The president and CEO of the Federal Reserve Bank of Minneapolis, Neel Kashkari, has expressed concern about consumer risk due to “fraud, hype, and confusion” surrounding bitcoin. Moreover, he said the cryptocurrency has been around for more than a decade but “there’s still no legitimate use case in an advanced democracy.” ‘I Am Worried From […]
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Bitcoin miner reserves can often be a tell for where the market could be headed next due to their large holdings. These reserves going up or down can pinpoint how miners are looking at the market, and a drop in their reserves can be bad for the BTC price.
Bitcoin miners, who are responsible for confirming transactions on the blockchain and keeping the network safe, seem to be turning toward selling rather than accumulating. According to a CryptoQuant report, these miner reserves have seen a notable drop since 2024 began.
Their holdings dropped by 14,000 BTC in less than two months, suggesting that these miners have been selling some of their stash. Going by an average price of $43,000 since January 2024, this means that Bitcoin miners have sold over $600 million worth of BTC so far. As a result of this, miner reserves are currently sitting at 1.8 million BTC, which is the lowest level since June 2021.
Bitcoin miners selling their coins are not new because they often need to sometimes sell to keep their operations running. The most notable costs include electricity, as well as mining machines. However, it does not change the fact that their selling can have an adverse effect on the price of BTC.
This time around, though, miners seem to be selling for an additional reason, which Matthew Sigel, who’s head of digital asset research at VanEck, has identified to be for purposes of bolstering their balance sheets.
The next Bitcoin halving is expected to happen sometime in April 2024, and the block rewards are expected to fall to 3.125 BTC. Naturally, these miners are getting ready for this drop in rewards, as identified by Matthew Sigel.
“Miners have begun to sell more of their coins to bolster balance sheets and fund growth capex ahead of tougher times for margins when block rewards are halved in April. After the halving, scale will matter even more.”
Nevertheless, as selling has ramped up, so has buying as Spot Bitcoin ETF issuers scramble to accumulate BTC for their customers. According to this NewsbTC report, Spot Bitcoin ETF issuers now hold more than 657,000 BTC, worth more than $28 billion at current prices.
At the time of writing, the BTC price is trending at $42,933, after being beaten back from the $43,000 resistance. The crypto’s fluctuations at this level suggest that $43,000 is the target to beat if it is to continue its uptrend.
BTC price struggles below $43,000 | Source: BTCUSD on Tradingview.com
Featured image from Forbes India, chart from Tradingview.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
MicroStrategy (MSTR), a prominent Bitcoin holding company, has once again expanded its BTC holdings with a substantial purchase of 14,620 Bitcoin, amounting to a staggering $615.7 million.
The former CEO of the American business intelligence (BI) firm announced the acquisition, highlighting the company’s continued confidence in Bitcoin’s long-term potential.
With the potential approval of Bitcoin spot exchange-traded funds (ETFs) on the horizon, MicroStrategy aims to capitalize on the positive impact on BTC’s price and the company’s profitability in the leading cryptocurrency market.
According to a CNBC report, MicroStrategy’s stock has experienced a remarkable 337% surge in 2023, making it one of the top gainers among US companies valued at $5 billion or more.
This success surpasses the rallies of industry giants like Nvidia and Meta. Unlike its tech peers, MicroStrategy’s appeal to investors stems primarily from its Bitcoin holdings.
MicroStrategy’s market capitalization currently stands at $8.5 billion, with a staggering 90% directly tied to its Bitcoin holdings. The company’s stock price closely mirrors the performance of Bitcoin, with significant fluctuations in response to the cryptocurrency’s price movements.
Per the report, in 2022, when Bitcoin experienced a 64% decline, MicroStrategy’s stock plummeted by 74%. Despite the substantial gains achieved this year, MicroStrategy shares are still below their peak levels in 2021, during the cryptocurrency’s peak.
MicroStrategy’s decision to invest in Bitcoin dates back to July 2020, when the company recognized the potential of alternative assets, including digital currencies.
At that time, MicroStrategy had a market capitalization of around $1.1 billion, primarily driven by its software business, which has been shrinking since 2015. Co-founder Michael Saylor, who was CEO then, saw an opportunity to put the company’s idle cash reserves to work, considering low interest rates and the need for diversification.
Saylor’s conviction in Bitcoin as a digital form of gold led MicroStrategy to prioritize Bitcoin purchases over equities and precious metals. This strategic move exposed investors to Bitcoin indirectly through MicroStrategy’s stock.
Saylor, who transitioned to executive chairman, remains optimistic about Bitcoin’s future, expecting the bull market to continue into the next year. Despite its growing popularity, Saylor emphasized that Bitcoin still represents only a fraction of global capital allocation, with ample room for further growth.
As of December 27, 2023, MicroStrategy’s latest purchase adds to its already impressive Bitcoin portfolio, bringing the total holdings to 189,150 BTC.
The company has invested approximately $5.9 billion, with an average purchase price of $31,168 per Bitcoin. These strategic acquisitions position MicroStrategy as a major player in the crypto space, aligning its interests with the anticipated growth and adoption of Bitcoin.
The current market data shows that Bitcoin is trading at $42,900, reflecting a marginal 0.5% increase over the past 24 hours. The cryptocurrency briefly dipped below its critical support level of $42,000 but has since regained its position.
The market is anticipating the potential approval of the Bitcoin Spot ETF applications between January 5 and 10, 2024.
This development holds significant promise for Bitcoin, as it could drive the cryptocurrency’s price well beyond $50,000, establishing a new yearly high and edging closer to its historical peak.
Featured image from Shutterstock, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
Gemini has confirmed it withdrew $282 million of its Earn users funds from the bankrupt crypto lender Genesis in August last year into its liquidity reserve, according to a Sept. 28 statement.
The exchange made this statement in response to a New York Post report alleging that the crypto platform’s co-founders, Tyler and Cameron Winklevoss, had secretly withdrawn over $280 million from the bankrupt lender.
According to the report, it was “unclear if the withdrawn funds were Gemini corporate assets or from the Winklevoss twins’ personal crypto stash.” However, the New York Post stated that “the sum did not include any Gemini customer funds.”
In response, Gemini stated that the report was “completely misleading,” adding that “everything the Post alleges in its story is the exact opposite.”
Gemini justified its $282 million withdrawal by pointing to the terms of the Gemini Earn Program, which allowed it to create a “liquidity reserve” for the benefit of Earn users. Gemini said:
“Amidst the broad market turmoil in the summer of 2022, we decided to increase the liquidity reserve. As a result, we pulled back $282 million of Earn users’ funds from Genesis on August 9, 2022 and held those funds in the liquidity reserve for their benefit.”
The exchange explained that the withdrawal helped its users have $282 million less exposure to Genesis when the bankrupt lender halted redemptions in November last year.
Gemini vehemently dismissed the Post’s report as “pure fantasy,” suggesting it was a calculated attempt to bolster the reputation of Digital Currency Group (DCG), the parent company of Genesis, and its CEO, Barry Silbert.
Gemini said:
“[The report was] pre-packaged and handed to the New York Post by BarrySilbert and DCG in another brazen attempt to manipulate public opinion, Earn users, and distract from their fraudulent behavior that is currently under criminal investigation.”
This continues the highly publicized dispute between Gemini and DCG, which began when Genesis filed for bankruptcy. According to Gemini, DCG has been aware of the lender’s insolvency since 2022 but chose not to disclose this critical information to investors.
The post Gemini confirms it withdrew $282M from Genesis to boost liquidity reserves in 2022 appeared first on CryptoSlate.
damircudic | E+ | Getty Images
The Federal Reserve is likely to temporarily pause its aggressive interest rate hikes when it meets next week, experts predict. But consumers may not see any relief.
The central bank has raised interest rates 10 times since last year — the fastest pace of tightening since the early 1980s — only to see inflation stay well above its 2% target.
“We are living in uncharted territory,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion. “The combination of rising interest rates and elevated inflation, while not uncommon from a historical perspective, is an unfamiliar experience for many consumers.”
“A pause is not going to make things better,” he added.
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Although the Fed’s rate-hiking cycle has started to cool inflation, higher prices have caused real wages to decline. That’s squeezed household budgets, pushing more people into debt just when borrowing rates reach record highs.
Even with a pause, “interest rates are the highest they’ve been in years, borrowing costs have gone up dramatically and that isn’t going to change,” said Greg McBride, chief financial analyst at Bankrate.com.
Here’s a breakdown of how the benchmark rate has already impacted the rates consumers pay:
The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.
For starters, most credit cards come with a variable rate, which has a direct connection to the Fed’s benchmark rate.
After the previous rate hikes, the average credit card rate is now more than 20% — an all-time high, while balances are higher and nearly half of credit card holders carry the debt from month to month, according to a Bankrate report.
Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rate for a 30-year, fixed-rate mortgage currently sits at 6.9%, according to Bankrate, up from 5.27% one year ago and only slightly below October’s high of 7.12%.
Now, the average rate for a HELOC is up to 8.3%, the highest in 22 years, according to Bankrate. “While typically thought of as a low-cost way to borrow, it no longer is,” McBride said.
The average rate on a five-year new car loan is now 6.87%, the highest since 2010, according to Bankrate.
Keeping up with the higher cost has become a challenge, research shows, with more borrowers falling behind on their monthly loan payments.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects could happen in the fall.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.
While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.4%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now over 5%, the highest since 2008’s financial crisis, according to Bankrate.
However, if the Fed skips a rate hike at its June meeting, then those deposit rate increases are likely to slow, according to Ken Tumin, founder of DepositAccounts.com.
