This past week was one of uncertainty. Is this period of capitulation nearing an end? Or is it just a harbinger for a further, more pronounced decline? Regardless of which way the market turns, those with the means have already commenced ‘buying the dip’. This, in addition to a meeting in front of the House Committee on Financial Services, highlighted this past week’s events.
Digital Assets and the Future of Finance
Over the past few years, much has been made about how digital assets should be regulated moving forward. This means looking at what benefits and challenges they bring forth, and how can this be leveraged without introducing unnecessary risks to financial markets.
This week saw various influential individuals within the digital asset sector speak on these topics in front of the House Committee on Financial Services. Those that took part included,
- Circle CEO, Jeremy Allaire
- FTX CEO, Samuel Bankman-Fried
- Bitfury Group CEO, Brian P. Brooks
- Paxos Trust Company CEO, Charles Cascarilla
- Stellar Development Foundation (SDF) CEO, Denelle Dixon
- Coinbase Inc. CEO, Alesia Haas
This discussion, which acted as an outlet for some of the sectors top actors to educate officials on digital assets, had a clear theme – regulation. The following are a few quotes from the various testimonies given highlighting this.
Paxos CEO, Charles Cascarilla, states, “Unfortunately, the uncertain state of digital asset regulation is hampering the industry's dynamism. The solution is not to shoehorn digital asset operations into a regulatory system designed for earlier generations of financial assets. Rather, we have an opportunity to learn from past failures and build something more efficient and effective.”
SDF CEO, Denelle Dixon, states, “We’ve started to see how innovation can be hampered in other parts of the world when regulators and lawmakers react quickly, and arguably prematurely, to address perceived risks around cryptocurrency…Let’s not hamper innovation here in the United States which would have a real impact on the ability to make full use of this technology elsewhere. Let’s learn from the past, let’s take down the walled gardens, let’s get rid of the friction, and let’s create an open loop for innovation here in the U.S.”
Coinbase Inc. CEO, Alesia Haas, was particularly bold in her hope for future regulation, advocating for the creation of a new regulator custom built for overseeing digital assets. While the belief that ‘a single regulator is the solution’ may seem far-fetched, it is clear that inadequacies in existing framework are being felt by not just a select few companies, but the sector as a whole. Hopefully moving forward, discussions such as this allow for the powers-that-be to make informed, thoughtful decisions, as opposed to knee-jerk reactions being seen in some nations around the globe.
Buying the Dip
Last week when BTC first began to decline in earnest, El Salvador President Nayib Bukele announced that the nation once again ‘bought the dip’ to the tune of 150 BTC. This week, it was the turn of MicroStrategy with CEO Michael Saylor announcing the firm had purchased another 1,434 BTC at an average price of $57,477.
As it stands, MicroStrategy now sits on one of the world’s largest treasure troves of Bitcoin – 122,478 BTC purchased on average at $29,861.
With an increasing amount of individuals and companies’ alike viewing BTC as a hedge against inflation, it is unsurprising to see more instances of ‘buying the dip’ (especially with U.S. inflation levels surging to almost 7% in November)
Market Reaction & Metrics
While Bitcoin bulls attempted to push the price of BTC higher mid-week, peaking at roughly $52,000, this attempt was ultimately unsuccessful. Meaning the week ended where it began – with BTC hovering around $49,000.
On a positive note the Bitcoin network is as robust as it has ever been. With a recent jump in hashrate, the Bitcoin network has officially recouped 100% of the losses it experienced after mining was banned in China months ago.
Although hashing power of the Bitcoin network is back to all-time highs, sentiment surrounding the digital asset market is not. Rather, the popular ‘Fear & Greed Index’ indicates that recent activity has resulted in an overall sentiment of ‘Extreme Fear’.