Chatter Around Crypto Regulation Reveals Lack of Knowledge
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| By Marija Matic |
Senator Elizabeth Warren’s (D-MA) recent push for the Digital Asset Anti-Money Laundering Act has sparked renewed concerns about regulatory uncertainties in the U.S. crypto market.
This initiative, along with Warren's vocal anti-crypto stance, has triggered discussions about potential regulatory risks, possibly contributing to Bitcoin's recent dip below $41,000.
A week ago, she issued a statement revealing increased support for the Digital Asset Anti-Money Laundering Act and highlighting the use of crypto for illicit activity.
Prior to this, she garnered backing from some important bankers including JPMorgan Chase (JPM) CEO Jamie Dimon, who notably stated, "If I were the government, I'd shut it down," in Warren’s presence, reinforcing her anti-crypto stance.
Harsh words. But it’s Dimon’s assertion that he could simply "shut down" a globally distributed blockchain — governed by numerous entities worldwide — that raises skepticism about his understanding of the technology.
Blockchains operate in a decentralized manner, making them resistant to singular control or shutdown. His comment underscores a fundamental misunderstanding of the nature and resilience of Bitcoin (BTC, "A").
This is why, while regulation can be instrumental in bridging TradFi users over to crypto, it’s imperative that opinionmakers and lawmakers educate themselves further to bring about smart regulation. Otherwise, we’ll be stuck with at best useless and at worst harmful regulation. And at that point, it won’t kill crypto … just the U.S.’ ability to keep up with the crypto revolution.
While this lack of understanding is not likely to bother Bitcoin one bit in a technical sense, it likely contributed to BTC's 5.51% price decline, marking an end to an eight-week winning streak on Dec. 17.
In addition, digital asset investment products saw mild bearishness with minor outflows totaling $16 million, ending an 11-week run of inflows.
On a positive note, though, institutional trading activity remained well above year average, totaling $3.6 billion for the week.
And the Bitcoin network's usage is on the rise, with NFTs gaining significant traction. Surprisingly, NFTs on Bitcoin have surged in popularity, surpassing Ethereum's (ETH, “B+”) by over threefold recently.
Specifically, last week saw a remarkable surge in NFT trading volume on the Bitcoin network, skyrocketing from $121 million to $305 million. Ethereum trailed with $93 million in NFT trading, followed closely by Solana (SOL, “C”) at $90 million.
The ascent of Bitcoin Ordinals has ignited industry excitement, prompting numerous companies to capitalize on this trend.
For instance, the Tap Protocol, utilizing ordinals, made headlines with a $4.2 million fundraising round focused on its development within the Bitcoin ecosystem.
Additionally, the pioneering NFT collection BitcoinShrooms made waves by fetching an astounding $450,000 at Sotheby's. This sale, which featured three pixelated pictures, exceeded initial expectations by a whopping fivefold.
However, the increased Bitcoin network activity didn't translate into price gains, ending its eight-week winning streak. Currently, the price remains in a sideways trend, confined within a triangular pattern that suggests a possible move this week:
More intriguing is the future breakout of ETH/BTC, as evident from this monthly chart:
Each candle on the chart above represents a month, and you can see ETH/BTC has been developing this triangular pattern since 2017, with the price now nearing the support level of the pattern for the fourth time. A bounce from this level is crucial in the upcoming weeks or months.
If the support is defended, the hopes are high for a significant upward breakout anticipated in the coming year. It could be huge!
Notable News, Notes & Tweets
- Red Bull Formula 1 team drops NFTs after a dominant season.
- OKX has become the No. 1 NFT marketplace after enabling trading of BTC Ordinals NFTs.
- Early Ethereum backers fund to invest $100 million in 'Cybernetic Economy,' which is focused on an intersection between blockchain, AI and IoT.
- Avalanche (AVAX, Not Yet Rated) burned $16.7 million of AVAX last week, 10 times more than the week before.
What’s Next
In the current crypto landscape, focal points for the broader public encompass discussions around U.S. regulatory matters, SEC activities and news related to BTC-spot ETFs.
However, within the realm of dedicated crypto users, the spotlight shines on various announcements emerging from cryptocurrency and platform development teams. The progress made during the bear market is increasingly apparent, reflecting substantial advancements in the crypto space.
Nevertheless, with the Christmas holidays approaching, it's probable that we'll experience a period of market quietness.
Best,
Marija
