The ECB said WHAT About Bitcoin?
What a long way we’ve come in the decade-and-a-half since Bitcoin was unleashed upon the world. The approval of a spot Bitcoin ETF in the United States is now a question of when, not if. Central banks will be able to hold BTC on their balance sheets from 2025. Bitcoin is unstoppable.
In these circumstances, it’s no surprise to see those in power taking an ever-closer interest in Bitcoin and the crypto sector more broadly. While the goings-on in the US tend to hog the headlines, other jurisdictions are proving to be more adept at getting to grips with all things crypto and the European Union is one of the most notable in this regard.
The European Central Bank (ECB) has just produced a fascinating report which analyses the factors that cause BTC’s wild price swings. It considers the macroeconomic, crypto-specific and country-specific factors which affect the price of BTC and examines its trading volume against 44 different fiat currencies over a four-year period. The result is an intriguing glimpse into what the future likely holds for BTC and what its price action may one day come to look like.
In today’s video, we go through this report and highlight its key findings. This will give you some valuable insights into what one of the world’s most powerful central banks thinks about Bitcoin and help you prepare your own personal strategy for the years ahead. You can watch that video here.
📈 Crypto Market Forecast 📈
It’s going to be an interesting week for the crypto market. That’s because the US Senate has decided to delay its holiday recess indefinitely to work on a series of bills. For context, the Senate was supposed to go on its holiday recess on Friday.
If you’re wondering why this matters, it’s because anti-crypto politician Elizabeth Warren recently introduced her anti-crypto bill to the Senate. It’s possible that this bill could be voted on and approved by the Senate during its extended session ahead of the holidays.
If this were to happen, then the bill would still need to be voted on by the House when they return from their holiday recess (which began last Thursday). Given the amount of pro-crypto politicians in the House, it’s unlikely that Elizabeth’s bill would make it past this hurdle.
Even so, a Senate approval (if it happens), would likely spook the crypto market. For reference, Elizabeth’s anti-crypto bill would basically mandate KYC for every crypto-related activity, including mining and validating. This would effectively kill crypto in the US.
In theory, the crypto market could brush off a Senate approval because investors would know it’s not a real threat (due to the hurdles in the House). In practice however, the insane amount of leverage in the crypto market could cause a surprisingly big dip.
Case in point, 300 million dollars worth of longs were liquidated on the same day that Elizabeth tabled her anti-crypto bill. While it’s hard to know for sure if this was the catalyst for the liquidations, it's likely that it contributed to the flash crash from $44k to $40k.
In the absence of this crypto headwind however, the market could see some tailwinds from the macro side. For starters, the US dollar has been weakening. For those unfamiliar, the US dollar’s strength (per the DXY) is inversely correlated to crypto prices.
The reason why the US dollar has weakened is because the Fed basically announced that it was finished raising interest rates, and forecast three rate cuts for 2024. With the other central banks still planning on keeping rates high, this has caused the USD to weaken.
The Fed’s rhetoric and forecast has also had the effect of causing long-term interest rates in the US to fall, with the yield on the 10-year treasury falling below 4%. If you watched yesterday’s Ethereum update, you’ll know that ETH is inversely correlated to these yields.
What this means is that if long-term interest rates in the US keep falling, then ETH could once again become attractive to yield-obsessed institutional investors. To put things into perspective, ETH staking rewards are currently around 4%, like the 10-year treasury.
This begs the question of how low long-term interest rates will need to go for institutional investors to start buying ETH around the margins. To get the answer, you have to remember that ETH is a risk asset, whereas government bonds are considered to be the safest assets going.
This means that the 10-year treasury yield will likely need to fall significantly below the ETH staking yield to make the risk-reward attractive. Considering that the Fed is influencing these yields, it’s possible that ETH won’t shine until spring, when the first rate cut will likely happen.
The caveat is that investors have a habit of pricing things in - buying and selling based on future catalysts that have yet to occur. What this means is that ETH could start to move sooner than expected, and the Dencun upgrade in January could be the catalyst.
In sum, it looks like the crypto market could be in for a choppy week, and it’s possible that ETH will finally start to gain some momentum against BTC and other alts. Fingers crossed!
🎅 Crypto Xmas 🎅
Christmas is the most wonderful time of the year! Full of time spent with family exchanging gifts under the tree.
But, us crypto holders deserve even more goodness given the roller coaster year we have been through.
Well, the Coin Bureau merch store has everything you need and more! Here, you will find crypto christmas themed merch, beanie hats, hoodies and even the obligatory christmas socks!
On top of that, our merch store is one of the best ways to support Coin Bureau’s work on YouTube. So, thanks in advance to everyone who decides to support us this Christmas! 🎄
👉 Check out the Coin Bureau store!
💯 Deal of The Week 💯
The festive period is always a good time to start thinking about those New Year resolutions. One thing that every crypto holder should definitely consider is their crypto security.
Is that portfolio as safe as it should be? If not, it is probably a good idea to pop that on your list of New Year’s resolutions and to grab yourself a hardware wallet before this bull run really takes hold!
Our two top picks for hardware wallets?
🥇 Trezor - store over 1,000+ coins and tokens!
🥈 NGRAVE - get 10% OFF the coldest hardware wallet.
Use code: COINBUREAU
🔮 Video Pipeline 🔮
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- Exclusive Interview With Tim Draper & Raoul Pal
- Coin Bureau Predictions in 2024: Our Top 10 List
- Are BTC Transactions Being Censored? What you need to know!
- K33 Research Report: Here’s What To Expect
🏆 What's New at CoinBureau.com This Week? 🏆
✅ Blockchain Use Cases and Applications
✅ Tokenized Assets on Bitcoin: Innovation or Wasted Blockspace?
✅ Play and Earn With the Top 10 Best Crypto Games of 2024
✅ Paybis Review 2024: The Ultimate Guide to Using Paybis
✅ M6 Labs: Hacks and Market Recovery
📖 Quote of the Week 📖
There are insane gains being made in crypto right now. This will no doubt create a great deal of FOMO, which is only natural. However, errors are made when that FOMO starts to cloud your judgement. It may look easy to make money on a highly speculative memecoin. But, that strategy cannot be sustained for the long term, as it is just that - highly speculative.
“Speculation is most dangerous when it looks easiest” - Warren Buffet
Team Coin Bureau
Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.
Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.