MicroStrategy CEO: Crypto Regulation Will Push Money Into Bitcoin

MicroStrategy co-founder and chief executive officer (CEO) Michael Saylors says increased regulations for cryptocurrency will cause a stampede of investment into bitcoin. 

In a recent interview with Salt Talks, Saylor responded to comments by President Joe Biden’s Treasury Secretary nominee Janet Yellen, who expressed concern over illicit uses for cryptocurrency. 

Saylor called the increased scrutiny bullish for crypto-assets, and said new rules would accelerate investment into bitcoin. 

He said, 

“To the extent that we have regulated entities that are dealing in Bitcoin, I think it’s just going to accelerate the stampede of institutional money into Bitcoin.”

The MicroStrategy CEO said most investors were already purchasing bitcoin through regulated exchanges, which are required to comply with strict Anti-Money Laundering (AML) and Know Your Customer (KYC) laws. 

Saylor called increased regulation an indication of bitcoin’s mainstream appeal, with governments now being forced to keep up with demand from investors. He said pressure from governments would prove to be beneficial for bitcoin.

He continued, 

I don’t think it’s earth-shattering. I don’t think it’s going to be negative for the industry. In fact, I think it’s the opposite […] I don’t think Bitcoin needs to be unregulated to be successful. I think Bitcoin just needs to be better than gold to be successful.

Featured Image Credit: Photo via Pixabay.com

Early Ethereum Investor Achieves Financial Independence After Selling All His ETH

An early Ethereum investor has revealed he has now become financially independent after selling all of his ETH, with the price of the cryptocurrency being above $1,200 at press time.

On Reddit, a user going by FollowMe22 revealed in a thread that they had sold all of their remaining cryptocurrency this week, after starting to buy up ETH when the cryptocurrency was trading slightly above $2 back in 2016.

The user claimed he had “missed the boat” on bitcoin, and described using his tax returns in 2016 to buy ETH, and investing “a couple hundred” on the crypto whenever he was able to. To save money to invest, the redditor did not buy a car and used his bike to commute to work.

The user added:

Sold a large chunk during the previous bull run in 2017, and sold the remaining in multiple sales this January. Averaged about a 150x on my cost basis across all sales. All long-term capital gains. Now I’m 27 and financially independent. Will be buying my parents a house this year.

As CoinTelegraph reports, another user managed to unearth FollowMe22’s first post entering the cryptocurrency space, where they described wanting to “buy about 250 ETH” while still being new to the cryptocurrency world and “not very technically savvy.”

At the time, the user wondered whether there was a significant risk on keeping his holdings on the cryptocurrency exchange where he acquired the funds. After clearing up his doubts, FollowMe22 did seemingly invest and managed to hold onto his funds.

The price of Ethereum has surpassed the $1,400 mark twice so far: once in early 2018 and earlier this month. Some analysts, however, believe it could go much higher. Fundstrat strategist David Grider has revelated he believes the price of Ethereum could go to $10,500.

Former Goldman Sachs executive Raoul Pal has revealed he believes the price of ETH, the second-largest cryptocurrency by market capitalization, could go to $20,000 “this cycle,” based on Metcalfe’s Law.

Featured image via Pixabay.

Mad Money’s Jim Cramer Advises $731M Powerball Jackpot Winner to Put 5% in Bitcoin

Mad Money’s Jim Cramer Advises $731M Powerball Jackpot Winner to Put 5% in Bitcoin

Mad Money host Jim Cramer has provided some investment advice aimed at the latest Powerball jackpot winner of $731.1 million. He recommends putting 5% of the jackpot in bitcoin alongside several other investments, such as gold and real estate.

Jim Cramer Says Put 5% of Powerball Jackpot in Bitcoin

Someone won a Powerball jackpot worth an estimated $731.1 million last week, which was one of the largest lottery prizes in U.S. history. The winning ticket was sold at Coney Market, a convenience store in Lonaconing, a town in Maryland. The store will get a $100,000 bonus for selling the ticket.

Jim Cramer, the host of Mad Money on CNBC, offered some advice to the lucky winner on Friday. The former hedge fund manager also co-founded the financial website Thestreet.com.

Cramer provided a list of investments he recommends for the jackpot winner. It consists of precious metals, real estate, art, bitcoin, municipal bonds, and dividend-paying stocks.

List of Jim Cramer’s recommended investments if you’ve won the lottery, like the recent Powerball jackpot winner of $731.1 million. Source: CNBC

For the Powerball jackpot winner, Cramer said: “When you are super rich like this, your main worry is not the taxman. You’ve got to be worried about inflation, specifically hyperinflation, that’s the only thing that can really threaten the nine-digit fortune.”

He continued, “So what holds value during periods of hyperinflation?” Cramer revealed, “You may not know this but it’s precious metals, real estate, and great art.” The Mad Money host has long been a gold proponent. He advised, “As for gold, yes, 5% jackpot into bullion.” However, he also warned, “Don’t store the bullion at home, put it in safety deposit boxes.” Cramer added:

If you won the lottery, go ahead, yes, I am going to say it, 5% in bitcoin.

Cramer further suggested without going into any detail: “Don’t buy it all at once, crypto could be incredibly volatile. Don’t buy on the weekend. But it’s an important new storehold of value.”

Besides recommending investments, Cramer also provided some general advice for Powerball jackpot winners, such as to watch out for scammers and to collect their winnings as a lump sum rather than annuities. “Always take the lump sum. You can stick it in treasury bonds and the interest you will accrue will make you more than if you took the annuity,” the Mad Money host said.

Cramer himself began looking into investing in BTC due to concerns of massive inflation. In December, he revealed that he had bought some bitcoin but sold the cryptocurrency earlier this month. He said to treat BTC like a stock: “As I tell people … if you have a double, take a lot out … It’s just no different from a stock.”

What do you think about Jim Cramer’s bitcoin advice? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Key metrics show this week’s $4B Bitcoin options expiry favors bulls

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Cryptocurrency makes World Economic Forum’s Davos Agenda

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Crypto Long & Short: No, Bitcoin Was Not a Response to the Financial Crisis

Maybe it’s just that winter is dragging on, but I find myself getting increasingly irritated with mainstream reports about Bitcoin that say it was a result of the financial crisis. 

It wasn’t, and that matters.

First, let’s look at why it wasn’t, and then I’ll explain why this misunderstanding bothers me.

Bitcoin’s pseudonymous creator Satoshi Nakamoto started working on the Bitcoin white paper in early 2007, over a year before the financial crisis hit mainstream markets.

In early 2007, the subprime mortgage industry was collapsing, but even lifelong finance insiders didn’t foresee the scale of what was to unfold. As Satoshi worked, bankruptcies and bank tremors would have been making the headlines, but there is no indication this added to his* urgency.

(*We don’t know that Satoshi was a “he,” but to avoid linguistic clutter I’ll use that pronoun throughout.)

By the time Satoshi uploaded the white paper to a cryptography mailing list in October 2008, the markets were in full meltdown, the U.S. government was taking over parts of the financial ecosystem, and central banks around the world were dropping interest rates and printing money.

The genesis block, mined by Satoshi in early January 2009, included the text of a headline from that day: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

Many have taken this as proof that Bitcoin was created in reaction to the crisis. This reveals a lack of understanding of how much work went into the design of Bitcoin, as well as the long history behind the idea of peer-to-peer finance.

History matters

The confusion is also potentially damaging to the Bitcoin narrative.

Why? Because it misrepresents the intentions of the army of cryptographers that had been working on a decentralized electronic cash solution for decades. It diminishes the bigger picture.  

Satoshi was not reacting to an event, just as those on whose shoulders he stood weren’t planning for a specific circumstance. They were all trying to solve the fundamental issue of financial sovereignty.

While we do not have (that I’m aware of) evidence of Satoshi’s thoughts on the financial system from before the publication of the Bitcoin white paper, shortly after the genesis block was mined, Satoshi wrote:

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

Satoshi was not referencing the financial mess at the time, even though its fallout was loud and hard to ignore. He showed signs of bigger thinking.  

And as for the genesis block itself, maybe the timing and choice of embedded text was intentional, or maybe it was a coincidence – we’ll never know for sure. Either way, a point was made.

That point was a dig at how politically beholden the banking system had become. It highlighted the lack of solid financial structure and the diminishing trust in institutional solvency. It essentially represented the financial crisis that was unfolding. But it was an example rather than a smoking gun.

The financial crisis was not the reason for Bitcoin. It was a symptom of the reason for Bitcoin. And if we continue to hear claims that the crisis was the cause, we will start to believe that Bitcoin is a new solution to a relatively new problem.

It isn’t. It’s a long-awaited solution to a long-standing problem.

If we continue to think of Bitcoin solely in the context of financial crises, we could start to believe that the need for it will diminish as the painful adjustments recede into the mists of time.

It won’t – the technology can’t be put back into its bottle. Nor can the growing awareness of the vulnerabilities inherent in the financial system on which we all rely.

Bitcoin has managed to spread ideas that were previously the purview of an arcane mailing list, and in so doing, has changed the way we look at our financial rights, our data, even our identity. True, the timing of Bitcoin’s emergence helped with that spread, and the recent departure from traditional monetary policy has accelerated it. Financial privacy, seizure resistance and fiat debasement are just some of the concepts that the crypto market price swings have pushed into conversations that now reach even the hallowed halls of traditional finance.

But Bitcoin was not created to fix crises. It was created to give people a choice.

Let’s stop treating it as a reaction to a specific situation, and recognize that Bitcoin is a technological evolution of a process that started decades ago.

Let’s also give credit to a group of thinkers who realized from way back where centralization of finance and our economy could eventually lead.

Regime change

After a momentous week in which COVID-19 briefly stepped back from the headlines to give space for us spectators to appreciate hope, rhetoric and a peaceful transfer of power, it feels good to take a breather and contemplate the scope of potential change ahead.

It’s not just that market infrastructure and institutional interest are growing in leaps and bounds (more on that below). It’s also that many of the regulatory authorities that determine the framework of financial markets, custody and value transfer are changing guard.

Gary Gensler will be the next chairman of the U.S. Securities and Exchange Commission (SEC). This possibility was reported last week, and was flagged as potentially very good news for the crypto industry, as Gensler has not only researched and often spoken in public about crypto assets and blockchain technology – he also has taught a course on the subject at MIT.

Chris Brummer, a Georgetown University law professor who runs the annual D.C. Fintech Week conference, edited a book on crypto assets and hosts the excellent Fintech Beat podcast, which often features compelling crypto content, may be the next chair of the Commodity Futures Trading Commission (CFTC), according to Reuters.

According to the Wall Street Journal, Michael S. Barr, a former U.S. Treasury Department official and onetime member of Ripple’s board of advisers, is likely to become the next Comptroller of the Currency.

This almost seems like a crypto-savvy trifecta of financial regulators which, as my colleague Nik De hinted at in his new crypto regulation newsletter The State of Crypto, is almost too much to ask for. It doesn’t guarantee crypto-friendly legislation, but at least it means the discourse will be relatively well informed.

CHAIN LINKS

Investors talking:

· “While it is nigh on impossible to forecast an expected return for bitcoin, its volatility makes the asset almost ‘uninvestable’ from a portfolio perspective.” – Barclays Private Bank chief market strategist Gerald Moser, talking to Financial News. He goes on to claim that the current bull run has been driven by retail investors rather than institutional money, which is a bewildering interpretation of the data.

· Guggenheim Partners Chief Investment Officer Scott Minerd, who recently said that he thought bitcoin’s fair value could reach $400,000, has been looking at the BTC charts and now believes that the cryptocurrency could be in for a sell-off down to $20,000.

· Bill Miller featured bitcoin in his Q4 income strategy letter, and talks about his fund’s investment in the MicroStrategy convertible security. “The world is ruled by fat-tail events, or seemingly improbable occurrences that have an outsized impact, and all indicators so far point to Bitcoin being one.”

· “You know what, if you won the lottery – Yes, I’m gonna say it: 5% in bitcoin.” – Jim Cramer, host of the Mad Money program. Cramer apparently sees bitcoin as an “important new store of value.”

Takeaways:

BlackRock, the world’s largest asset manager with $7.81 trillion under management, appears to have granted at least two of its funds (BlackRock Global Allocation Fund Inc. and BlackRock Funds V) the ability to invest in bitcoin futures, according to prospectus documents filed with the U.S. Securities and Exchange Commission. TAKEAWAY: For now, the funds will only be able to invest in cash-settled bitcoin futures, not actually hold bitcoin. And we shouldn’t assume that BlackRock will be betting on upside – it could use bitcoin futures to express bearish positions. But this move does echo comments made last month by CEO Larry Fink, when he said bitcoin could possibly “evolve” into a global market asset. And it is encouraging to see official acknowledgement that the world’s largest asset manager has invested resources in understanding the market.

If any of you heard some alarming chatter about a double-spend on the Bitcoin network (when a certain amount of BTC is spent twice, which in theory is impossible), here is an explanation of what really happened and how it’s nothing to worry about.

While bitcoin is still usually the first crypto investment for professional investors, due largely to its relative liquidity and range of onramps and services, Ethereum’s native token ether is starting to attract more institutional attention. A report from Fundstrat Global Advisors posits that the wide array of potential use cases for Ethereum gives ETH the best risk/reward scenario in the market, and believes that the asset could rally up to $10,500. TAKEAWAY: ETH has outperformed BTC for 8 of the past 12 months (and looks set to do the same for this one), yet it is currently below its all-time high (ATH), while BTC left its ATH in the dust three months and 52% ago (at time of writing). It is not easy to directly compare the two, however, since the underlying technology, use case outlook and risk profile are very different. We’ll be following this closely, so watch this space. (See our report on Eth 2.0 for more detail on its upcoming protocol shift.) 

New U.S. Treasury secretary Janet Yellen got off on the wrong foot with the cryptocurrency community by claiming that bitcoin was mainly used for illicit financing. This happened on the same day that blockchain forensics firm Chainalysis published a report that shows that cryptocurrency-based criminal activity fell to 0.34% of total transaction volume, down from 2.1% in 2019. TAKEAWAY: That doesn’t look like “mainly” to me. Thankfully, she rectified shortly after in a written response to the Senate Finance Committee, stressing the need to “encourage their use for legitimate activities while curtailing their use for malign and illegal activities.” That sounds more reasonable.

London-based crypto liquidity provider Wintermute has raised $20 million in a Series B funding round, led by Lightspeed Venture Partners, with participation from Pantera Capital, Sino Global Capital, Kenetic Capital, Rockaway Blockchain Fund, Hack VC, DeFi Alliance and Fidelity-affiliated Avon Ventures. TAKEAWAY: Most of the meaningful raises we’ve seen recently have been for market infrastructure firms, which points to strong under-the-surface development and increasing sophistication from crypto markets, and expectations of significant growth in service demand.

Sen. Mike Flood (R) of Nebraska has introduced two bills that would allow the state’s banks to offer custodial services for digital assets. TAKEAWAY: Several states are likely to follow Wyoming’s lead in making their jurisdictions crypto asset-friendly. This will not just attract new businesses or retain existing ones in an industry with growth potential. It could also serve to attract investment funds, and enhance the opportunities for interstate crypto commerce and business deals.

Market research commissioned by trading platform eToro, which surveyed 25 large institutions in Q3, revealed that interest in crypto markets from pensions and endowments is increasing. TAKEAWAY: This would be a big shift if it materializes, as pensions and endowments are traditionally risk-averse investors. Crypto markets, as we were reminded this week, are not for the risk-averse. It’s a relatively small sample, and so can’t be taken as indicative of pending inflows, but it does hint at a shift in market perception.  

According to a Deutsche Bank survey of market professionals, over 50% believe that BTC is at a 10 on a 1-10 “bubble scale”, and is likely to halve in value over the next 12 months. TAKEAWAY: Is this a sign of the market getting tired? Or, a sign of growing awareness amongst people who have yet to do research?

JPMorgan strategists have said in a report that a bitcoin price breakout over $40,000 would require daily inflows into the Grayscale Bitcoin Trust (GBTC; Grayscale is owned by DCG, also parent of CoinDesk) of approximately $100 million. TAKEAWAY: So far, that does not look too farfetched: On Monday, the firm had its largest daily inflow ever, almost $700 million, bringing the daily average since it reopened for new investment last week to approximately $200 million.

Digital asset management firm CoinShares has launched an exchange-traded bitcoin product (ETP) on Swiss stock exchange SIX. TAKEAWAY: It is becoming increasingly obvious how much livelier in terms of variety the listed crypto product landscape is in Europe vs the US.

Valkyrie Digital Assets filed an application this week for a bitcoin exchange-traded fund (ETF), the Valkyrie Bitcoin Fund, which would be listed on the New York Stock Exchange. TAKEAWAY: This is the second bitcoin ETF filing we’ve seen in the past three weeks, and is probably the first of many in 2021. With Gary Gensler as nominated head of the U.S. Securities and Exchange Commission, expectations are rising that the industry will see a bitcoin ETF approved this year.  

Wall Street CFOs are more wary of putting company funds into bitcoin after last week’s 30% price plunge, according to Bloomberg. TAKEAWAY: As they should be. CFOs putting company reserves into BTC just for the headlines and possible share price bump are being irresponsible. BTC has a place on balance sheets, but it should be a cautious one. Microstrategy, the software company that kicked off this trend in August of last year, is placing conviction above caution, however, and revealed this week that it has added another $10 million worth of bitcoin during the dip.

Harvard Economics Professor: Governments Will Not Allow Bitcoin on a Big Scale and They Will Win

Harvard Economics Professor: Governments Will Not Allow Bitcoin on a Big Scale and They Will Win

Harvard Professor of Economics and former Chief Economist at the International Monetary Fund (IMF) Kenneth Rogoff believes that governments will not allow bitcoin to flourish on a large scale. “The regulation will come in. The government will win,” he said. The professor also discussed the likelihood of a bitcoin bubble.

Harvard Professor Warns of Strict Crypto Regulation

Harvard University Professor Kenneth Rogoff shared some thoughts about bitcoin regulation during an interview on Bloomberg Surveillance last week. Rogoff is the Thomas D. Cabot Professor of Public Policy and a professor of economics at Harvard University. He also served as Chief Economist at the International Monetary Fund (IMF) from 2001–2003.

“It’s speculative,” he began. “I’ve been a bitcoin skeptic and certainly the price has gone up.” However, Rogoff argued, “there’s sort of an ultimate question of what’s the use. Is it just valuable because people think it’s valuable? That is a bubble that would blow up.”

He continued: “I can see bitcoin being used in failed states. It’s conceivable it could have some use in a dystopian future.” Nonetheless, he emphasized, “I think the governments are not going to allow pseudonymous transactions on a big scale. They’re just not going to allow it.” The Harvard economics professor elaborated:

The regulation will come in. The government will win. It doesn’t matter what the technology is.

“So, I think over the long run if there’s not a use, the bubble will burst. I hope there’s not such a valuable use but I suppose it’s a hedge against dystopia,” he further opined.

Rogoff was then asked, “would you advise Secretary Yellen at Treasury that the U.S. should be proactive in instituting that regulation which could collapse the price of cryptocurrency?”

He simply replied: “Yes, that’s just true across the board. It needs to be regulated … I think governments are on it. It’s not being used that widely and I suspect although the bitcoin lobbyists have been successful in getting it in some places, that won’t last.”

Rogoff has long been a bitcoin skeptic. In 2018, he told CNBC that the cryptocurrency was more likely to be worth $100 than $100K a decade from then. “Basically, if you take away the possibility of money laundering and tax evasion, its actual uses as a transaction vehicle are very small,” the former IMF chief economist said.

Last week, Joe Biden’s pick for the U.S. Treasury Secretary, Janet Yellen, stated that cryptocurrencies are mainly used for illicit financing. She later softened her stance slightly and promised to work with the Federal Reserve Board and other regulators to implement an “effective” crypto regulation. A week prior, the president of the European Central Bank (ECB), Christine Lagarde, called on countries to regulate bitcoin, claiming that the crypto has “conducted some funny business” and some “totally reprehensible money laundering activity.” Despite regulators’ belief, an industry report found that in 2020 crime accounted for only 0.34% of all crypto transactions.

Meanwhile, several U.S. lawmakers have said that governments should not try to stop bitcoin. Rep. Patrick McHenry previously said:

Due to the nature of the technology of Bitcoin, governments cannot kill it, nor should they.

Furthermore, the U.S. now has a bitcoin-friendly lawmaker. Senator Cynthia Lummis has vowed to ensure Congress understands that bitcoin is a great store of value. She is a hodler, who believes that bitcoin “has shown great promise and may rise as a viable alternative store of value to the U.S. dollar both on the institutional level and the personal level.”

What do you think of the Harvard professor’s view on bitcoin? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.