Bitcoin will survive. Will you?
Bitcoin trades near $40,000 as attacks against it and self sovereignty unfold.
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First they ignore you, then they laugh at you, then they fight you, then you win.
Crypto market sentiment and my take.
NEW TARGET price range is $34,000-42,000.
Bitcoin is trading near $40,000 after topping $42,500 on July 31st. The July close was $41,626.20, 10% shy of a bullish target of $45,000. The slow and steady upward movement of a wider trading range is, however, signaling strength.
A drop below $34,000 reopens $30,000.
OVERALL BULLISH on current Bitcoin and crypto market price action. This is in spite of the following regulatory uncertainty.
Bitcoin at War
The war on Bitcoin has begun.
AS BITCOIN TRADES near $40,000, attacks against the world’s largest cryptocurrency and the industry it spawned are unfolding.
Some of these attacks are quiet and slow.
Others are loud, messy, and come quick.
We’re in the “then they fight you” era in the history of Bitcoin. We have been for a while and there’s no telling when it will end.
If you’ve been around crypto, you’ve seen a microcosm of this in the way investment banks first scoffed at Bitcoin, then doubled down on their dismissals, and have now done a complete 180, offering crypto solutions and exposure to their clients.
JPMorgan CEO Jamie Dimon famously called Bitcoin “not real” and a “fraud” and now offers it to his clients. His personal opinion on the cryptocurrency aside, Bitcoin won that battle.
Jamie Dimon vs Bitcoin Timeline:
2014: calls it a terrible store of value
2015: says no gov’t will support it
2016: launches enterprise blockchain
2017: “I’d fire traders who buy BTC”
2018: regrets calling it a fraud
2019: proposes stablecoin—JPM Coin
2020: new unit for blockchain projects
2021: offers crypto to clients
You shouldn’t be worried about the Jamie Dimon’s of the world though. They’re at least incentivized to come around for the “then you win” phase because when you win, they win too. They follow the money plus the wants and needs of their clients.
Uninformed regulation is an attack.
IN THE U.S., attacks are coming in forms we’re used to seeing—regulation. To be clear, uninformed or rushed regulation is just as much an attack as anything else. It’s an attempt to redefine Bitcoin and cryptocurrency in a way that makes it less focused on decentralization, the individual user, and his or her sovereignty.
NOT YOUR KEYS, not your coins. This is the most important sentiment in Bitcoin and cryptocurrency. It’s more important now than ever before.
If you don’t hold your private keys (passcode that gives you and only you access to your funds), you do not own your crypto.
And if you share your private keys with an exchange or wallet provider, those entities are entering a period of muddling through government regulation and how or what they report about you, your identity, your funds, and transaction activity.
IN ISRAEL, the Ministry of Finance is proposing regulation that would require investors to report crypto holdings exceeding $61,000 USD to tax authorities. This wouldn’t be the same as reporting what are typically considered taxable events but rather declaring your holdings in order to help the government with “increased supervision” of virtual currencies.
IN MEXICO, financial authorities have repeatedly said that cryptocurrency is not money. Regulators recently announced that 12 crypto exchanges were operating illegally and when Mexican billionaire Ricardo Salinas Pliego said his bank, Banco Azteca, may begin using bitcoin, authorities reiterated their stance that cryptocurrencies do not belong in their financial system.
CHINA CONTINUES its crackdown on Bitcoin mining and cryptocurrencies across the board. This move remains a long term strategic mystery to many but it may be best explained by—governments that seek to remove freedoms, seek to remove tools that improve freedom. Many Chinese miners are holding out hope that the restrictions will be lifted in the near future whereas others are moving abroad.
EL SALVADOR made Bitcoin legal tender and has since seen their president blacklisted while experiencing increased tensions with the International Monetary Fund, World Economic Forum, and other countries.
I’m a U.S. citizen.
I’ve been paying taxes on my taxable cryptocurrency-related events for as long as there’s been decent guidance on the subject. Lawmakers this week are discussing an infrastructure bill that could further complicate tax reporting around crypto.
The bill aims to raise $28 billion in crypto-related taxes and was added seemingly out of nowhere. There’s even speculation that the Treasury Department is behind the sudden move to address crypto and taxes.
In the short term, the bill will be debated and whether or not language around crypto is amended, crypto companies and individual users enter an even more uncertain time period.
The bill is sure to stifle innovation in the space and encourage unnecessary “over compliance” from companies.
Blockchain Association Executive Director Kristin Smith had this to say—“We think it would have the effect of potentially driving a lot of these actors and businesses and individuals involved in crypto overseas and really stifling the innovation in this space here in the United States.”
Coin Center’s Jerry Brito, who testified before a senate hearing called “Cryptocurrencies: What are they good for?”, was caught off guard by the bill’s approach, saying that “Not only is this nonsensical from a technical perspective, such a mandate would very likely be unconstitutional surveillance."
I won’t go into the hearing where Brito testified or the passive aggressive framing of cryptocurrency by the Senate Banking Committee down the title of the hearing itself… But Senator Elizabeth Warren doubled down on her crusade against crypto, lumping Bitcoin in with all else and falsely asserting that cryptocurrency is at the whim of “shadowy super coders.”
Sen. Warren’s attack came within days of her re-upping calls for a wealth tax that would cut through all existing tax guidance on crypto and force users to report and pay taxes on all holdings, similar to the regulation being proposed in Israel, even if they are not transacting with that crypto.
Some argue Sen. Warren’s proposed wealth tax would only apply to a small percentage of individuals and is nothing to worry about. While true, it would set a dangerous precedent of government overreach that completely undermines the entire point of cryptocurrency, let alone the 1st and 4th amendments of the U.S. Constitution.
But the U.S. Constitution, quality guidance from folks at Coin Center or the Blockchain Association, or actual industry insiders cannot stand in the way of a government that has an economy to rescue. Just this week, Treasury Sec. Janet Yellen discussed invoking ‘extraordinary measures’ as Congress missed its deadline to raise or suspend the debt ceiling.
Bitcoin Will Survive
ALL THIS TO SAY, Bitcoin will be fine.
Now is as good a time as any to consider your cryptocurrency holdings and how or where you keep them.
I wrote about setting up and securing a cryptocurrency wallet. You’ll find a how-to guide on setting up both a hot wallet that gives you access to your private keys and a cold wallet solution that further increases your self sovereignty over your holdings.
2 Rules of Thumb:
The more Bitcoin (or cryptocurrency) you own, the more secure your wallet strategy ought to be.
What you intend to do with your Bitcoin determines the type of wallet you should be using.
I’M MOVING MORE Bitcoin to cold storage. Next week, I’ll tell paid subscribers about my upcoming moves. This week, I’ve begun moving more BTC to cold storage, taking it off exchanges and into a cold wallet.
I’LL CONTINUE to use BlockFi for my Ethereum mining efforts for the time being. I’m very interested in BlockFi’s current and future financial products. They have the potential to encourage innovation across the traditional finance and banking sector but upcoming regulations could increase reporting requirements on the company and the amount of know-your-customer compliance they impose.
I’m fine with all of that for my Ethereum mining efforts but I only mine Ethereum and transact in any altcoins in order to earn more Bitcoin. So, I’ll be holding the majority of my BTC in a more private and secure manner from now on while my mining efforts will continue in a way that maximizes profitability.
Paid subscribers track my crypto transactions and holdings. I’ll breakdown where I’m moving and storing my crypto in next week’s email.
I’m even considering a more secure cold storage solution than what I currently have. Become a paid subscriber to learn more about why and how I’m doing this.
What to Watch
Where will Bitcoin go next?
PRICE RANGES TO WATCH:
A wider range brings us to $30k:
Bitcoin appears to be in upward consolidation. Regulatory uncertainty aside, trading volume has increased from lower periods just weeks ago. Increased government scrutiny could also further validate Bitcoin and crypto, proving its originally intended use case as a self sovereign asset.
Referencing China some weeks back, I sent paid subscribers this email titled BITCOIN BANS DON’T WORK. Subscribe to read it and the entire archive.
Bitcoin bans and misinformed regulation are bullish for price. Individual holders like myself don’t like them in the short term because they present complications for how we hold and transact our crypto.
Long term, Bitcoin will persist. It will survive. What remains to be seen is whether or not you will maintain sovereignty over your Bitcoin. You can take action now to use Bitcoin in a more private, secure, and also compliant way. I’ll walk you through doing just that as I do it with my own holdings.
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