The cryptocurrency market faced a significant downturn following the announcement of President Donald Trump’s U.S. Bitcoin reserve plan
The initiative aimed to position the United States as a global digital asset leader fell short of market expectations, triggering a wave of selloffs.
Bitcoin, the flagship cryptocurrency, experienced a 3% drop, trading at $87,586.86 before dipping further to $84,688.13. Other major cryptocurrencies, including Ethereum, XRP, and Solana, also saw declines, with Cardano’s ADA token suffering a sharp 13% drop.
The market’s reaction underscores the gap between investor hopes and the plan’s immediate implications.
The executive order established a strategic bitcoin reserve funded exclusively by assets seized in criminal and civil proceedings. While this approach ensures no taxpayer burden, it disappointed investors who anticipated direct government purchases to bolster Bitcoin’s value.
White House Crypto and AI Czar David Sacks emphasised the reserve’s role as a ‘digital Fort Knox’, but the lack of immediate buy pressure dampened market sentiment.
The broader economic context also played a role. Weakness in equities and ongoing tariff concerns added to the uncertainty, compounding the market’s reaction.
Analysts noted that while the reserve plan is a step toward legitimising cryptocurrencies, its short-term impact on prices was underwhelming.
Despite the initial disappointment, the strategic reserve could have long-term benefits. By centralising and securing digital assets, the U.S. government aims to strengthen its position in the global financial system.
However, for now, the market remains volatile, reflecting the challenges of balancing innovation with investor expectations.
As the crypto landscape evolves, the success of such initiatives will depend on their ability to deliver tangible value to both the market and the broader economy.
Will the U.S. government create a strategic crypto reserve by directly buying the digital asset and holding it as a national reserve?
At this moment in time, only Trump has that ‘key’.
Bitcoin flirted with the $100,000 mark, coming within less than $1,000 of that psychological threshold. However, it failed to breach this peak, falling back to as low as $90,702. on Tuesday 26th November 2024. It has since rallied, trading at approximately $96,697 early on 29th November 2024. But still off the $100,000 barrier.
Investors taking profits
One factor contributing to the fall was investors capitalising on Bitcoin’s exceptionally high price, which increased the supply of Bitcoin. Long-term holders began to release substantial quantities of Bitcoin during the recent surge.
However, there are deeper reasons why some strategists remain uncertain about Bitcoin’s ability to reach the six-figure milestone. The $100,000 mark seems to have become a significant obstacle, if not an outright barrier, to further increases.
Leveraged to the hilt
Indeed, the recent surge in Bitcoin’s value could be instilling a misleading sense of confidence among investors. Viewing Bitcoin as a speculative bet or a means to achieve returns, it appears that investors are flocking to Bitcoin primarily for potential capital gains rather than its intrinsic value or practical applications.
The recent introduction of options for spot Bitcoin exchange-traded funds could be influential. Options provide investors with a way to speculate on Bitcoin’s price fluctuations without the need to invest in Bitcoin directly.
It’s leveraged to the hilt and there most likely will be a correction anytime soon.
That being said, a correction does not equate to lasting deflation. Should even a portion of U.S. President-elect Donald Trump’s commitments to the cryptocurrency sector materialise, the $100,000 mark might not represent a peak, but merely another milestone that Bitcoin surpasses during its triumphant ascent.
But remember, in my opinion and for what it’s worth – it is just a punt, not an investment.
Bitcoin one-day chart as of 29th November 2024 (11:16 am)
Bitcoin one-day chart as of 29th November 2024 (11:16 am)
Bitcoin’s origin is one of the most captivating mysteries of the digital age. The cryptocurrency was created in 2008 by an unknown individual or group under the pseudonym Satoshi Nakamoto.
Despite numerous investigations, the true identity of Nakamoto remains shrouded in secrecy.
Story
The story of Bitcoin begins with the release of a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” This document outlined a new kind of decentralised digital currency, one that relied on cryptographic principles to ensure security and prevent double-spending.
Nakamoto’s revolutionary vision was to create a financial system free from the control of traditional banks and government interference.
Genesis block
In January 2009, Nakamoto mined the first block of the Bitcoin blockchain, known as the ‘genesis block,’ marking the birth of the cryptocurrency. Over the next couple of years, Nakamoto continued to work on the project, communicating with other developers via email and online forums.
The mystery surrounding the origin of Bitcoin
However, by 2011, Nakamoto had largely stepped away from active involvement in the project, leaving behind a legacy that would forever change the financial landscape.
Speculation
Speculation about Nakamoto’s true identity has been rampant. Some believe Nakamoto is a single, exceptionally talented individual, while others theorise that it could be a group of developers working under a collective pseudonym.
Over the years, various names have been proposed as possible candidates, including renowned cryptographers, developers, and even eccentric entrepreneurs. Yet, none of these theories have been definitively proven, and Nakamoto’s identity remains a closely guarded secret.
Intrigue
The intrigue surrounding Nakamoto is not just a matter of curiosity but also of financial significance. As the creator of Bitcoin, Nakamoto is estimated to own around one million Bitcoins. At current market values, this makes Nakamoto one of the wealthiest individuals in the world.
Bitcoin chart from inception as of 7th November 2024 touching $75,000
Bitcoin chart from inception as of 7th November 2024 touching $75,000
However, these Bitcoins have never been moved or spent, adding to the enigma of Nakamoto’s motives and intentions.
Myth?
The myth of Satoshi Nakamoto has taken on a life of its own, becoming a symbol of the power and potential of decentralized technology. The anonymity of Nakamoto also serves as a reminder of the core principles behind Bitcoin: privacy, decentralisation, and freedom from traditional financial systems.
In a world increasingly dominated by surveillance and control, the mystery of Nakamoto provides a compelling counter-narrative, one that continues to inspire and intrigue both technologists and libertarians alike.
In the end, the true identity of Satoshi Nakamoto may never be revealed, and perhaps that is as it should be. The enduring mystery adds to the allure of Bitcoin, ensuring that its origins will forever be a topic of fascination and debate.
Britcoin is a potential British digital currency that would be issued by the Bank of England and backed by the Government.
It would be tied to the pound and have a stable value, unlike cryptocurrencies such as Bitcoin. It would be accessible through digital wallets and interchangeable with cash and bank deposits. The Treasury and the Bank of England are consulting on its launch, which could take place by 2030.
Britcoin could be used for everyday transactions, both in-store and online, and could make payments more efficient and enable innovation. However, some MPs have warned that Britcoin could cause severe financial damage and undermine the role of banks.
Some MPs have warned that Britcoin could cause severe financial damage and undermine the role of banks for several reasons.
Concerns about introducing a digital pound
Britcoin could increase the chance of bank runs, if customers were able to quickly and easily switch their bank deposits into digital pounds, especially during times of financial stress or panic. This could reduce the liquidity and solvency of banks and make them more vulnerable to failure.
Britcoin could also raise the cost of borrowing for banks and consumers, as banks would need to replace the funding that they would lose from deposits with more expensive sources. The Bank of England estimated that if 20% of bank deposits turned digital, it could result in a rise in interest rates on commercial loans.
Britcoin could pose risks to data privacy and security, as the government or third parties could potentially access, track, or control how users spend their digital funds. This could raise ethical and legal issues and require robust regulation and protection.
Britcoin could also have unintended consequences on the wider economy and society, such as affecting monetary policy, financial inclusion, innovation, and competition. The MPs said that the benefits and costs of Britcoin should be clearly evidenced before any decision is taken to introduce it.
Art illustration: Digital £ pound proposal – Britcoin
The development of a state-backed ‘digital pound’ should proceed with caution, MPs have warned.
The benefits of the currency are still unclear and there must be systems in place to protect cash access and privacy, the Treasury Committee said in a report.
The Bank of England (BoE) and the Treasury have been consulting on the idea since February 2023. They are currently designing what such a system could look like. The CBDC would be directly issued by the Bank of England (BoE), just like banknotes.
This means people would have all the same safety and security that they have with their cash currently, which is different to cryptocurrencies that fluctuate in value and are generally run by private companies.
It was reported Friday 17th November 2023 by the city-state’s central bank that Singapore will be piloting the live issuance and use of wholesale central bank digital currencies in 2024.
During the pilot, the Monetary Authority of Singapore, (MAS) will partner with local banks to pilot the use of wholesale CBDCs to facilitate domestic payments.
What is a CBDC?
A CBDC is a digital form of a country’s fiat currency, issued and regulated by the central bank or monetary authority of that country. CBDCs are different from cryptocurrencies, which are decentralized and not backed by any government.
Singapore is one of the countries that has been actively exploring the potential of CBDCs, both for wholesale and retail purposes. Wholesale CBDCs are meant for interbank transactions and cross-border payments, while retail CBDCs are meant for general public use and everyday payments.
CBDC MAS timeline
In November 2021, the Monetary Authority of Singapore (MAS) launched Project Orchid, a retail CBDC project that aims to build the infrastructure and test the use cases for a digital Singapore dollar. The project will explore the concept of purpose-bound digital Singapore dollars, which allow senders to specify how and where the money will be used.
In August 2021, MAS announced Project Dunbar, a wholesale CBDC project that involves the collaboration of the Reserve Bank of Australia, Bank Negara Malaysia, and South African Reserve Bank. The project will develop prototypes of shared platforms for cross-border transactions using multiple CBDC’s.
In June 2021, MAS published a monograph on the economic considerations of a retail CBDC in the Singapore context. The monograph concluded that there is no urgent case for a retail CBDC in Singapore, but MAS wants to be prepared in case the situation changes in the future.
In April 2021, MAS extended the regulatory sandbox for Project Ubin, a wholesale CBDC project that started in 2016. Project Ubin has successfully demonstrated the feasibility of using blockchain technology for clearing and settlement of payments and securities.
Singapore to pilot use of wholesale central bank digital currencies in 2024
In March 2021, MAS joined the Multiple CBDC (m-CBDC) Bridge initiative, a wholesale CBDC project that involves the Bank of Thailand, the Hong Kong Monetary Authority, and the Bank for International Settlements. The project will explore the use of distributed ledger technology to enable real-time cross-border transactions using multiple CBDC’s.
Process
Banks will issue tokenized bank liabilities in the form of claims in balance sheets. Retail customers can then use the tokenized bank liabilities in transactions with merchants, who will then credit these bank liabilities with their respective banks. Tokenization refers to the process of issuing a digital form of an asset on a blockchain.
The CBDC will then be automatically transferred to the merchant as a form of payment during the transaction.
Many central banks are testing and exploring their own digital currencies, includung the UK and U.S.
IMF’s Kristalina Georgieva reportedly said that the public sector should keep preparing to deploy central bank digital currencies (CBDC’s) and related payment platforms in the future.
But according to data from the Atlantic Council, only 11 countries have adopted CDBC’s thus far.
Alternative to cash
Central bank digital currencies (CBDC’s) have the potential to replace cash. But adoption could take time, said Kristalina Georgieva, managing director of the International Monetary Fund on Wednesday 15th November 2023.
‘CBDC’s can replace cash which is costly to distribute”, she is reported to have said at the Singapore FinTech event. ‘They can offer resilience in more advanced economies. And they can improve financial inclusion where few hold bank accounts’.
‘CBDC’s would offer a safe and low-cost alternative to cash. They would also offer a bridge between private monies and a yardstick to measure their value, just like cash today which we can withdraw from our banks’, the IMF chief reportedly said.
Fiat currency
CBDC’s are the digital form of a country’s fiat currency, which are regulated by the country’s central bank. They are powered by blockchain technology, allowing central banks to channelgovernment payments directly to households.
Central Bank digital money to replace cash. IMF’s Kristalina Georgieva reportedly said that the public sector should keep preparing to deploy central bank digital currencies (CBDC’s) and related payment platforms in the future.
‘The level of global interest in CBDCs is unprecedented. Several central banks have already launched pilots or even issued a CBDC’, the IMF said in a September 2023 report.
According to a 2022 survey conducted by the Bank for International Settlements, of the 86 central banks surveyed, 93% said they were exploring CBDCs, while 58% said they were likely to or may possibly issue a retail CBDC in either the short or medium term.
But as of June 2023, only 11 countries had adopted CBDC’s, with an additional 53 in advanced planning stages and 46 researching, according to data from the Atlantic Council.
Bitstamp has reportedly disclosed its ongoing discussions with a number of European banks about assisting them in launching cryptocurrency services. These discussions are expected to come to fruition in early 2024.
Bitstamp’s Negotiations with Top European Banks
Bitstamp’s negotiations underscore the growing acceptance of digital assets within the European financial sector.
This news comes at a time when the European Union is actively advancing its regulatory framework for cryptocurrencies, known as Markets in Crypto Assets (MiCA).
It aims at facilitating the entry of traditional financial institutions into the digital asset space.
Singapore’s financial regulator has reportedly said it had finalised rules for a type of digital currency called ‘stablecoin’, placing it among some of first the regulators worldwide to do so.
Stablecoins are a type of digital currency designed to hold a constant value against a fiat currency. Many claim to be backed by a reserve of real-world assets, such as cash or government bonds.
Reserves that back stabelcoins must be held in low-risk and highly-liquid assets. They must equal or exceed the value of the stablecoin in circulation at all times, the rules say. The stablecoin market is valued at around $125 billion, with two tokens – Tether’s USDT and Circle’s USDC – dominating roughly 90% of the market cap value. Stablecoins are broadly unregulated around the world.
The Monetary Authority of Singapore’s (MAS) framework requirement
Reserves that back stabelcoins must be held in low-risk and highly-liquid assets. They must equal or exceed the value of the stablecoin in circulation at all times
Stablecoin issuers must return the par value of the digital currency to holders within five business days of a redemption request.
Issuers must also provide ‘appropriate disclosures‘ to users, including the audit results of reserves.
These rules will apply to stablecoins that are issued in Singapore and mimic the value of the Singapore dollar, or of any G10 currencies, such as the U.S. dollar.
‘Shackles being removed from crypto regulation paving way for stablecoin adoption’
Last year, the collapse of a so-called algorithmic stablecoin named UST put this type of stablecoin in the crosshairs of regulators. Unlike USDT and USDC, UST was governed by an algorithm and did not have real-world assets like bonds in its reserves.
Singapore’s stablecoin framework puts it among one of the first jurisdictions to have such rules. In June, the U.K. passed a law that gives regulators the ability to oversee stablecoins, though there are no concrete rules yet. Hong Kong is meanwhile undergoing a public consultation on stablecoins and seeks to introduce regulation next year.
What is a stablecoin
A stablecoin is a type of cryptocurrency that tries to maintain a stable value by being pegged to another asset, such as a fiat currency, a commodity, or another cryptocurrency. Stablecoins aim to offer the benefits of cryptocurrencies, such as decentralisation, security, and transparency, without the drawbacks of high volatility and price fluctuations.
Stablecoins can be used for payments, remittances, trading, and storing value. However, stablecoins also face some challenges and risks, such as regulatory uncertainty, technical issues, and trust issues.
There are different ways to create and manage stablecoins, depending on the mechanism used to stabilize their value.
Main types of stablecoins
Fiat-backed: These stablecoins are backed by a reserve of fiat currency, such as the US dollar or the euro, held by a third-party entity. The stablecoin issuer promises to redeem the stablecoin for the fiat currency at a fixed ratio. Examples of fiat-backed stablecoins are Tether (USDT), USD Coin (USDC), and TrueUSD (TUSD).
Commodity-backed: These stablecoins are backed by a reserve of physical commodities, such as gold, silver, or oil, held by a third-party entity. The stablecoin issuer promises to redeem the stablecoin for the commodity at a fixed ratio. Examples of commodity-backed stablecoins are Paxos Gold (PAXG), Tether Gold (XAUT), and Digix Gold (DGX).
Crypto-backed: These stablecoins are backed by a reserve of other cryptocurrencies, such as Bitcoin or Ethereum, held in a smart contract. The stablecoin issuer uses over-collateralization or algorithmic adjustments to maintain the stability of the stablecoin. Examples of crypto-backed stablecoins are Dai (DAI), sUSD (SUSD), and BitUSD (BITUSD).
Algorithmic: These stablecoins are not backed by any reserve, but instead use an algorithm to control the supply and demand of the stablecoin. The algorithm adjusts the supply of the stablecoin according to the market conditions and the target price. Examples of algorithmic stablecoins are Basis Cash (BAC), Empty Set Dollar (ESD), and TerraUSD (UST).
What is ‘crypto’
Crypto has attracted a lot of attention in recent years. Crypto is short for cryptocurrency, which is a digital or virtual currency that uses cryptography to secure and verify transactions. Crypto can also refer to the underlying technology that powers cryptocurrencies, such as blockchain.
Some examples of popular cryptocurrencies are Bitcoin, Ethereum, Ripple ( XRP)and Cardano (ADA).
Cryptoman superhero
Cryptocurrencies have many advantages over traditional currencies, such as decentralisation, transparency, anonymity, and lower fees. However, they also face some challenges, such as volatility, regulation, security, and scalability. Crypto enthusiasts believe that cryptocurrencies have the potential to revolutionise the world of finance and beyond.
Some examples of popular stablecoins are Tether, USD Coin and Binance USD.
XRP, the native token of the blockchain company Ripple, soared more than 60% on Thursday after a U.S. judge delivered a major victory to the firm in its legal battle with the Securities and Exchange Commission (SEC).
The SEC had sued Ripple in December 2020, alleging that it had raised over $1.3 billion through the sale of XRP in an unregistered securities offering. The SEC claimed that XRP was an investment contract that gave buyers the expectation of profits based on Ripple’s efforts.
However, the Judge ruled that XRP was not a security “on its face” and that some aspects of its sale did not violate the federal securities laws.
Digital coin
The judge drew a distinction between the sales of XRP to institutional investors, which she said could constitute investment contracts, and the sales of XRP to the general public on exchanges, which did not.
Argument
The judge also denied Ripple’s argument that the SEC lacked jurisdiction over XRP transactions because they were not domestic, and agreed with the SEC that the Howey test, a four-pronged criteria to determine whether an asset is a security, applied to cryptocurrency transactions.
The ruling was welcomed by Ripple and its supporters, who argued that XRP was a utility token that facilitated cross-border payments and did not depend on Ripple’s efforts for its value.
Ripple’s chief legal officer, reportedly tweeted: “A huge win today – as a matter of law – XRP is not a security. Also, a matter of law – sales on exchanges are not securities. Sales by executives are not securities. Other XRP distributions – to developers, charities, and employees- are not securities.”
A lawyer representing over 19,000 XRP holders who intervened in the case, reportedly called on U.S. exchanges to relist XRP in solidarity with the decision.
Crypyo boost
The ruling also boosted the sentiment in the broader crypto market, as it suggested that the SEC did not have unlimited authority over digital assets and that some tokens could escape the securities classification.
‘Have you seen the news? Crypto might possibly could be going manstream.’ ‘Oh WOW! – What’s crypto?’
Crypto-related stocks such as Coinbase and crypto-coins such as ADA, HBAR, BITCOIN & ETH surged following the news.
More to come?
However, the case is not quite over yet, as the SEC said it would continue to review the decision and pursue its claims against Ripple for the sales of XRP to institutional investors.
The SEC also responded to the judge’s ruling by saying that it did not change its position that XRP was a security and that it would seek to prove that Ripple violated the securities laws in certain circumstances.
The outcome of the case could have significant implications for the crypto industry, as it could set a precedent for how other tokens are regulated and how other lawsuits are resolved.
Crypto, short for cryptocurrency, is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. Cryptocurrencies are decentralised currencies, meaning they’re neither issued nor governed by a central bank.
Some cryptocurrencies are issued by their developers, while others are generated by their respective network algorithms. They exist and operate on a public ledger called a blockchain, which records all crypto transactions. Blockchain encryption is designed to make all transactions safe and secure from tampering, counterfeit, and other forms of fraudulent transactions.
‘Do you know what crypto is? Nope, absolutely no idea, do I need to?’
Digital Wallet
Cryptocurrencies can be stored in a ‘digital wallet’ on a smartphone or computer, and owners can send them to people to buy things. Although we can’t see or touch cryptocurrencies, they do hold value. Cryptocurrencies are now being used to purchase many different products and services, and some people are even buying cars and houses with their digital assets. They’re not widely used at the moment, but many believe the use of cryptocurrencies could one day become a common way to trade.
Is there a future for a digital currency?
However, the future of cryptocurrency is uncertain and opinions are divided. Some predict that institutional money entering the market and the possibility of crypto being floated on the Nasdaq could add credibility to blockchain and its uses as an alternative to conventional currencies. Others predict that regulators around the world might come together on a global framework for crypto regulation, but this looks unlikely right now. It is impossible to predict the future of the crypto market with absolute certainty.
Despite a strong start to 2023, some analysts remain cautious on growth and predict pressure for digital assets. Cryptography and blockchains will continue to be integral parts of the modern economic toolkit.
In conclusion, while there is no consensus on whether crypto is the future of currency, it is clear that it has the potential to play a significant role in the future of finance.
Stop crypto?
There is evidence to suggest that the US, EU, UK and other nations are trying to regulate the crypto market. Some people in the crypto world believe that recent attempts to ring fence the crypto industry and cut off its connectivity to the banking system are reminiscent of a little-known Obama-era program called ‘Operation Choke Point’. This refers to a 2013 US government initiative that sought to cut off undesirable industries from banking services.
Meltdown
The sector was already under pressure, after prices of virtual currencies collapsed last year. Further damage came from the meltdown of several high-profile firms, including FTX, run by the so-called ‘Crypto King’ Sam Bankman-Fried, whom prosecutors have accused of conducting ‘one of the biggest financial frauds’ in US history. Jolted by the turmoil, US regulators stepped up their policing of the sector, which authorities say has been on notice since at least 2017 and that their activity runs afoul of US financial rules intended to protect US investors.
Crackdown?
The campaign has yielded a steady drumbeat of charges against crypto firms and executives, alleging violations ranging from failing to register properly with authorities and provide adequate disclosure of their activity to, in some cases, more damaging claims such as mishandling of consumer funds and fraud. The crackdown culminated this month in legal actions against two of the biggest platforms: Coinbase and Binance.
However, during a hearing on cryptocurrency and blockchain technology regulation, Senate Banking Committee Chairman Mike Crapo shared his belief that the United States would not be able to succeed in banning Bitcoin.
In conclusion, while there is evidence that the US is trying to regulate the crypto market, it is not clear if they are trying to stop it completely and there is also evidence that suggests that the US would not be able to succeed in banning Bitcoin.
What was operation choke point?
‘Operation Choke Point’ was allegedly an initiative of the United States Department of Justice that began in 2013 under the Obama administration. The program investigated banks in the United States and the business they did with firearm dealers, payday lenders, and other companies believed to be at a high risk for fraud and money laundering. It was an attempt by President Obama’s Department of Justice, the Federal Deposit Insurance Commission, the Consumer Financial Protection Bureau, and other government agencies to cut off banking and financial services for small businesses and industries that they deemed to be illegal enterprises or otherwise undesirable.
