used to the detriment of the user. This security is immutable and runs on a consistent schedule. Secure hash algorithms help compile and sort out astronomical math equations to earn bitcoin by mining computers. The human intervention of the process is not needed and would be downright impossible to achieve even with the best calculators money could buy. A private key is a 256-bit number. A “bit” has a value of 0 or 1 and is the smallest unit of measurement for computer data.

Digital signatures are secured with private keys, meaning you can transact with Bitcoin monetarily under that key’s unique bit number. If you don’t have the correct private key, you cannot spend the bitcoin or gain access to any funds under the keys blockchain database. Therefore, these private keys must be correctly generated, then stored in a safe and secure location. Remember the saying coined by Isaiah Jackson, “No keys, No cheese.”

The possibility data is revealed from the hash value is so low it is considered impossible. The combinations of digits and data remove brute force attacks or hijacking of the network due to sheer complexity. In addition, it’s also severely unlikely that two data values (known as collision) have the same hash. After reading this essay, learning about hash functions when in doubt about Bitcoin’s security and possible exposure with corrupted public or private keys should be a breeze.

Those feelings of doubt should be quelled once you understand how well thought out and secure the encryption process is thanks to the genius of Satoshi. The Bitcoin network is designed to take money out of the hands of centralized control and into a permissionless decentralized world. The hash functions SHA-256 and RIPEMD-160 make this possible, in a functional one-way and secure fashion.

This is a guest post by Dawdu Amantanah. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Estonia’s new AML laws set to clamp down on crypto industry

Estonia’s new AML laws set to clamp down on crypto industry

The new guidelines reportedly expand the definition of Virtual Asset Service Providers to include decentralized applications, ICOs and other related services.

Beginning in February, Estonia is set to introduce sweeping changes to its definition of Virtual Asset Service Providers, or VASPs, to include several cryptocurrency-related services — a move that could impact Bitcoin (BTC) ownership in the country — according to European compliance specialist Sumsub.

On Sept. 21, the Estonian Ministry of Finance published a draft bill to update the Money Laundering and Terrorist Financing Prevention Act (the AML Act) as part of the government's effort to prevent money laundering and terrorist financing.

As Sumsub reported, the legislation is now in the interagency review process, with implementation set for February 2022. Regulated crypto companies have until March 18, 2022 to bring their operations and paperwork into compliance. 

According to New DeFi CEO Mikko Ohtamaa, the updated law effectively bans non-custodial software wallets, as well as decentralized finance products, in the country. That's because the bill's provisions target VASPs, which include crypto exchanges and wallets, in Estonia. When the bill is ready, VASP will be extended to cover decentralized platforms, initial coin offerings, and other services. Violation of the provisions may result in a penalty of up to $452,000, or 400,000 euros. 

According to Ohtamaa's interpretation, the new law has the following effect: "You are only allowed to hold your Bitcoin in a custodial Virtual Asset Service Provider (VASP). VASP can freeze your account. So it is not effective your Bitcoin anymore."

Related: Estonia's crypto honeymoon at an end as stricter regulations loom

Estonia was one of the first countries in the European Union to license cryptocurrency businesses, but it has had to crack down after hundreds of billions of dollars worth of dirty money was discovered in Danske Bank, positioning Estonia at the heart of Europe's biggest money-laundering catastrophe.

As reported by Cointelegraph, Matis Mäeker, the head of the Estonian Financial Intelligence Unit (FIU), urged the government in October to "turn the rules to zero and start licensing all over again." He stated that the general public is unaware of the inherent risks of cryptocurrency, especially around its alleged role in money laundering and terrorist financing, as well as the vulnerability of the industry to cybercriminals. 

SEC Commissioner: The U.S. Doesn't Need A New Bitcoin Regulator

SEC Commissioner: The U.S. Doesn't Need A New Bitcoin Regulator

Hester Peirce also said she doesn’t understand why a bitcoin spot ETF hasn’t yet been approved, adding the reasoning to deny is outdated.

Having an exclusive regulator oversee cryptocurrency developments in the U.S. might not be the best strategy, according to Securities and Exchange Commission (SEC) Commissioner Hester Peirce. She told CoinDesk TV in a Thursday interview that the SEC has adapted to new technologies over the years, and it shouldn’t be different with crypto.

“I have a couple of problems with it,” Peirce said. “Typically in Washington, when you build another regulator, all you get is all the existing regulators plus one.”

Regulation was at the forefront of Bitcoin and cryptocurrency discussions in 2021 as bigger players started jumping on the Bitcoin bandwagon last year. Larger investors usually demand a higher level of regulatory clarity as sizable investments could mean sizable risks in an uncertain environment.

Earlier this month, a cohort of chief executives of prominent cryptocurrency-related companies joined the U.S. House of Representatives to discuss how the new technology could fall under the existing regulatory framework as legislators tried to wrap their minds around novel concepts of the decentralized network. Many executives, including Coinbase Inc. CEO Alesia Haas, clamored for new legislation to be developed as they argued existing laws couldn’t encompass the new tech.

A couple of weeks after the hearing, Senator Cynthia Lummis announced that she had started working on a draft bill on the matter, seeking to encompass everything from categorization to taxation of cryptocurrencies. The bill would be presented to her colleagues next year and include a proposal to create a regulatory body exclusively for Bitcoin and crypto.

A central aspect of Bitcoin regulation this year related to exchange-traded funds (ETFs). In October, the SEC approved the first bitcoin-linked ETF in the U.S., the derivatives-based ProShares Bitcoin Strategy ETF. Despite the initial excitement, which led the offering to become the fastest ever to reach $1 billion in assets, increased costs and active management issues drove investors away from the vehicle as the ProShares ETF invests in futures contracts of bitcoin rather than in the asset itself. The phenomena left many asking for a spot offering to trade in U.S. markets.

The first filing with the SEC for a spot bitcoin ETF dates back to 2013 when the Winklevoss twins filed to offer an exchange-traded fund in the U.S. that would invest in bitcoin directly. The proposal was denied by the commission, which followed suit in many similar filings over the years. Last week, the SEC denied two spot bitcoin ETF filings, from Valkyrie and Kryptoin, before the stipulated deadline.

“I’m just hopeful that we set our minds to work at building something that makes sense in terms of regulatory clarity, instead of always just falling back on enforcement,” said Peirce.

Despite SEC Chairman Gary Gensler having said multiple times why such proposals have been rejected, the true reasons seem opaque. The watchdog boss has called for Bitcoin firms and platforms to talk with the commission and “get registered,” as concerns over its abilities to ensure investor protection and prevent fraud and manipulation have led the SEC to deny every single proposal that arrived on its desk to date. Peirce herself, an SEC insider, said she doesn’t understand why there isn’t a spot bitcoin ETF trading in the U.S. yet as she argues the arguments being made to justify the denials have been outdated for some time.

“I can’t believe we’re still talking about this as if, you know, we’re waiting for one to happen,” Peirce said. “We’ve issued a series of denials even recently, and those continue to use reasoning that I think was outdated at the time.”

Although little has been done to move a spot bitcoin ETF proposal forward by the SEC, regulation is trying to keep up with Bitcoin now more than ever and 2022 could be a year that things start to change and such an offering becomes available to U.S. investors. An approval might come simply due to game theory, as the SEC’s scrutiny led banking giant Fidelity to launch its bitcoin fund in Canada after frustrated attempts to do it locally. Filers need to meet investors’ demand for a convenient vehicle for direct, rather than indirect, exposure to the bitcoin price and it will be up to the SEC to determine whether these products will be available in America or elsewhere.

“Chair Gensler has said he wants to see platforms registering with us,” Peirce said. “So maybe that’s what it takes for a spot product to get approved.”

Despite the U.S. thirst for a spot bitcoin ETF, the truth is such an offering isn’t strictly necessary and should be avoided by most investors. Retail investors can get better exposure to the bitcoin price by buying and custodying BTC themselves, a way in which they also get to benefit from the peer-to-peer network’s resistance to manipulation and censorship – something they wouldn’t get from a bitcoin ETF. Institutional investors, on the other hand, could leverage MicroStrategy’s playbook and get actual bitcoin without moving the market. For other cohorts which can’t buy and hold bitcoin themselves, It might be a matter of having their investment policies adapt to Bitcoin rather than the innovative money bend to fit existing investment practices.

Institutional tax-loss harvesting weighs on the Bitcoin price as 2021 comes to a close

Institutional tax-loss harvesting weighs on the Bitcoin price as 2021 comes to a close

BTC price retests the recent lows at $46,000 as institutions appear to be “selling for tax reasons” while $52,000 remains a major hurdle in the path higher.

2021 has been a breakout year for the cryptocurrency market as a whole despite the year-end struggles that have kept the price of Bitcoin (BTC) pinned below $48,000, much to the chagrin of the cadre of folks who had been calling for a $100,000 BTC moonshot. 

Data from Cointelegraph Markets Pro and TradingView shows that the past 24 hours have been a rollercoaster ride for the top cryptocurrency after a brief dip below $46,000 in the early trading hours on Dec. 30 was quickly bought up to push the BTC price back above $47,500 by midday.

BTC/USDT 4-hour chart. Source: TradingView

Here’s a look at what several analysts in the market are saying about the year-end price action for Bitcoin and what to expect in 2022 as the mass adoption of blockchain technology and cryptocurrencies continues to unfold.

Major resistance flips to support

Analysis of Bitcoin price action on the monthly chart was discussed by market analyst and pseudonymous Twitter user Rekt Capital, who posted the following chart highlighting how BTC has flipped a major resistance zone into support:

BTC/USD 1-week chart. Source: Twitter

According to Rekt Capital, “BTC has turned the February, August and September resistance into new support this month” and is looking for a monthly candle close above the green zone shown in the chart above to confirm this as a new support level.

Regarding levels to watch in the days ahead, Rekt Capital is keeping an eye on the $48,500 price level as a gauge for the overall strength of BTC. The analyst said:

“If BTC is able to reclaim ~$48500 as support by the end of the week then BTC could once again revisit ~$52000 resistance.”

$52,000 is the biggest short-term hurdle for BTC

Insights into the year-end weakness of Bitcoin's price were offered by David Lifchitz, managing partner and chief investment officer at ExoAlpha, who pointed the finger at institutional investors who appear to be “selling for tax reasons with a T+3 settlement... to settle on 12/31.”

According to Lifchitz, the volatility of the past week is, in large part, due to weak liquidity in the market. He suggested that it wouldn’t be surprising to “see BTC back up to $50,000 in the next couple of days... as well as down to $46,000.”

If bears manage to break below support at $46,000 and complete the large head and shoulder pattern forming on the BTC chart, Lifchitz suggested that “the next stop could be ultimately down to $30,000” but stated that “we’re still far from that and too obvious technical patterns tend to not complete as expected.”

As far as upside levels, Lifchitz pointed to $52,000 as “the main hurdle which BTC has already failed twice.” He further stated that,

“Should that resistance get overthrown, the next upside stops are the $60,000 region then $70,000 ATH.”

A final word of caution was offered by Lifchitz regarding the upcoming Mt. Gox distribution of 146,000 BTC over the first half of 2022, which the chief information officer sees as having “the potential to reshuffle the cards big time.”

Related: Mt. Gox rehabilitation plan is now 'final and binding'

No need to panic

Reassuring words for those traders who are worried about BTC's most recent dip below $46,000 were expressed by the crypto trader and pseudonymous Twitter user Devchart. He posted the following chart showing that Bitcoin has been trading in a clearly defined range for most of December:

BTC/USDT 4-hour chart. Source: Twitter

Devchart explained:

“Zoom out and you will see that we are just back to the bottom of the same range we have been oscillating on since December 3rd. No need to panic until we exit this range.”

A similar outlook was offered by markets analyst and Cointelegraph contributor Michaël van de Poppe, who posted the following tweet indicating that there could be some short-term weakness in the market before ultimately heading higher.

The overall cryptocurrency market cap now stands at $2.237 trillion and Bitcoin’s dominance rate is 40.4%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

SEC chair has a new senior adviser for crypto

SEC chair has a new senior adviser for crypto

Corey Frayer has worked as a staff member of the Senate Banking Committee as well as a senior policy adviser for some members of the House Financial Services Committee.

United States Securities and Exchange Commission (SEC) chair Gary Gensler has added a new staff member who will offer advice related to crypto policymaking and interagency work. 

In a Thursday announcement, the SEC said Corey Frayer would be joining Gensler’s executive staff as a senior adviser on the agency’s oversight of cryptocurrencies. Frayer has worked as a professional staff member of the Senate Banking Committee as well as a senior policy adviser for the House Financial Services Committee with Representatives Maxine Waters and Brad Miller.

Frayer’s appointment to the SEC chair’s executive staff came alongside those of Philipp Havenstein, Jennifer Songer and Jorge Tenreiro, who will be working as operations counsel, investment management counsel and enforcement counsel, respectively. Gensler cited the new staff members’ “valuable counsel on policy, enforcement and agency operations” in appointing them to the team.

The SEC, the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network handle digital asset regulation in the United States, but each with different jurisdictional claims, resulting in a patchwork approach that crypto firms must navigate to legally operate. Having been confirmed by the U.S. Senate in April, Gensler will likely continue to serve as chair of the SEC until 2026. 

Appointing Frayer to his staff could potentially affect Gensler’s public position on crypto-related policy changes. The SEC chair is arguably one of the most informed people on crypto and blockchain technology to ever hold his position but has expressed concerns about exchange-traded funds with exposure to cryptocurrencies like Bitcoin (BTC). He has long urged crypto projects to register with the SEC, specifically saying they should “come in” and work with regulators.

Related: ‘I'm a huge believer in crypto technology,’ says former US SEC chair

The SEC’s leadership will likely change in 2022 following the departure of commissioner Elad Roisman in January and the expiration of commissioner Allison Lee’s term, which is set to be in June. This leaves President Joe Biden with an opportunity to pick financial experts who could have a significant influence on policy related to crypto.

Kevin O'Leary says his crypto holdings could reach 20% of portfolio

Kevin O'Leary says his crypto holdings could reach 20% of portfolio

Clearer regulations around stablecoins could make crypto a more viable investment option, according to the Shark Tank star.

Shark Tank celebrity Kevin O’Leary, also known as Mr. Wonderful, says he would be ready to increase his crypto allocations up to 20% as soon as there are clearer regulations around stablecoins. 

O’Leary, a former Bitcoin (BTC) skeptic, is now a vocal advocate of cryptocurrency, which currently makes up over 10% of his investment portfolio.

Mr. Wonderful is particularly focused on U.S. dollar-pegged stablecoins, which he sees as an effective hedge against rising levels of inflation. By staking stablecoins, he pointed out, he can make up to 6% returns. He explained to Cointelegraph: 

​”When inflation is 6%, you're buying power 12 months from now is 6% less. And that's all lot […] I'm a huge advocate for solving this problem with stablecoin.”

A clear regulatory framework would allow O’Leary to convert large cash positions into stablecoins. Currently, however, he cannot invest beyond 5% into stablecoins because of regulatory constrains.

“My own compliance department consider stablecoins as an equity no different than a stock,” he said.

According to O’Leary, his excitement around stablecoins is shared by many institutional investors, who are “working quietly in the background” and waiting for regulators to make their move.

In addition to stablecoins, Mr. Wonderful is also an investor in Bitcoin, Ether (ETH), and other cryptocurrencies. However, due to their underlying volatility, these cryptos are unlikely to make up a large portion of an institutional investor's portfolio, he claimed. 

“You're not going to get there to a 20, 30% in Bitcoin in an institutional or sovereign mandate, you're just not. Stablecoins have that potential,” he explained.

Watch the full interview on our YouTube channel and don't forget to subscribe! 

MicroStrategy Adds 1,914 Bitcoin To Its Holdings

MicroStrategy Adds 1,914 Bitcoin To Its Holdings

The software intelligence firm headed by Bitcoin bull Michael Saylor bought bitcoin once again in a $94 million investment.

  • MicroStrategy bought bitcoin yet again, the third big purchase in one month.
  • The software company acquired 1,914 BTC for $94.2 million.
  • Saylor’s firm now holds about 124,391 bitcoin, the largest bitcoin holding among corporations worldwide.

Software intelligence company MicroStrategy has “bought the dip” yet again, adding 1,914 bitcoin to its holdings at an average price of $49,229 per BTC. The company now holds 124,391 bitcoin, the largest corporate bitcoin holdings besides trusts and exchange-traded funds (ETFs).

MicroStrategy said in a Thursday filing with the U.S. Securities and Exchange Commission (SEC) that it had acquired almost two thousand new bitcoin between Dec. 9 and Dec. 29 for $94.2 million.

“MicroStrategy has purchased an additional 1,914 bitcoins for ~$94.2 million in cash at an average price of ~$49,229 per #bitcoin. As of 12/29/21 we #hodl ~124,391 bitcoins acquired for ~$3.75 billion at an average price of ~$30,159 per bitcoin,” MicroStrategy CEO Michael Saylor tweeted on Thursday to announce the purchase.

The purchase was funded in full by the selling of class A common stock by MicroStrategy during the same period. The company sold a total of 167,759 shares under a June open market sale agreement at an average price of $565.78 per share.

MicroStrategy’s bitcoin purchasing strategies are now quite common. The company indulges in new BTC every time the market bleeds, securing cheap bitcoin at a discounted price.

The acquisition comes after two significant purchases in the past month. On November 29, MicroStrategy announced it had purchased a massive $400 million worth of bitcoin, totaling 7,000 new BTC added to its holdings, right after the market began plunging. Under two weeks later, the software company added 1,434 more bitcoin to its stack in an $82 million purchase.

Frax Share, Swipe and Gnosis lead the altcoin market as Bitcoin recovers to $47.5k

Frax Share, Swipe and Gnosis lead the altcoin market as Bitcoin recovers to $47.5k

Data from Cointelegraph Markets Pro shows FXS, SXP and GNO posting double-digit gains as BTC bulls look to recover support at $47,500.

Volatility is once again the major theme across the cryptocurrency market on Dec. 30 as the price of Bitcoin (BTC) bounced back from an early morning dip below $46,000 with bulls now battling bears for control of support near $47,500. 

The altcoin market has likewise been a mixed bag of results on Dec. 30, with many of the coins in the top 200 seeing slight losses while the top performers have posted double-digit gains thanks to major protocol developments and acquisitions.

Top 7 coins with the highest 24-hour price change. Source: Cointelegraph Markets Pro

Data from Cointelegraph Markets Pro and TradingView shows that the biggest gainers over the past 24 hours were Frax Share (FXS), Swipe (SXP) and Gnosis (GNO).

Frax Share increases its stablecoin supply

Frax Share is the governance token of the Frax protocol, a fractional algorithmic stablecoin system designed to provide scalable and decentralized algorithmic money.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for FXS on Dec. 28, prior to the recent price rise.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. FXS price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score for FXS climbed into the green zone on Dec. 27 and hit a high of 86 on Dec. 28, around 14 hours before the price increased 57% over the next two days.

Gains for FXS token align with the growing adoption of the Frax stablecoin. The circulating supply of FRAX increased by more than 300% in the past two months to its current supply of $1.74 billion.

Swipe gets acquired by Binance

Another project that saw its price spike over the past 24 hours is Swipe, a platform that is developing card payment infrastructure for the cryptocurrency economy.

Data from Cointelegraph Markets Pro and TradingView shows that, after hitting a low of $1.46 on Dec. 29, the price of SXP surged 38% to a high at $2.02 on Dec. 30 as its 24-hour trading volume spiked 951% to $683 million.

SXP/USDT 4-hour chart. Source: TradingView

The sudden burst in trading volume for SXP came after it was revealed that crypto exchange Binance was finalizing the acquisition of Swipe and rebranding it to Solar.

Related: Binance to finalize acquisition of Swipe, paving for CEO exit

Gnosis releases its zodiac bridge

Gnosis, a decentralized prediction market built on the Ethereum (ETH) network, saw its price increase 38% on Dec. 30.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for GNO on Dec. 27, prior to the recent price rise.

VORTECS™ Score (green) vs. GNO price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score for GNO hit a high of 77 on Dec. 27, around 35 hours before the price increased 38% over the next day.

The building momentum for GNO followed the introduction of the zodiac bridge module for the Gnosis ecosystem, which gives decentralized autonomous organizations (DAOs) the ability to control assets on separate Ethereum virtual machine-compatible chains.

The overall cryptocurrency market cap now stands at $2.233 trillion and Bitcoin’s dominance rate is 40.3%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

Polygon upgrade quietly fixes bug that put $24B of MATIC at risk

Polygon upgrade quietly fixes bug that put $24B of MATIC at risk

“Considering how much was at stake, I believe our team has made the best decisions possible given the circumstances,” said Polygon’s co-founder Jaynti Kanani.

Ethereum-based layer two scaling network Polygon has quietly fixed a vulnerability that put almost $24 billion worth of its native token MATIC at risk.

According to a Dec. 29 blog post from Polygon, the “critical” vulnerability in the network’s Proof-of-Stake (PoS) Genesis contract was first highlighted by two whitehat hackers on Dec. 3 and Dec. 4 via blockchain security and bug bounty hosting platform Immunefi.

The vulnerability put more than 9.27 billion MATIC at risk that is valued at around $23.6 billion at the time of writing, with the figure representing the vast majority of the token’s total supply of 10 billion.

Polygon noted that the bug was resolved at Block #22156660 via an “Emergency Bor Upgrade” to the Mainnet on Dec. 5 at around 7:27 am UTC. The network noted that a “malicious hacker” managed to steal 801,601 MATIC ($2.04 million) before the bug was resolved. The blog post said:

“The Polygon core team engaged with the group and Immunefi’s expert team and immediately introduced a fix. The validator and full node communities were notified, and they rallied behind the core devs to upgrade 80% of the network within 24 hours without stoppage.”

Polygon stated that the issue was fixed behind closed doors as it follows the “silent patches” policy introduced by the Go Ethereum (Geth) team in November 2020. Under the guidelines, projects or developers report on key bug fixes 4-8 weeks after they go live to avoid the risk of being exploited at the time of patching.

According to Immunefi, Whitehat hacker “Leon Spacewalker” was the first to report on the security hole on Dec. 3 and will be rewarded with $2.2 million worth of stablecoins for their efforts, while the second unnamed hacker, referred to as “Whitehat2” will receive 500,000 MATIC ($1.27 million) from Polygon.

Related: Here's how Polygon is challenging the limitations of Ethereum, as told by co-founder Sandeep Nailwal

Polygon's co-founder Jaynti Kanani emphasized the network's ability to promptly resolve the critical bug, noting in the blog post that:

“What’s important is that this was a test of our network’s resilience as well as our ability to act decisively under pressure. Considering how much was at stake, I believe our team has made the best decisions possible given the circumstances.”

According to data from Coingecko, MATIC is priced at $2.45 and is up 35.1% over the past 30 days despite the current downturn across major crypto assets this month.

Brock Pierce and Tom Lee tip $200K BTC in 2022, despite missing the mark in 2021

Brock Pierce and Tom Lee tip $200K BTC in 2022, despite missing the mark in 2021

Pierce and Lee believe that Bitcoin will continue its meteoric rise in price through 2022, but that's pretty much par for the course with those two.

Despite missing the mark with their $100,000 Bitcoin price predictions in 2021, Former Chief Strategy Officer at Block One Brock Pierce and co-founder of research firm Fundstrat Global Advisors Tom Lee are both tipping Bitcoin could hit $200,000 in 2022.

Essentially they are doubling down on their ambitious projections for 2022, even though Bitcoin's high water mark of $69,000 was set on Nov. 10 and BTC is currently trading at $46,270.

Tom Lee predicted $200,000 for BTC in the Dec. 23 Market Rebellion Roundtable discussion. He said in the discussion:

"So maybe Bitcoin is, you know, in that $200,000 range. I mean, I think that’s achievable and I know it sounds fantastical, but it’s very useful."

Lee previously maintained his 2021BTC price prediction of $100,000 as late as October in light of ProShares launching the first Bitcoin ETF in the USA.

At that time, he also predicted that Bitcoin exchange traded funds (ETF) would attract at least $50 billion over the next 12 months. American Bitcoin ETFs currently hold about $1.5 billion in assets between Valkyrie, Van Eck, and ProShares’ offerings.

Pierce meanwhile told Fox Business on Dec. 29 that it was "conceivable that it could break $200,000 for a moment and come falling back again."

In a Jan. 22 article at the start of the year Pierce had cited $100,000 at the top of the range for 2021:

“There really are not many levels where I (anticipate) Bitcoin seeing resistance. We could get anywhere from $70,000 to $100,000 by the end of the year, but it will not be without volatility.”

In fairness to Pierce,  the lower end of the range was indeed hit on November 10.

Popular anonymous Bitcoin price analyst Plan B has made his name with his price predictions and stock to flow model. On June 20, PlanB correctly predicted that BTC would hit $63,000 in October, but missed his $98,000 and $135,000 marks for November and December respectively as his “worst case scenario.”

PlanB has defended his predictions by claiming the accuracy of his statistical models to within one standard deviation. Although his price predictions were off, he said in a Dec. 25 tweet,

“$50K-$200K 1 standard deviation band feels wide. Some people think this makes S2F model invalid and not useful, but is it??"

Related: Bitcoin dips below $47K but one trader is eyeing 'solid risk/reward' for longing BTC now

Founder and CEO of Ballet Crypto Bobby Lee predicted that BTC would hit $300,000 this year back on Mar. 22 on CNBC’s Squawk Box. This was one of the most ambitious predictions to miss the mark this year.

Each public figure’s wrong predictions go to highlight the need to Do Your Own Research (DYOR) in cryptocurrency investing and to take price predictions as a bit of fun, rather than a serious guide to the future.

5 ways derivatives could change the cryptocurrency sector in 2022

5 ways derivatives could change the cryptocurrency sector in 2022

Retail and institutional investors love derivatives instruments. Here‘s how they could impact crypto markets in 2022.

We‘ve all heard stories of billion-dollar future contracts liquidations being the cause of 25% intraday price crashes in Bitcoin (BTC) and Ether (ETH) but the truth is, the industry has been plagued by 100x leverage instruments since BitMEX launched its perpetual futures contract in May 2016.

The derivatives industry goes far beyond these retail-driven instruments, as institutional clients, mutual funds, market makers and professional traders can benefit from using the instrument‘s hedging capabilities.

In April 2020, Renaissance Technologies, a $130 billion hedge fund, received the green light to invest in Bitcoin futures markets using instruments listed at the CME. These trading mammoths are nothing like retail crypto traders, instead they focus on arbitrage and non-directional risk exposure.

The short-term correlation to traditional markets could rise

As an asset class, cryptocurrencies are becoming a proxy for global macroeconomic risks, regardless of whether crypto investors like it or not. That is not exclusive to Bitcoin because most commodities instruments suffered from this correlation in 2021. Even if Bitcoin price decouples on a monthly basis, this short-term risk-on and risk-off strategy heavily impacts Bitcoin‘s price.

Bitcoin/USD on FTX (blue, right) vs. U.S. 10-year yield (orange, left). Source: TradingView

Notice how Bitcoin‘s price has been steadily correlated with the United States 10 year Treasury Bill. Whenever investors are demanding higher returns to hold these fixed income instruments, there are additional demands for crypto exposure.

Derivatives are essential in this case because most mutual funds cannot invest directly in cryptocurrencies, so using a regulated futures contract, such as the CME Bitcoin futures, provides them with access to the market.

Miners will use longer-term contracts as a hedge

Cryptocurrency traders fail to realize that a short-term price fluctuation is not meaningful to their investment, from a miners‘ perspective. As miners become more professional, their need to constantly sell those coins is significantly reduced. This is precisely why derivatives instruments were created in the first place.

For instance, a miner could sell a quarterly futures contract expiring in three months, effectively locking in the price for the period. Then, regardless of the price movements, the miner knows their returns beforehand from this moment on.

A similar outcome can be achieved by trading Bitcoin options contracts. For example, a miner can sell a $40,000 March 2022 call option, which will be enough to compensate if the BTC price drops to $43,000, or 16% below the current $51,100. In exchange, the miner‘s profits above the $43,000 threshold are cut by 42%, so the options instrument acts as insurance.

Bitcoin‘s use as collateral for traditional finance will expand

Fidelity Digital Assets and crypto borrowing and exchange platform Nexo recently announced a partnership that offers crypto lending services for institutional investors. The joint venture will allow Bitcoin-backed cash loans that can t be used in traditional finance markets.

That movement will likely ease the pressure of companies like Tesla and Block (previously Square) to keep adding Bitcoin to their balance sheets. Using it as collateral for their day-to-day operations vastly increases their exposure limits for this asset class.

At the same time, even companies that are not seeking directional exposure to Bitcoin and other cryptocurrencies might benefit from the industry‘s higher yields when compared to the traditional fixed income. Borrowing and lending are perfect use cases for institutional clients unwilling to have direct exposure to Bitcoin‘s volatility but, at the same time, seek higher returns on their assets.

Investors will use options markets to produce “fixed income”

Deribit derivatives exchange currently holds an 80% market share of the Bitcoin and Ether options markets. However, U.S. regulated options markets like the CME and FTX US Derivatives (previously LedgerX) will eventually gain traction.

Institutional traders dig these instruments because they offer the possibility to create semi “fixed income” strategies like covered calls, iron condors, bull call spread and others. In addition, by combining call (buy) and put (sell) options, traders can set an options trade with predefined max losses without the risk of being liquidated.

It‘s likely that central banks across the globe will worldwide keep interest rates near zero and below inflation levels. This means investors are forced to seek markets that offer higher returns, even if that means carrying some risk.

This is precisely why institutional investors will be entering crypto derivatives markets in 2022 and changing the industry as we currently know.

Reduced volatility is coming

As previously discussed, crypto derivatives are presently known for adding volatility whenever unexpected price swings happen. These forced liquidation orders reflect the futures instruments used for accessing excessive leverage, a situation typically caused by retail investors.

Yet, institutional investors will gain a broader representation in Bitcoin and Ether derivatives markets and, therefore, increase the bid and ask size for these instruments. Consequently, retail traders‘ $1 billion liquidations will have a smaller impact on the price.

In short, a growing number of professional players taking part in crypto derivatives will reduce the impact of extreme price fluctuations by absorbing that order flow. In time, this effect will be reflected in reduced volatility or, at least, avoid problems such as the March 2020 crash when BitMEX servers “went down” for 15 minutes.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.