Crypto weekly: Bitcoin making a comeback Crypto weekly: Bitcoin making a comeback Crypto weekly: Bitcoin making a comeback

Crypto weekly: Bitcoin making a comeback

Picture of Anders Nysteen
Anders Nysteen

Senior Quantitative Analyst, Saxo Bank

Summary:  During the past week, several positive Bitcoin-specific headlines caused Bitcoin to shine performance-wise when compared to other major cryptocurrencies. Meanwhile, the demand for regulative clarity around cryptocurrencies is increasing.


Bitcoin outperforming altcoins

Over the past week, the price of Bitcoin has increased by more than 10 %, whereas most of the larger altcoins have given close-to-zero or even negative returns. The Bitcoin rally has been driven by multiple Bitcoin-specific headlines, such as El Salvador making Bitcoin legal tender in the country (although the Minister of Labor and Social Welfare states that the country is not prepared for using Bitcoin for paying wages). Additionally, Telsa announced that they will resume allowing Bitcoin transactions whenever there is confirmation that clean energy constitute more than 50 % of total energy consumption for Bitcoin mining. And the first major Bitcoin upgrade in four years has now been locked in – see more below.

Regulation – providing constraints or opportunities?

The global focus on crypto regulation has increased over the past weeks. Last week the U.S. Senator Elizabeth Warren called on U.S. policymakers to confront the issues related to the growing use of cryptocurrencies. An official in the Netherlands has proposed a ban on Bitcoin, but the Dutch minister of finance sees that supervision is more effective than a total ban in the Netherlands, although it is crucial to have proper rules for mitigating the associated risks, e.g. regarding money laundering. The head of Italy’s stock market regulator has as well raised concerns about the lack of regulatory standards within the growing crypto sector, and South Africa are also laying out the fundament for a structured regulation of cryptos. But is regulation necessarily a bad thing for cryptocurrencies? The CEO of BlockFi Inc, Zac Prince, see regulation as something positive as “regulatory clarity enables companies like BlockFi to continue innovating, it enables consumers and investors to participate in this sector with the utmost confidence”.

Bitcoin’s first update in four years

Over the weekend, the first upgrade to the Bitcoin network in four years, the Taproot upgrade, was accepted by a majority of the Bitcoin miners, signaling that they are ready to implement the upgrade. It is expected to activate in November 2021, as miners and nodes will need time to update their software. In short, the upgrade will provide improved privacy, scalability and security to the Bitcoin network. Additionally, the upgrade opens the door to running smart contracts on the Bitcoin network, which is currently one of the widely used features of the Ethereum blockchain.

16_ANNY_BTC
BTC vs. USD. Source: CoinMarketCap
16_ANNY_ETH
ETH vs. USD. Source: CoinMarketCap

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.