Insider Information Claims Bitcoin Futures ETF Will See No Opposition At Deadline

Bitcoin ETFs have been a hot topic of discussion in the crypto space recently. Rumors of approval have circulated in recent days and the SEC looks set to give its approval to its first ETF. There have been speculations as to which ETFs would get approved first, but it looks like the Valkyrie Bitcoin ETF has the highest chance of getting the first approval.

A Bloomberg article reported that the SEC was set to approve the first Bitcoin ETF in the United States, citing people who are familiar with the matter on this. It would seem after a drawn-out battle, the regulator has come to a conclusion regarding the trading of Bitcoin ETFs in the country.

Related Reading | El Salvador Sees Rise In Identity Theft As Scammers Steal Personal Data To Get $30 Bitcoin Bonus

Bitcoin Futures EFT See High Chance Of Approval

There is still no definitive decision on the Bitcoin ETFs. Nevertheless, there has been information brought to light that suggests that Bitcoin Futures ETF are likely to be approved by the regulator. Filings like that of Proshares and Invesco Ltd. which were filed under mutual fund rules see a high chance of getting approved when the SEC is set to make its decision.

Related Reading | Institutional Investors Remain Bullish On Bitcoin As Market Records Eight Weeks Of Inflows

This is because Bitcoin Futures ETFs are said to be safer to trade on for investors. The SEC is the regulatory body that makes sure investors’ money is protected and thus has to make sure that it approves only filings that will see to it that funds of investors are protected. SEC boss Gary Gensler said that Bitcoin Futures ETFs actually provide “significant investor protections” and this comment has participants in the crypto space believing the regulatory body will approve a Bitcoin Futures ETF.

Bitcoin price chart from TradingView.com

BTC price breaks above $61K | Source: BTCUSD on TradingView.com

The SEC has been very cautious when it comes to approving trading vehicles in connection to cryptocurrencies. The lack of regulation in the space has drawn concern from the regulator about the safety of investor funds. However, with the growing popularity of the space, the SEC is forced to make a decision on the ETF filings which it has received.

Going Through Without A Hitch

According to people familiar with the matter, they claim that there will be no opposition to the Bitcoin Futures ETFs once the deadlines for the decisions arrive. Investors will be able to trade on the ETFs once approval goes through.

Related Reading | Why Bitcoin, Ethereum, And Solana Are Posting Major Gains In The Market

The rumors surrounding the ETFs have had a great effect on the market. BTC price broke $60,000 for the first time in five months as speculations around an SEC approval grew. It has caused a ripple effect in the market which has seen altcoins rallying alongside the top cryptocurrency in the market.

There is still some time left before the SEC has to make a decision. But soon after the decision is made, Bitcoin ETF filings from VanEck and Valkyrie are nearing their deadline and the regulator will have to make a decision on these too.

Featured image from Premium Times Nigeria, chart from TradingView.com

Bitcoinist Book Club: “The Bitcoin Standard” (Chapter 7, P. 2: Inflation)

Let’s focus. If we do, we can finish our analysis of Saifedean Ammous’ “The Bitcoin Standard” this century. The rest of this chapter is all about inflation, the buzzword of the last few months. As the whole world is feeling the effects of something that’s day-to-day life for small economies, people in privileged countries are curious about why their purchasing power decreases every month.

SPOILER ALERT: It’s because of unsound money and the government’s constant money printing.

Let’s explore that idea and everything fiat money permits and generates as a byproduct. But first… 

About The Coolest Book Club On Earth

The Bitcoinist Book Club has two different use cases: 

1.- For the superstar-executive-investor on the run, we’ll summarize the must-read books for cryptocurrency enthusiasts. One by one. Chapter by chapter. We read them so you don’t have to, and give you just the meaty bits. 

2.- For the meditative bookworm who’s here for the research, we’ll provide liner notes to accompany your reading. After our book club finishes with the book, you can always come back to refresh the concepts and find crucial quotes. 

Everybody wins.

So far, we’ve covered:

And now, let’s go back to, The Bitcoin Standard:
“Chapter 7: Perpetual War, Inflation, And Taxation”

Inflation is a hidden tax. Bitcoin fixes this. However, the world doesn’t live under the Bitcoin standard… yet. We could summarize this whole section with this quote:

“With sound money, the government’s war effort was limited by the taxes it could collect. With unsound money, it is restrained by how much money it can create before the currency is destroyed, making it able to appropriate wealth far more easily.”

Only through this technology called money can trade exist at a massive scale. And, as we explored here, price is a mechanism that summarizes all the intricacies of different economies into a simple number. However, if the signals are corrupter by unsound money, price is no longer useful. “Prices need to be denominated in a sound form of money across the community that trades with it,” however, in our world they’re not.

“When communities use different kinds of unsound money, trade becomes more complicated, as prices vary along with the variation in the value of the currencies, making the terms of trade unpredictable, and making it often counterproductive to plan economic activity across borders.”

In the world we live in, perpetual war is our day to day

Do you remember a time when there was not an active war somewhere? Not to mention the unwinnable wars that the U.S. likes to engage with. Like the war on drugs. Or the war on terror. “As it stands, a large number of firms in all advanced economies specialize in warfare as a business, and are thus reliant on perpetuating war to continue being in business.” Well, these types of operations are only possible in a fiat money world.

“In nineteenth-century Europe, kings who wanted to fight each other had to tax their populations in order to finance their militaries. In the long run, such a strategy could only be profitable for kings who would employ their military defensively, not offensively.”

As you might suspect, the hidden tax that is inflation doesn’t only finance wars. Unbeknownst to the common people, It finances everything, including the government’s incompetence.

“As long as government had to tax its people to finance its operations, it had to restrict its operations to what its subjects deemed tolerable. Governments had to keep a balanced budget by always keeping consumption within the limits of earnings from taxation. In a society of sound money, government is reliant on the consent of its population to finance its operations.”

Inflation Is Easier Than Taxation

It would be much harder to fund the government’s every whim if they had to outright tax the population. Not only that, inflation “allows governments to buy allegiance and popularity by spending on achieving popular objectives without having to present the bill to their people.” No wonder the ones on top wanted to get out of the gold standard and rewarded those economists that gave them the intellectual justification to do so.

“Unsound money makes government power potentially unlimited, with large consequences to every individual, forcing politics to the center stage of their life and redirecting much of society’s energy and resources to the zero-sum game of who gets to rule and how. Sound money, on the other hand, makes the form of government a question with limited consequences.”

As we said before, the constant printing of new money distorts the price signal beyond recognition, but there’s more. “Credit creation by central banks causes unsustainable booms by allowing the financing of unprofitable projects and allowing them to continue consuming resources on unproductive activities.” Businesses with access to direct government payments and low-interest‐rate credit have an enormous advantage over those who don’t. And who gets those contracts? Those already connected and big companies. The bigger the better.

“In a society with sound money, the more a person saves, the more he is able to accumulate capital and the more he can invest, meaning that capital owners tend to be those with lower time preference. But when capital comes from government credit creation, the allocators of capital are no longer the future-oriented, but members of various bureaucratic agencies.”

BTCUSD price chart 10/16/2021 - TradingView

BTC price chart for 10/16/2021 on Bitstamp | Source: BTC/USD on TradingView.com

Banking In A Sound Society

The banking profession gets a bad rep. Yet, more and more students are drawn to it each and every year. The reason is that it’s an extremely profitable industry, sure. However, the fact that those institutions are considered “too big to fail” and can take enormous risks without fear of consequences also plays a big role. 

“In a society with sound money, banking is a very important and productive job, where bankers perform two highly pivotal functions for economic prosperity: the safekeeping of assets as deposits, and the matching of maturity and risk tolerance between investors and investment opportunities. Bankers make their money by taking a cut from the profits if they succeed in their job, but make no profit if they fail. Only the successful bankers and banks stay in their job, as those that fail are weeded out.”

About the relationship between these untouchable “too big to fail” institutions and inflation, Saifedean says:

“In a society with sound money, a central bank would have to tax everyone not involved in the bank in order to bail out the bank. In a society with unsound money, the central bank is simply able to create new money supply and use it to support the bank’s liquidity.”

Would the U.S. population have backed the bailout if they had to directly pay for it from their own pockets?

Featured Image: The Bitcoinist Book Club logo | Charts by TradingView

Billionaire Barry Sternlicht Buys Bitcoin And Ethereum, Calls Gold “Worthless”

Another legendary investor has revealed a position in Bitcoin and Ethereum as the cryptocurrencies approach their all-time highs. In an interview with CNBC billionaire Barry Sternlicht claimed that he has purchase BTC and ETH joining the ranks of Elon Musk, Michael Saylor, and Paul Tudor Jones.

Related Reading | Deutsche Bank Analyst Marion Laboure Says Bitcoin Is Here To Stay As Digital Gold

Sternlicht has an approximate net worth valued at $4 billion. He is one of the founders of Starwood Capital Group. The investment fund has an estimated $60 billion in assets under management (AUM).

Similar to Jones and Saylor, Sternlicht is concerned about central banks and their monetary policies which could be creating inflation for their currencies. Thus, the legendary investor decided to diversify his portfolio into Bitcoin and Ethereum as a hedge against this phenomenon.

In addition, Sternlicht took on the opportunity to address the comments made by the CEO of JP Morgan Chase Jamie Dimon on Bitcoin. A few days ago, the executive called BTC “worthless” following a long list of dismissing comments made by Dimon across the years.

In response, Sternlicht claimed that gold, one of the most common use assets a store of value, is “worthless”. The legendary investor said:

What Jamie Dimon talked about, I mean, gold is kinda worthless too and silver. They have some industrial uses, but they are minor. It’s a store of value. The reason I own Bitcoin it’s because the U.S. government and every government in the Western hemisphere is printing money now until the end of time (…).

BTC’s characteristics, its capacity to move value around the world, and its finite supply, are other reasons that convinced Sternlicht to jump into the crypto market. In that sense, the co-founder of Starwood Capital added:

You can move into something (Bitcoin) that the world has accepted as a substitute for gold, and since it’s an 18 million flow or something like that out of 21 (million BTC). I think Bitcoin is the biggest, it’s a dumb coin, it has no real purpose, other than a store of value (…).

Bitcoin And Ethereum Still In Its Early Phase

On the contrary, Sternlicht believes Ethereum has the capacity to be programmable. Ultimately, the legendary investors claimed to be interested in blockchain technology as a whole.

Related Reading | The SEC Will Not Ban Crypto, That Would Be Up To Congress, Says Gary Gensler

Bitcoin and Ethereum, as Sternlicht understand them, could lead to a technology revolution as the internet once did. He added:

I became very interested in the blockchain technology, in the digital ledger. This is going to change everything, and we are probably in inning one.

Sternlicht is far from the only institutional investor that has caught with the potential in cryptocurrencies. This has taken an important tolled on gold-based investment products, as pointed out by Bloomberg Intelligence Senior Commodity Strategist Mike McGlone.

At the time of writing, BTC trades at $57,337 with a 3.7% profit in the weekly chart.

Bitcoin BTC BTCUSD
BTC moving into support in the daily chart. Source: BTCUSD Tradingview

How The U.S. Took The Leading Position In Bitcoin Mining From China

Latest data shows the leading global Bitcoin hashrate now resides in the US as a result of China’s crackdowns on mining.

US Leads In Bitcoin Hashrate, Kazakhstan And Russia Follow After

As per a report from the University of Cambridge, the US is now leading the global BTC hashrate, with Kazakhstan and Russia following soon after.

The Bitcoin “hashrate” is an indicator that shows the total amount of mining power on the BTC network. Here is a map that shows how this metric is distributed around the world:

Bitcoin Mining Hashrate

US seems to be leading the global hashrate | Source: Cambridge Bitcoin Electricity Consumption Index

The above map is based on research produced by CBCEI where they collected data from mining pools and used their methodology to plot the hashrate by location. Note that this data is for the end of August 2021.

As the map shows, US is now the number one nation by Bitcoin hashrate as its share now stands at 35.4%. At the end of April, this value was only around 16.8%.

Related Reading | Here Is Why The Russian Crypto Industry Is Trying To Attract Bitcoin Miners

Kazakhstan makes up for 18.1% of the global hashrate now, up from 8.2% since the last data. Russia follows closely after with 11% (up from 6.8%).

The report also shows that the global Bitcoin hashrate dropped around 38% in the month of June due to China’s crackdowns. These crackdowns had the Chinese government clamp down on mining in the country to free up power for other projects.

Related Reading | China’s Crackdown Hits Ethereum Hard As Authorities Shut Down Over 10,000 Mining Rigs

The drop is roughly equal to the country’s hashrate from before the crackdowns started, meaning that miners immediately and simultaneously shutdown their operations.

Once miners from China started relocating in other countries, the Bitcoin hashrate started bouncing back, and now in October it has already almost fully recovered to levels before the crackdowns. In fact, the mining hashrate is looking set to make a new ATH soon.

During the period of low global hashrate, mining difficulty had severely fallen, and profitability rose to high levels for those still active on the network

Western miners won big profits then, and the mining firms in those regions saw their stocks skyrocket in response.

BTC Price

Today, BTC broke $48k for the first time since May, but since then has fallen off a bit. At the time of writing, Bitcoin’s price floats around $57.5k, up 5% in the last seven days. Over the last month, the crypto has gained 24% in value.

The below chart shows the trend in the price of BTC over the last five days:

Bitcoin Price Chart

BTC's price continues to show volatility while it overall moves up | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, University Of Cambridge

SEC Tweet Sparks Fresh Speculation Over Bitcoin ETF Approval

Let the speculation begin! The official Twitter account of the United States Securities and Exchange Commission (SEC) has reissued a bulletin educating investors on “the potential risks and benefits” of a Bitcoin ETF or “fund” which has the cryptocurrency community spiraling over the possible implications.

Those implications are that the tweet is a subtle hint that a Bitcoin ETF is near approval – something that a decision should soon be made on before the month is over. Could this be the news event that sends the cryptocurrency to new all-time highs?

Speculation Runs Wild As SEC Tweets About BTC “Fund”

As a branch of the United States government, the SEC isn’t just tasked with protecting investors, it must also educate investors as part of planning and prevention.

For example, the SEC devised the Howey Test to determine if an asset is a security or otherwise. If it is, it would then fall under its purview. In the past, the SEC created a Howeycoin website specifically to show crypto investors what a scam would look like.

Related Reading | This Perspective Shows What The Last Leg Up In Bitcoin Looks Like

Their most recent tweet has shared a reminder about the potential pitfalls of “investing in a fund that holds Bitcoin futures contracts,” along with a link to learn more.

With potential Bitcoin ETF – which stands for exchange-traded fund – approvals on the horizon, speculation immediately turned to how the tweet basically meant an ETF approval was “inevitable.”

Could The Debut Of A Futures-Based Bitcoin ETF Lead To Cycle Climax?

But it is important to note that the link shared by the SEC’s investor education handle links off to a page created in early June, and might not be the smoking gun connection to a Bitcoin ETF approval conspiracy that the community thinks it is.

Still, with several potential Bitcoin ETFs that could be approved as early as this month, the timing certainly is suspect. “VanEck, ProShares, Invesco, Valkyrie and Galaxy Digital” will all be decided on before the month is over, according to CNBC.

bitcoin ETF approval SEC

An approval or denial could be a big deal | Source: BTCUSD on TradingView.com

During the bear market, when an ETF would fail to pass approvals, Bitcoin price would tank as a result. Another failure here could caused a double-top scenario in the leading cryptocurrency by market cap, while an approval would likely lead to a blitzkrieg of full blown BTC FOMO.

Related Reading | Bitcoin Is “The Loudest Monetary Fire Alarm” In Finance

The SEC’s tweet does reference a fund that holds Bitcoin futures contracts, which in theory could allow institutions to gain access to short positions on the cryptocurrency. The last time a major new platform debuted that let institutions short BTC, it was the launch of CME Bitcoin futures, and it was the exact top of the last cycle.

Will the eventual Bitcoin ETF be this cycle’s CME?

Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com

Why Bitcoin, Ethereum, And Solana Are Posting Major Gains In The Market

The broader crypto market has seen recovery trends from September lows that have sent the price of top coins rallying. Bitcoin, Ethereum, and Solana have recorded some of the biggest gains so far. This has been due to a number of factors that have greatly affected the movement of cryptocurrencies. Bitcoin, in particular, has seen the most significant price movements, with Ethereum and Solana not too far behind.

Institutional Investors Back On The Bull Train

Institutional investors are a big reason behind the recent price rally. The crypto market has now recorded eight straight weeks of inflows totally above $600 million. The market has greatly benefitted from this as top coins have rallied to new heights in recent weeks. Bitcoin alone saw $225 million in inflows for the past week and altcoins brought a couple of million in inflows in the same time period.

Related Reading | The Big Difference Between Bitcoin And Ethereum, According To Founder Vitalik Buterin

It signals that institutional investors are beginning to get back into the market en masse and this has driven up faith in cryptocurrencies where there had been so little. Solana and Ethereum led altcoins in inflows for the period. Both altcoins have led the altcoin market in recorded gains. With both assets bounding towards their previous all-time highs.

Bitcoin price chart from TradingView.com

BTC breaks above $60K | Source: BTCUSD on TradingView.com

The supply shock expected across these digital assets as hold sentiment grows among investors has also helped in driving up their value. This bull rally has seen some marked differences from previous bull markets. Instead of investors moving assets to exchanges to sell off, the market is seeing more exchange outflows than inflows, suggesting that investors are holding onto their cryptocurrencies despite growth in value.

Bitcoin ETF Rumors Driving Market

The SEC is expected to make a decision on Bitcoin ETF approvals soon. Speculations are that the SEC will approve a bitcoin ETF before the month runs out and it is expected that this will be done with no opposition from the regulatory body.

In light of this, the market has surged in expectation of the first approved bitcoin ETF in the United States. An approval carries major connotations for the crypto market as this will bring crypto trading to the mainstream. Investors will be able to invest in a bitcoin ETF in the United States and will be able to add it to investment portfolios like ROTH.

Related Reading | Billionaire Mark Cuban Says Ethereum Carries ‘Most Upside’ As An Investment

Bitcoin briefly touched $60K on Friday as the SEC’s ETF decision draws near, while Ethereum and Solana have made good progress following behind BTC’s gains in the market. If the market maintains the current momentum, all three assets are expected to touch their previous all-time highs by next week and then continuing to rally towards record highs.

Featured image from Managing Upwards, chart from TradingView.com

99% Bitcoin Supply In Profit Again, Here’s What Happened Next Historically

On-chain data shows 99% of the circulating Bitcoin supply has unrealized profits again. History may have the hint for where the market could head next.

99% Of The Circulating Bitcoin Supply Has Unrealized Gains

As pointed out by a CryptoQuant post, the profit percent of the circulating BTC supply has reached 99% once again as the coin rallies past $59k.

The profit percent indicator used here shows the ratio of transactions with unrealized profits versus the total number of transactions.

Unrealized profits” here refer to those gains that investors haven’t taken yet. The indicator looks at the chain for coins that if sold today will net some profit compared to when they were last transacted.

Now, here is a chart that shows the trend in this indicator for Bitcoin over the last few years:

Profit percent of the circulating BTC supply since 2017 | Source: CryptoQuant

As the above graph shows, 99% of the circulating Bitcoin supply now has some unrealized gains. Since 2017, there have been two other instances where similar values were observed.

Related Reading | Bitcoin Mining Metrics Continue To Spike In Most Profitable Year Ever

The first time was in 2017. The indicator reached values as high as 99.9% back then, and kept up above 99% values for a while. It is during this period with such sustained high values that BTC price went on to have the historic parabolic bull run.

The only other time this has happened was from late 2020 till early 2021. Bitcoin showed a similar trend back then as well and went to make the current $65k all time high (ATH).

Related Reading | Billionaire Barry Sternlicht Buys Bitcoin And Ethereum, Calls Gold “Worthless”

As the indicator is now approaching similar values as those times, it’s possible the trend could make a repeat now too. The key here could be the sustained period of high values.

During the leadup to the 2018 bull run, high values were present but they didn’t last too long and the run fizzled out early. It’s possible this may happen now as well.

BTC Price

At the time of writing, Bitcoin’s price floats around $59.3k, up 8% in the last seven days. Over the last month, the crypto has gained 25% in value.

The below chart shows the trend in the value of the coin over the last five days.

Bitcoin Price Chart

BTC continues to make a strong push up | Source: BTCUSD on TradingView

Over the last couple of weeks, Bitcoin has showed big momentum up as the crypto has now broken the $59k price mark. It’s unclear how long BTC can keep this up, but indicators are for the most part showing bullish signals for the coin right now. If the profit percent indicator keeps the trend up, perhaps BTC will make a new ATH soon.

Featured image from Unsplash.com, charts from TradignView.com CryptoQuant.com

“Significant Uptick” In Bitcoin Spot Buying Volume Suggests Sustainable Rise

Data shows the latest rise in Bitcoin’s price is accompanied by a significant uptick in the trading volume. This could suggest that the current uptrend may be sustainable.

Bitcoin Trading Volume Climbs Up Fast This Week

As per this week’s Arcane Research report, the BTC trading volume is climbing up fast this month after a relatively slow last few days of September.

The “trading volume” indicator highlights the total amount of Bitcoin transacted on the network. An increase in the metric’s value would suggest that activity on the blockchain has risen, while a decrease implies little movement of coins by holders.

Here is a chart that shows the daily trading volume for BTC after taking a 7-day average of it:

Bitcoin Trading Volume

The BTC trading volume over the last year | Source: The Arcane Research Weekly Update - Week 40

As the above graph shows, after some inactivity towards the end of September, the Bitcoin network seems to have awakened.

Related Reading | Bitcoin FOMO: On-Chain Data Suggests Big Accumulation Going On

For the first time in three months, the daily volume crossed $10 billion on 6th October. The current 7-day average volume is around $6.3 billion.

What Does The Indicator Say About BTC Price?

The trading volume is an important metric when looking for whether the crypto can sustain its price increases or not.

The metric showing high values implies investors are looking to change their positions in the market and newcomers are also entering into the network.

Related Reading | Bitcoin Eclipses Trillion-Dollar Market Cap on Equity ETF Approval – Crypto Weekly Roundup, October 11, 2021

This activity leads to higher volatility, which can mean larger price swings for Bitcoin. Therefore, such an environment is suitable for sustaining price moves.

On the other hand, lack of proper trading volume can mean investors aren’t interested in the coin at the moment. This kind of situation can result in the price moving sideways, and if the crypto tries to make a big move, it quickly falls apart.

The last few months had several moves where there wasn’t any trading activity, but BTC was moving up. Those moves either didn’t last much, or were quickly supported by a rise in the volume.

The current high trading volume is a good signal for Bitcoin’s latest rally. If the volume keeps up, BTC could possibly push for a new all time high (ATH) soon.

At the time of writing, BTC’s price floats around $55.1k, up 4% in the last seven days. Over the past month, the crypto has accumulated 23% in gains.

The below chart shows the trend in the value of Bitcoin over the last five days:

Bitcoin Price Chart

BTC's price shows some downtrend after a large move up where the coin crossed $57k | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

Institutional Investors Remain Bullish On Bitcoin As Market Records Eight Weeks Of Inflows

Institutional inflows in the market have not slowed down. Presumably, the recent rounds of inflows have something to do with the recovering market prices. Retail investors are also buying into the market. But with a $1 trillion market cap, real movements in the market can only come from big money FOMOing into the market.

Bitcoin, as well as altcoins, are having a good season. After the summer of low momentum, things are starting to look up again for the cryptocurrency market. Large, medium and small market cap coins are all seeing an appreciation in their value as “Uptober” rages on. Only less than two weeks into the month, bitcoin has seen market prices that have sent it shooting to four-month highs.

Institutional Investors Still Bullish On Bitcoin

Since the price of the top digital currency is rallying, investors are putting money back in the market to make sure that they do not miss out on the train. Inflows for the week were $226 million. But bitcoin dominated this with a total weekly inflow of $225 million. Leaving altcoins in the dust with only $1 million of inflows for the week.

Related Reading | Why A U.S. Bitcoin ETF Has A 75% Chance Of Being Approved In October

This marks the eight straight weeks of inflows for the crypto market that come up to a total of $638 million of inflows. Bringing the total assets under management (AUM) to $63.65 billion.

The record for assets under management for crypto currently sits at $67 at its peak and currently, AUM is only 5% away from reaching this all-time high. Most of this has come from renewed faith in bitcoin as sentiment has turned towards the positive for the digital asset.

Bitcoin price chart from TradingView.com

BTC price rebounds from Tuesday lows | Source: BTCUSD on TradingView.com

The recent statements from SEC boss Gary Gensler saying that the U.S. was not planning on banning bitcoin have helped to turn the tide in favor of the asset. With this, institutional investors have upped their bet in the market. And ahead of the first bitcoin ETF to be approved in the country, big money is getting ready to trade on the asset.

Still Not Altcoin Season?

Altcoins did not do especially well with inflows the past week. Although top earners like Solana and Cardano saw inflows, the numbers were quite disappointing. Altcoins like Polkadot, Ripple, and Litecoin all experienced outflows to the tune of almost $3 million, signifying a decreased interest in the altcoin market from institutional investors.

Related Reading | El Salvador Sees Rise In Identity Theft As Scammers Steal Personal Data To Get $30 Bitcoin Bonus

Altcoins have not entirely lost out to bitcoin but the pioneer cryptocurrency still commands a significant share of the market. Ethereum also experienced outflows and this dragged its total AUM to 24%. With bitcoin creeping up to take more market share from the number 2 contender.

The total market inflows mark a significantly positive sentiment among institutional investors. With so much money flowing into the market, the bull rally is likely to continue and a new all-time high may be imminent.

Featured image from City AM, chart from TradingView.com

Ted Cruz Said Bitcoin Will Strengthen Texas’ Electrical Grid, What Does He Mean?

It’s official, Ted Cruz is a bitcoiner now. However, take into account that he is a Senator for Texas, and the state is quickly becoming the biggest Bitcoin hub in the USA. The politician might be catering to his constituency, but that doesn’t take away from his message. “In five years I expect to see a dramatically different terrain with Bitcoin mining playing a significant role as strengthening and hardening the resistance of the grid,” he said in the Texas Blockchain Summit.

Related Reading | Ted Cruz Says Crypto “Got Screwed,” Here’s Why

The senator joined notorious Bitcoin maximalist Jimmy Song in a fireside chat, and Bitcoin mining’s energy consumption was the main dish on the menu. And since ESG concerns have been one of the main points of contention against Bitcoin this year, that’s the topic we’ll focus on.

What Did Ted Cruz Say About Bitcoin Mining, Exactly?

The Bitcoin community’s answer to ESG concerns is consistent. Bitcoin mining is actually a neutral, ever-hungry, third-party client for energy producers. It provides a much-needed financial incentive to help develop new, clean energy sources. It can also finance existing ones. The main example of that use case scenario is natural gas.

Surprising everyone, Senator Ted Cruz explained the concept perfectly.

“If you look at natural gas right now, in West Texas the amount of natural gas that is being flared. Fifty percent of the natural gas in this country that is flared, is being flared in the Permian right now in West Texas. I think that’s an enormous opportunity for Bitcoin, because that’s right now energy that’s just being wasted. It’s being wasted because there’s no transmission equipment to get that natural gas where it could be used the way natural gas would ordinarily be employed. It’s just being burned.”

As is often the case, Bitcoinist reported on this procedure two years ago. In the article titled “Bitcoin Miners in Canada Uncover Green Energy Breakthrough,” we said:

“With the new solution, this will no longer be the case, as the companies can install Bitcoin mining gear and use the gas to mine the coins. With more of the natural gas being used for powering mining farms, there will be a major reduction of carbon dioxide emissions from gas and oil exploration, which ultimately leads to greener mining.”

So, it’s not only carbon-neutral. It’s climate positive. However, nowadays, Bitcoin mining can do even more.

BTCUSD price chart for 10/14/2021 - TradingView

BTC price chart for 10/14/2021 on Bittrex | Source: BTC/USD on TradingView.com

What Is “Demand Respond” And How Does It Relate To Bitcoin Mining?

Surprising everyone once again, Ted Cruz can and did answer that question.

“Because of the ability to Bitcoin mining to turn on or off instantaneously, if you have a moment where you have a power shortage or a power crisis, whether is a freeze or some other natural disaster where the power generation capacity goes down, that creates the capacity to instantaneously shift that energy to put it back on the grid.”

As opposed to every other industry, Bitcoin mining can be turned on and off at will. A question arises, why would the miners turn off their equipment? In case of an emergency, they would not only have a moral duty to do so, but they’ll also have a financial incentive. During a normal scenario, the population doesn’t need that excess energy, that’s why the Bitcoin mining rigs are there in the first place. In an emergency, the grid operator would simply buy that energy, probably at a premium.

The theory is that is not economically feasible to build natural gas pipelines. However, with Bitcoin mining as an incentive, they’ll build natural gas powered generators on site. In the case of an emergency, the grid would buy that energy. At the same Texas Blockchain Summit, Bitcoin expert Nic Carter introduced the “Demand Respond” concept and elaborated on the idea. In the “Bitcoin mining is an energy sponge” section of his talk, he states:

  • Bitcoin mining soaks up excess supply during offpeak periods, improving economics of renewable energy projects.

  • Miners curtail load when prices are high, giving households better access during times of heavy demand.

  • • Miners can consume renewable energy when an economic buyer does not exist and be interrupted during times of peak load.

In Conclusion, Bitcoin Mining Will Finance Green Energy

Natural gas provides the clearest example for our thesis, so we focused on that. However, the concepts apply to other renewable energy sources as well. Especially intermittent ones like wind and solar.  As Nic Carter said in his talk, “It’s well understood that the profile of wind/solar generation does not match typical household demand.” Bitcoin mining can use the excess energy produced and, thus, incentivize the building of new green power infrastructure.

Related Reading | Texas Commercial Law Making Crypto Legal In The State Goes Into Effect

And this is just beginning. The incentive Bitcoin mining provides could unlock new renewable energy sources we’re not even thinking about yet. As Ted Cruz said, “In five years I expect to see a dramatically different terrain with Bitcoin mining playing a significant role as strengthening and hardening the resistance of the grid.”

 

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