Sunday Rundown - January 24, 2021

Happy Sunday! A brief update and three interesting articles.

This week, bitcoin’s price crashed. Its price is now 10% higher than it was at the beginning of the month.

Some blame the crash on a negative article about Tether (USDT). For my thoughts about that article, watch my video:

Others claim a fantom double-spend destroyed faith in bitcoin as an investment while many believe whales are manipulating the market downward.

Perhaps it’s a massive scheme by the world’s governments and central banks to pump up the price of bitcoin, then crash the market to destroy humanity’s faith in it and cryptocurrency in general forever? Steven Mnuchin’s last laugh?

We shall see. I share my own ideas in this video:

Also, if you missed my most recent update from January 23, 2021, get it now:

Read below for some interesting news.

• Bitcoin Miners Saw 33% Revenue Increase in December

  • Bottom line: miners earned more bitcoin fees than they have in three years. That includes block rewards and transaction fees.

  • My take: great for miners and undoubtably January brought them even more revenue. This also creates enormous selling pressure, because miners need to cash out their bitcoin for local currency to pay electricity, labor, new equipment, and other costs. Often, they also take a cut for themselves.

  • Why we care: when bitcoin’s price moves up too quickly, miners end up with sudden, massive windfalls. They tend to sell. In fact, miner outflow in December actually exceeded the 2017 peak. You need a lot of buying pressure to sustain rising prices. When that buying pressure comes, it’s beautiful. Without that buying pressure, it’s hard to keep the momentum going. Miner behaviors play a big role in price action.

• Treasury Secretary Nominee Janet Yellen Plans to Encourage Legitimate Crypto Use

  • Bottom line: the next U.S. treasury secretary says she wants to bring crypto into the traditional financial system.

  • My take: nice to know, but Congress drives this train. Biden administration can change how it enforces and interprets the laws, but it’s still on U.S. Congress to change ancient financial laws that tie the White House’s hands. That will take a while. In one of my first articles (April 2019), I shared my views on why that’s a long road to hoe: US Congress Will Pass Blockchain Bills as Soon as Somebody Tells it What ‘Blockchain’ Means. More recently, I wrote Bitcoin Won the U.S. Presidential Election.

  • Why we care: don’t buy into the rumors that the new administration hates crypto. Even if the Biden administration isn’t your friend, it’s almost certainly going to be better than the previous one (Trump hated crypto). There’s no reason to automatically FUD or worry about anything you hear about the U.S. government anymore.

• Privacy Coin Firo in Midst of ‘Hash War’ With 51% Attacker

  • Bottom line: somebody tried to takeover the Firo blockchain in advance of a protocol upgrade that would make this type of attack almost impossible.

  • My take: just another day in crypto. Did you catch the 300% pump that happened right before the attack? I missed it.

  • Why we care: the team resolved the problem and the community took it in stride, but it’s just one more reminder that this technology is still speculative and needs more time to grow before mainstream adoption. That includes bitcoin, too. Prices can moon tomorrow—great for your net worth but doesn’t validate the technology.

Relax and enjoy the ride!