Rumors of an FBI hack of Bitcoin are just FUD. Focus on the real signal.
For a long time, I’ve been thinking that the first country to make Bitcoin a legal tender will go down in history forever. Just as Michael J. Saylor will forever be remembered as the first CEO of a major publicly-traded company to embrace the Bitcoin revolution, it would seem that El Salvador will hold that role as far as countries are concerned.
In early June 2021, El Salvador’s President Nayib Bukele has just announced to the world his intention to make Bitcoin a legal tender in his country.
This proposed law will have to be passed by the Congress of El Salvador before it becomes a reality. In any case, it is a strong signal sent by El Salvador to the rest of the world. Nayib Bukele explains that Bitcoin will be used alongside the US dollar, which is currently the country’s official currency.
For the president of El Salvador, Bitcoin will make it easier for Salvadorans living abroad to send money back home.
This is a bold move by Nayib Bukele, who believes it will create jobs in the short term while contributing to the financial inclusion of thousands of people outside the formal economy. It must be said that 70% of Salvadorans do not have access to a bank account. Bitcoin would give them direct access to basic banking services.
El Salvador’s economy relies heavily on remittances, i.e. money sent from abroad, which represent 20% of the country’s GDP. Current services charge prohibitive fees and can take days to arrive while having to be picked up in person.
For President Bukele, “Bitcoin will improve the lives and futures of millions of people”.
In the wake of El Salvador’s announcement, several other South American countries have decided to publicly embrace the Bitcoin revolution. This ranges from Paraguay to Argentina, Panama, and Nicaragua. Many Brazilian politicians are also starting to give Bitcoin a wide berth.
Official recognition of Bitcoin in these countries would be a response to the will of the people, who did not wait for an official authorization to massively use the digital currency invented by Satoshi Nakamoto at the end of 2008.
For all these countries, Bitcoin is an opportunity to be seized to find a solution to the American dollar system which leaves them little chance of a better future.
Despite all this great news for the revolution, you may have noticed that the price of Bitcoin has dropped again in the last few hours from just over $36K to $33K as I write this. A low of $32.2K has even been hit.
Many people have asked me over the past few hours why Bitcoin is seeing its price fall as countries announce their intention to embrace the Bitcoin revolution. This may indeed seem paradoxical.
There are two main reasons for Bitcoin’s price drop.
The first is an announcement made by the US authorities on June 7, 2021, that $2.3 million paid in BTC to the hacker group DarkSide has been recovered. As a reminder, this hacker group had demanded ransomware from the American government during a cyber attack against the Colonial Pipeline in May 2021.
The U.S. authorities released a document explaining that the FBI was able to access the private keys of one of the hackers to recover the ransom directly from his wallet on the Bitcoin network.
For the media, it was very easy to make a shortcut with disastrous consequences for the general public’s opinion: Bitcoin was hacked by the FBI. The spread of such a rumor necessarily frightened the market, which then quickly collapsed within minutes.
Those who have taken the time to analyze the documents can see that Bitcoin was not hacked by the FBI. No Bitcoin wallet has been hacked, and that is simply not possible. The Dark Side hackers had rented a cloud server on which the private keys were hosted.
The FBI obtained a subpoena to seize the server and take control of it. Once they had the private keys, it was a simple matter for the FBI to recover the stolen Bitcoin. It was simply a matter of performing standard transactions on the Bitcoin network. Nothing the average person can do.
So Bitcoin remains the most secure decentralized network in the world. A network that has never been hacked. It is important to repeat this so that you can understand that the media has simply propagated FUD (Fear, Uncertainty, and Doubt) information as it often does.
To this first reason was added the second classic reason: the psychology of 99% of the investors who do not know how to distinguish between the true and the false.
Meanwhile, you have people who can take the long view and will take every opportunity to accumulate more BTC. This is how Michael J. Saylor announced on June 7, 2021, that MicroStrategy would issue $400 million in debt to buy more BTC.
The recent market fall has led to traders rushing toward sell-offs, even as Bitcoin’s price started to consolidate. The king coin’s downtrend on June 12, which led to an over 6% fall in valuation, was followed by several alts such as Binance Coin, Filecoin, and Tron’s TRX. Breaking through important support levels, these coins also faced rising selling pressure and depleting capital inflows. Their south-bound movement kept them vulnerable to additional losses going forward.
Binance Coin continued on its downtrend. After gaining over 33% just between May 31 and June 2, its valuation fell by 20% during June 7-9. Still trading in the red, the coin was priced at $337.8 at press time. After testing resistance at $365, it had fallen a further 13.2% over the past week.
Relative Strength Index or RSI dipped below the median line on June 10 to 39.8 at press time. If selling pressure continues to mount, the coin could be headed for the oversold zone. As Parabolic SAR’s dotted line hovered above the candlesticks, a downtrend for the price action could be noted.
However, according to Awesome Oscillator’s histogram, bullish momentum could be seen creeping in although it was too early to declare a positive price movement based on the indicator alone.
The support at $304 remained strong and could act as a savior if BNB continues its downward movement.
Filecoin lost 26% of its valuation during the market reduction on June 7. The coin fell through support lines at $84.5 and $75.5 and had since lost further valuation during the price fall on June 11. It was trading at $69 and saw slight gains on the four-hour chart with the emergence of a green candlestick at press time.
Chaikin Money Flow indicated that traders rushed to sell their holdings on June 12, as the capital outflows mounted way over the inflows. Selling pressure also continued to be overpowering, as Relative Strength Index continued to hover over the oversold region since June 8. The convergence of the Bollinger Bands did highlight the reduced volatility of the market and price action could be constricted going forward.
The blockchain network recently hit several milestones. Tron’s daily active users hit an all-time high of 5.26 million, while the total daily transaction count has also hit an all-time high of 6.22 million on Tuesday.
Nevertheless, Bitcoin’s retracement on June 10-11 proved to be detrimental to Tron, which fell by over 12% during this time. The coin broke through its support at $0.069 but found new support at the $0.065 mark, with the former acting as a strong resistance. The 24-hour trading volume for the coin also fell by 31% over the past day.
Bollinger Bands remained diverged during this time, indicating that market volatility was picking up. The appearance of a red line below Awesome Oscillator’s histogram suggested that bullish momentum was starting to surface on the coin’s price action. Moreover, MACD’s histogram closed in one a bullish crossover, even as the lines remained below the equilibrium and moved in alignment with one another.
Since the indicators suggest that bearish momentum is declining, TRX could defend $0.065 support from a breakdown. In case the support is broken, the coin could face a plunge of over 20% towards the next support at $0.055.
Why NFL’s Russell Okung Asked Nigeria To Adopt The Bitcoin Standard
Following El Salvador’s decision to grant Bitcoin the status of legal tender, other government officials in the region have hinted at adopting similar measures. Most of the interest seems to have a source in developing countries. Their populations have been the most benefit from Bitcoin’s open and censorship resistance network. NFL’s professional player Russell Okung […]
Following El Salvador’s decision to grant Bitcoin the status of legal tender, other government officials in the region have hinted at adopting similar measures. Most of the interest seems to have a source in developing countries. Their populations have been the most benefit from Bitcoin’s open and censorship resistance network.
Okung is of Nigerian descendant and is well-known for his pro-BTC stance. He famously used the phrase: “Paid me in Bitcoin”, as a demand to his team’s management. The professional football player has kept an eye on the situation in El Salvador and believes that “soon every nation will be faced with this decision”.
Therefore, Okung argues that it will be more beneficial for the country to be first in Africa to make BTC legal tender. In that way, Nigeria will “will enjoy significant advantages globally for generations to come”.
Similar to El Salvador, Nigeria and other countries in Africa have placed their fate in “the hands of global central bankers”. Okung believes these entities have acted for their own benefit and not those of the Nigerian people.
The NFL’s player emphasizes that the current global economic outlook calls for fast and extreme measures. Other countries, Okung claims, such as Russia, China, Kenya, and Iran use Bitcoin in some form to “circumvent U.S. sanctions” and retake more participation in the global financial system. He adds:
I’m proposing an equally aggressive approach to national Bitcoin adoption which would significantly bolster every sector of the Nigerian economy and revitalize the spirit of every Nigerian domestically and abroad.
What Countries Risk By Not Adopting Bitcoin
Nigeria has a troublesome history with the cryptocurrency. A national ban was imposed in the country, only to be removed after a couple of days when BTC’s price rose 46%. The measure caused people to panic buy BTC to protect their savings, businesses, and hedge against the situation described by Okung.
Data from Statista indicates that around $400 million are traded in cryptocurrencies in this country for 2021 alone. This suggests that the Nigerians have a lot of interest in this asset class.
The African country has seen a wave of massive protest, as a report from The Guardian claims. Nigerians have been celebrating Democracy Day and have mobilized to manifest rejection for their government’s bad governance.
The report claims that Nigeria is one of the most corrupt countries around the globe. Thus, seems logical that their citizen has high Bitcoin adoption levels. At the same time, it seems improbable that government officials will give BTC legal tender status. Still, Okung presented his arguments, he seems to understand the benefits for Nigerians and what truly it’s at stake.
(…) a delay in pursuing a national plan for bitcoin adoption will risk a scenario where Nigeria is left behind and its citizens excluded from the possibility of significant wealth creation and preservation.
At the time of writing, BTC trades at $37,464 with moderate gains in the daily chart. BTC experienced high volatility during the weekend. In order for the bulls to take control, the $40,000 resistance must be flipped into support in the short term.
Bitcoin maximalists are currently gaining from the dropping altcoin market capitalization. Another group in on that is DeFi project traders and HODLers. This weekend, the altcoin market capitalization dropped further. In the past 7 days, the altcoin market capitalization has dropped along with a drop in altcoin prices. BNB, ADA, DOGE, XRP, DOT and CRV have dropped and this has increased the accumulation, investment inflow.
Low marketcap projects have offered high returns over the past 7 days. There are several factors supporting this narrative. Increasing trade volume of DeFi projects has increased in proportion to altcoin market cap. The demand across exchanges has increased and there is an increase in the number of unique wallet addresses and TVL. This may change the narrative of DeFi to bullish.
High market cap projects may lead to the increase in demand and investment inflow proportionate to the interest of their users. The low market cap projects continue to face a correction when traders exit. The drop in altcoin market capitalization has a direct impact on DeFi users.
The diminishing altcoin market capitalization has had a direct impact on the investment inflow, the number of traders and the demand across exchanges. This is bullish for DeFi projects as the rising number of users and the metrics related to number of trades, wallets and users indicate a growing interest, investment, institutional investment inflow and growth in DeFi market capitalization.
With the rise in the number of DeFi projects, there is a surge interest from institutions. With the upcoming biggest smart contract event of the year, it is likely that DeFi projects like UNI, CAKE, SUSHI, AAVE that haven’t rallied in the past 2 weeks would rally following increasing demand and popularity, social media mentions.
When the average price chart of these projects is observed, and they are ranked in accordance to their ranking of growth in Active users, there is a strong correlation between users and market capitalization. AAVE, UNI, SUSHI have ranked the highest. Though ranking does not have a direct correlation with social volume and price, it has increased following drop in altcoin market capitalization. This builds a bullish case for DeFi in the following two weeks.
The Purpose Bitcoin ETF holdings have reached an all-time high of 19,692.149 BTCdespite the current bitcoin market decline.
The dip in the bitcoin market has not scared off Canadian investors. By considering the Purpose Bitcoin ETF re-accumulation, there is an indication that investors are buying the dip. Over the last month, Purpose’s holdings have increased by 963 BTC.
BTC is currently sitting at $36,028, a steep drop from its all-time high of $63,000. However, despite the flash crash, which brought the price down to around $30,000, the ETF has been steadily gaining over time.
Its holdings at the current price amount to around $709 million.
Purpose Bitcoin ETF success
The Purpose Bitcoin ETF launched in February 2021. It is hosted by the Canadian investment company Purpose Investments.
The company won approval for the ETF from Canada’s regulators and continues to be successful. Two days after its launch, the ETF grew its assets under management (AUM) to over $400 million.
This ETF offer investors the chance to invest directly into physically settled ether.
No signs of ETF approval from U.S.
Not only was the bitcoin ETF a first for Canada, but it was also a first for North America. It was hoped that this bold move would encourage its southern neighbor, the United States. However, this was not the case.
The U.S. is still to approve an ETF, despite the multiple applications from various parties. In addition, it appears even the success of the Canadian ETF hasn’t been able to sway regulators.
Most recently, the SEC delayed its decision on VanEck’s latest filing just hours before the deadline. This keeps it in the pile of over a dozen applications that are still in limbo.
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After working in news and lifestyle journalism, Leila decided to bring her interest in cryptocurrencies and blockchain to her day job. She now runs the Features and Opinions desk at BeinCrypto which fits perfectly with her enthusiasm for crypto’s social and political impact.