Category: Bitcoin

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Bitcoin Crime Crypto News Illegal

Darknet Ecstasy Kingpin Forfeits $2.3 Million in Bitcoin

A 25-year-old man from Massachusetts in the US has been sentenced to eight years’ imprisonment for selling illicit drugs for cryptocurrencies on the dark web. In addition, he also had to forfeit US$2.3 million worth of bitcoin after starting “EastSideHigh” on the darknet.

At the age of 22, Binh Thanh Le set up “EastSideHigh”, a storefront on the Wall Street Market illegal marketplace on the darknet, selling illicit drugs such as Xanax, ecstasy (MDMA), and ketamine. Le’s illegal business netted him a profit of 59 bitcoin, which was originally seized in March 2019. At the time the funds were worth US$200,000, but now amount to a whopping US$2.3 million.

Le and Two Associates Arrested with 20+ kg of Ecstasy

Along with his bitcoin, Le also held over US$114,000 in cash and another US$42,000 generated from a sale of a car. He was indicted in June 2019 with two other people for conspiracy to manufacture and distribute drugs. At the time of his arrest and seizure, law enforcement officials found over 20 kilograms of ecstasy, approximately 6.8 kilograms of ketamine, and more than 10,000 Xanax pills in Le’s possession.

After serving his prison sentence, Le will be supervised on release for a further three years. US District Attorney for Massachusetts Rachel Rollins said: “This sentence sends a clear message to dark web criminals – the federal government is entering this space. We will find you and we will hold you accountable.” She added:

Thanks to the incredible work of our law enforcement colleagues, there is one less cybercriminal hiding in the shadows.

Rachel Rollins, US District Attorney for Massachusetts

Crypto Seizures Add Up to Massive Numbers

Recently, the US Justice Department impounded US$3.6 billion in bitcoin and arrested a wannabe rapper and her husband for conspiring to launder the funds. A January report also revealed that US$33 billion had been laundered via crypto by cybercriminals over the past five years.

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Bitcoin Blockchain Stacks Tokens

STX Token Gains 70% Amid ‘Bitcoin Odyssey’ Announcement, Then Plunges

STX, the utility token of layer-1 blockchain platform Stacks, has seen a 70 percent gain following the announcement of ‘Bitcoin Odyssey’, a US$165 million grants program. Stacks and OKCoin will be putting the pooled money towards developing decentralised apps and furthering Bitcoin. However, the token price plunged soon after.

Positive Reaction to Bitcoin Odyssey Program

The Bitcoin Odyssey program will fund Stacks product development that will reach NFTs, DeFi, and Web3. The announcement will stoke the Bitcoin ecosystem and has already generated a flurry of positive media attention:

However, the positive gain was short-lived as the token dived by 30 percent soon after the announcement. Due to STX’s long wick candlestick it appears that selling opportunities were identified by traders the day after, although the selloff also seemed partly technical.

The STX Token Has Spiked Before

The Stacks Network token had several value spikes towards the back end of 2021. In October STX exploded in value, soaring 57 percent in 24 hours. This followed an increase in demand amid a thriving NFT ecosystem.

Then, in December, another spike was witnessed in reaction to the exit of Jack Dorsey, Twitter’s former CEO, with the token’s value rising by almost 65 percent in a week. Investor speculation peaked over the possibility of Dorsey migrating into the cryptocurrency industry.

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Australia Bitcoin Crypto News Ethereum Investing Real Estate

How Crypto Helped a 23-Year-Old Aussie Climb the Property Ladder

A 2021 survey conducted by international cryptocurrency exchange Kraken found that 40 percent of Australian millennials preferred investing in digital assets over real estate.

Now a 23-year-old university graduate from Brisbane, Queensland has brought both elements together by using cryptocurrency to break into the city’s soaring property market.

Economics graduate and new homeowner Loi Nguyen. Source: news.com.au

Loi Nguyen first started investing in crypto in 2017 during his second year of an economics degree. After graduating from high school he had worked full-time as a bank teller for a gap year on a miserly salary of just A$28,000. But the best economic lesson he learned in that time came from observing his customers in the bank.

“I saw people being diligent with their savings and also saw people being very reckless,” Nguyen said. “You had people consistently putting savings away every week and others putting stuff on the stock market.”

Starts With ‘a Couple of Hundred Bucks’ Worth’ of Crypto

Nguyen augmented his own meagre savings by investing in stocks and cryptocurrencies, buying “a couple of hundred bucks’ worth” of bitcoin and ethereum in 2017. When the crypto market crashed a year later, he thought he’d done his money.

Crypto came back into my life when I learned about inflation at uni, and how bitcoin could be disinflationary. I was earning less than half a per cent on my savings account at the bank and wanted to protect my purchasing power … I knew I had to be smart, otherwise I would never break into the property market.

Loi Nguyen, economics graduate and new homeowner

When Covid-19 hit in 2020, crypto started to pick up again as panic hit more traditional markets. Nguyen spent an estimated A$18,000 over the ensuing months until he owned an entire bitcoin, then continued to invest in BTC and ETH.

The one-bedroom apartment Nguyen bought using crypto. Source: news.com.au

Before purchasing his one-bedroom inner-city apartment this year for A$430,000, Nguyen cashed out A$43,000 in cryptocurrency, less than half his overall portfolio, for the deposit on a home loan.

I’ve always wanted to own my own property and to be able live in it. Cryptocurrency allowed me to do that earlier.

Loi Nguyen, economics graduate and new homeowner

Crypto Millennials Aim to Retire at 50

According to a survey conducted by Pearler last May, a “significant number” of Australian millennials intend to retire at the age of 50 using their investments in exchange-traded funds (ETFs) and cryptocurrencies. Nguyen is one such millennial who seems well on the way.

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Bitcoin Crypto News Economics Markets

US Inflation Hits Four Decade High of 7.9%

US inflation has hit a new 40-year high of 7.9 percent, driven by a surge in gas, food and housing costs, all of which are expected to increase further as geopolitical conflict intensifies in Ukraine.

From Bad to Worse

For the 12 months ending December 2021, US consumer price inflation (CPI) hit 7 percent, which at the time was the highest in four decades.

While Bitcoiners and other hard money advocates warned that more pain was potentially on the horizon, many mainstream commentators remained committed to the “inflation is transitory” narrative, citing Covid-related supply chain bottlenecks. They also referred to so-called “base effects”, a distortion in monthly inflation figures resulting from abnormally high or low levels of inflation in the year-ago month.

Turns out that inflation is stickier than anticipated, as the latest figures represent the highest CPI print since July 1981:

Latest CPI figures. Source: US Bureau of Labor Statistics

Costs are up across the board, but some segments are clearly increasing at a faster clip than others. Energy, fuel, transport and housing have experienced the most dramatic increases, as illustrated below:

Image
Illustration of CPI increase line by line. Source: Yahoo Finance

All of this assumes that you take the official CPI statistics at face value, which those in the Bitcoin world don’t:

Bitcoin Offers No Short-Term Relief, More Pain on the Horizon?

Bitcoin held steady on the news at US$39,300, confirming what most market participants believe – namely that in the short-run, it remains a risk-on asset. Interestingly, this trend was recently reversed amid the Russian invasion of Ukraine, but the point remains.

All of this is happening at a time when commentators are signalling that the US stock market is due for a serious correction:

The US markets have been in a bull market since 2010 and some have been screaming for a market correction for months, if not years. It’s entirely inevitable that the party will end. The timing, of course, remains unknown.

In the interim, ordinary consumers will continue to feel the pain as inflation, regarded by some as “tax without legislation”, continues to far outpace domestic wage increases.

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Bitcoin Bored Ape Yacht Club Charity Crypto News Kraken NFTs

Crypto Donations to Ukraine Exceed $100 Million as Kraken and BAYC Join In

Two weeks into the Russia-Ukraine War, total crypto donations across Ukrainian government wallet addresses, charities and relief efforts have passed US$108 million.

Ukrainian Clients of Kraken to Receive $1,000 in BTC

On March 9, Kraken announced it would distribute over US$10 million for relief efforts to clients who created an account from Ukraine prior to that date. Those clients will each receive US$1,000 in bitcoin during the first tranche of funds disbursement, which can be withdrawn immediately. The exchange also waived currency exchange fees for withdrawals of up to US$1,000.

BAYC Developers Match Contribution

Bored Ape Yacht Club (BAYC) has also pitched in on the fundraising effort. After collecting nearly US$1 million in ETH from wallets containing a BAYC non-fungible token (NFT), the developers behind BAYC said it would match the contribution with a US$1 million ETH donation of their own.

Good News Follows Bad

Both these pieces of good news come after the cancellation of a planned airdrop from the Ukrainian government earlier this week, accompanied by a spate of scams looking to capitalise on the crypto community’s generosity.

Last week, an NFT of the Ukrainian flag was sold for 2,258 ether – about US$6.75 million – with the proceeds directed to ‘Come Back Alive’, an organisation that donates supplies to Ukrainian civilians and members of the military.

In other donations news, Binance’s Ukraine Emergency Relief Fund has received over US$11.3 million in various cryptocurrencies since its inception. Kuna’s Crypto Fund of Ukraine has also accepted over US$14 million in major altcoins such as Polkadot, Tether, Candle, USD Coin and Dai.

Alex Bornyakov, Ukraine’s Deputy Minister of Digital Transformation, says that cryptocurrencies have been “essential in this conflict, in terms of helping our army”. 

In a situation like this where the national bank is not really operating, crypto is helping to perform fast transfers, to make it very quick and get results almost immediately.

Alex Bornyakov, Ukraine’s Deputy Minister of Digital Transformation
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Bitcoin Crypto News Markets

Total Exchange BTC Inflows Show Sellers May Be Exhausted

Despite the chaotic geopolitical environment, the Bitcoin market is in a fairly balanced state with low exchange inflows, suggesting seller exhaustion. Could this indicate we’re approaching a turning point in the market?

According to market analysis firm Glassnode, net BTC inflows to exchanges since September 2021 have been virtually flat, indicating fairly modest sell-side supply pressure. Even with the heightened geopolitical uncertainty of the past week, total exchange inflows have remained relatively small at around 1000 BTC per day.

Investors Flock to BTC Derivatives

Although the net inflow of BTC to exchanges overall has been flat, there has been a movement of BTC from exchanges with less derivative market dominance to those with more, indicating investors may be looking increasingly to hedge risk rather than actually sell their BTC.

Bitcoin balances on exchanges. Source: Glassnode

Binance, FTX, Bittrex and Bitfinex have seen significant growth in the amount of BTC they hold: in aggregate, these exchanges have seen an increase of BTC inflows of 24.3 percent since the end of July 2021. In contrast, all other exchanges Glassnode tracks have seen drops. 

In addition to the growth of their held BTC, Binance and FTX have seen their dominance in the BTC derivatives markets more than double since December 2020. This growth in derivatives suggests that investors are generally looking to find ways to offset their risk rather than sell.

Other Market Indicators Further Suggest Seller Exhaustion

According to Glassnode, the majority of sell-side pressure for BTC has been coming from short-term HODLers – those who bought in the past 155 days – who are about 15 percent down on their investment on average. Selling pressure from long-term HODLers has been in steady decline since January 2021.

Despite many recent sellers realising losses, the aggregate market losses are not nearly as significant as we’ve seen in previous bear markets – around 0.5 percent of market cap per day compared to around 1.0 percent in previous bear markets.

According to Glassnode, these relatively small aggregate losses may be a further signal of seller exhaustion, that is to say most of those who plan to sell already have. Although they warn a “final and complete capitulation” is still possible based on historical precedent.

Are We Getting a Look at Bitcoin’s Bear Bottom?

Another encouraging indicator that the bottom of the bear market may be close is that approximately 52.5 percent of all transaction volume is currently spent at a loss: historically this figure has been around 55 percent in the final stages of bear markets.

This finding follows a sell-off of BTC in January 2022, where Bitcoin’s relative strength indicator (RSI) dropped to levels not seen since March 2020 during the Covid crash, which some analysts suggested showed that BTC was oversold and primed for a rebound.

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Bitcoin Crypto News Economics Russia

Global Bank ‘Credit Suisse’ Says We’re Witnessing ‘A New Monetary World Order’

Zurich-based financial services giant Credit Suisse has released a report entitled “Bretton Woods III” in which its strategist argues that we are witnessing the birth of a new monetary world order.

New Monetary World Order – Bretton Woods III

The report starts by saying:

We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.

Zoltan Pozsar, Credit Suisse strategist

“Bretton Woods” refers to the 1944 World War II agreement in which 44 countries consented to a new monetary system in which the US dollar was pegged to gold, and other currencies were pegged to the greenback.

The arrangement completely disintegrated in 1971 when president Richard Nixon took the US off the gold standard. This marked the beginning of the current fiat currency system, what the author terms “Bretton Woods II”, a regime in which the US dollar’s value was largely backed by “inside money” (mostly US treasury bonds).

As G7 nations seized Russia’s foreign exchange reserves following its invasion of Ukraine, Pozsar argues that this marked the beginning of “Bretton Woods III”.

From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries with un-hedgeable confiscation risks), to Bretton Woods III backed by outside money (gold bullion and other commodities).

Zoltan Pozsar, Credit Suisse strategist

The author notes that the West’s sanctions will result in self-inflicted financial instability, even if it causes pain for Russia. To believe that sanctions won’t lead to price stability risks is to “also believe in unicorns”.

He adds that “this crisis is not like anything we have seen since [Richard] Nixon took the US dollar off gold in 1971”. Pozsar then concludes that the West will therefore necessarily experience continued and increased levels of inflation.

‘Money Will Never Be the Same Again’

Pozsar outlines some possibilities as to what the future may look like and how the Chinese Communist Party may play a role (hint – a big one). He concludes his analysis with an ominous warning, saying:

“After this war is over, ‘money’ will never be the same again … and Bitcoin (if it still exists then) will probably benefit from all this.”

Over extended periods of time, Bitcoin has tended to act as a good hedge against inflation despite being correlated with equities. However, recently it surprised commentators by breaking this correlation and soaring 15 percent overnight in response to the Russian/Ukrainian conflict.

We’re living through an extraordinarily volatile and uncertain period of history, and no doubt the monetary system will look very different in the years to come. Is Bitcoin going to play a role? Quite possibly.

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Bitcoin Economics Russia

Can Bitcoin Protect You Against Rising Inflation?

Market volatility and geopolitical tensions remain high amid an ongoing Russian currency crisis, and the United States’ highest CPI print in 40 years. Where does Bitcoin fit into this inflationary environment?

As the “digital gold” narrative gained institutional traction in 2021, much of that argument rested on the belief that Bitcoin provided a hedge against inflation.

However, Bitcoin hasn’t performed as expected, nor has it been predictable. Most of the time it’s acted as a high-risk technology stock, experiencing sharp drawdowns whenever the market shifts risk-off. This broad correlation with equities was, however, recently reversed amid a widespread market sell-off following Russia’s invasion of Ukraine.

Notably, one of the main features of the “digital gold” narrative is that Bitcoin trades (or is otherwise supposed to trade) the same way as gold during these inflationary bouts. A failure to provide short-term protection against inflation is therefore viewed by some as a fatal flaw. This reasoning is however misguided.

Bitcoin as an Inflation Hedge

When considering whether an asset like Bitcoin is an inflation hedge, one shouldn’t be looking at how it reacts to the news cycle. Instead, we should zoom out and evaluate its performance over long periods of time.

Looking at gold, it tends to be the type of asset that underperforms for much of the time but dramatically outperforms in specific periods. This is reflected in the illustration below:

Gold’s performance against inflation. Source: Ecoinometrics

By contrast, Bitcoin has tended to outperform inflation over relatively short and long periods:

Bitcoin’s performance against inflation. Source: Ecoinometrics

Despite being down more than 40 percent from its all-time high, even at the current price of US$38,775, Bitcoin has dramatically outperformed both gold and the broader US stock market over periods exceeding one year.

BTC, gold, S&P 500 performance compared. Source: Casebitcoin.com

Key Takeaway

When it comes to evaluating whether an asset acts as an inflation hedge, it is critical to consider its performance over longer periods. How a particular asset fluctuates in response to news, while interesting, tells us nothing about its capacity to protect purchasing power over extended periods of time.

If you were one of the 1.1 billion people living with double-digit inflation, which asset would you be turning to? Available data tends to suggest that Bitcoin is a good bet.

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Bitcoin Crypto News Events Tether

Swiss City of Lugano to Make BTC and USDT ‘De Facto’ Legal Tender

This week, Switzerland’s ninth-largest city, Lugano, played host to “Plan ₿”, where the city proudly announced plans to make both BTC and Tether (USDT) “de facto” legal tender.

Europe’s Aspiring Bitcoin Capital

In the livestreamed event, Mayor Michele Foletti and CTO of Tether, Paolo Ardoino, announced plans to make both bitcoin and USDT legal tender in Lugano, a city with just over 60,000 residents.

Once passed, residents will be able to make payment for public services, fees and taxes in bitcoin or USDT. Mayor Foletti described the move as a “de facto” legalisation, given that the the Swiss franc would remain as official legal tender in the city and elsewhere in Switzerland.

In addition to the proposed changes to legal tender laws, Plan ₿ also involves establishing a Bitcoin and blockchain hub, where entrepreneurs can congregate, collaborate, network and host Bitcoin meetups and workshops.

This [the Bitcoin hub] is probably the most important thing of this project.

Paolo Ardoino, CTO of Tether

A City Following in El Salvador’s Footsteps

Since El Salvador declared bitcoin legal tender, its GDP has increased by 10 percent and its tourism by 30 percent. “Imagine what we can do in a city at the centre of Europe,” Ardoino added, when speaking of El Salvador’s remarkable progress.

Foletti indicated that the city would “roll [out] the red carpet” for Bitcoin businesses, visitors and new arrivals, offering a business-friendly environment with minimal red tape. El Salvador has similarly taken this approach by creating an attractive investment environment, and exempting foreign investors from capital gains on the bitcoin.

There are a host of other exciting developments happening in Lugano, including a move towards bitcoin mining. To get fully up to speed with the city’s plans, an English translation of the event has been provided below:

As nation states and cities around the world compete for crypto talent, Lugano has put the world on notice that it is serious about becoming a crypto paradise.

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Bitcoin Bitcoin Mining Crypto News Cryptocurrency Law Digital Asset Mining Regulation

EU Scraps Plans to Ban Proof-of-Work Following Backlash

In what has been heralded as a victory for Bitcoin, European lawmakers have backtracked on provisions in a crypto regulation bill that would have effectively banned proof-of-work (POW) tokens, most notably Bitcoin.

European Union Parliament’s U-Turn

Following outcry among miners and the broader investment community, German outlet BTC Echo first reported that the controversial provisions of the Markets in Crypto Assets (MiCA) bill had been struck.

Just days ago, Crypto News Australia highlighted the significant impact that may result from a ban which provided that by 2025, “no crypto assets could be created, sold, or traded within the EU if they used environmentally unsustainable consensus mechanisms”.

Most construed this as a de facto ban on Bitcoin, given that by 2025 it would likely be the only digital asset of value still using POW. This is, of course, assuming that Ethereum successfully transitions to proof-of-stake, a process that is apparently well under way.

Stefan Berger, a German EU member of parliament, was tasked with driving the legislative change and took to Twitter saying:

Correct is: The paragraph is no longer in the text. The report has yet to be voted on in committee. In this vote we will then see where the majorities lie. The decision has not yet been made.

Stefan Berger, Twitter (translated)

According to Berger, the vote on MiCA was originally scheduled for February 28, but since the deletion of the offending paragraphs, the vote has been postponed for an indeterminate period.

Bitcoin Battles ESG

With the risk of China nationalising miners well and truly behind us, it’s become evident that ESG (environment, social and governance) concerns are presently one of Bitcoin’s greatest hurdles to overcome.

Even though Bitcoin consumes less than 0.05 percent of global energy, of which more than 60 percent originates from sustainable sources, the bigger challenge seems to be persuading detractors that it has any value at all.

As long as one fails to see the value of Bitcoin and the importance of POW to security and decentralisation, from their perspective the appropriate amount of energy consumption is likely zero.