The Bitcoin bounce back

At the end of last week a new Covid variant appeared called Omicron. As a result, the cryptocurrency market experienced a sell-off on Friday 26th. It wasn’t the only market where panic had set in. But by the end of the weekend, we had seen some confidence returning as traders realised that it was likely there would be no return to full lockdowns this time round.

Yesterday, Monday 29th November looked very promising. Digital assets were mostly back in the green, although as Billy Bambrough points out, Bitcoin appeared not to be leading the market in this bounce back. Instead it was noticeable that the assets rebounding most strongly were Ethereum (ETH), Solana (SOL) and Polkadot (DOT) showing higher gains of around 7%, while Bitcoin (BTC) was somewhat lower at +4-5%. But there were still several wins for Bitcoin along the way.

El Salvador buys ‘discounted’ Bitcoin?

As Bitcoin dipped to $53,000 some were ready to buy the dip. Nayib Bukele, El Salvador’s “bitcoin-besotted” president was one of them. He announced to the press that his country had bought another 100 Bitcoins during the dip at the end of last week, adding to El Salvador’s stash of 1,000 BTC. Luckily for Bukele and his country, Bitcoin rallied after he’d made what he referred to as his ‘discounted’ BTC purchase, so he must be happy at least.

However, Bambrough points out that there Bukele’s buy should be noted, because he is “is doubling down on bitcoin in the face of international warnings and condemnation.” What is this about?

Well, last week plans were announced for a $1 billion bitcoin bond. This is supposed to fund an ultra-low tax city. However, it had the effect of sending El Salvador’s dollar-denominated bonds to an all-time low, and gave the country a debt profile that is even worse than that of Lebanon. In fact, it’s the worst in the world now. The Bank of England governor had warned last week that the “country’s decision to adopt Bitcoin as legal tender alongside the US dollar was concerning because people could be caught out by its volatility. He couldn’t believe that a country would choose Bitcoin as a national currency he told Cambridge University student union. He also told the assembled students that the IMF was really not very happy with El Salvador.

Did Microstrategy power the bounce back

But El Salvador’s purchase of 100 BTC was nothing compared to Microstrategy’s announcement that it had acquired 7,002 Bitcoin on Monday at an average price of $59,187 per coin. It’s an announcement that pleased the bitcoin bulls, as did the one from the German stock market operator Deutsche Boerse, which is listing the Invesco Physical Bitcoin, an exchange-traded note (ETN).

And in other good news for Bitcoin supporters: over the past week, the Bitcoin network has transferred or settled an average of $95,142 of value for every $1 worth of fees. This means the network’s value settlement efficiency has been improving steadily recently, with more being settled for lower fees. On-chain analyst, Dylan LeClair, tweeted, “Bitcoin is the most efficient monetary settlement network the world has ever seen.” Despite its recent ups and downs, Bitcoin is here to stay, and it’s still a digital asset with enormous influence, even if a handful of altcoins occasionally deputize as market leaders.

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