The concept of the U.S. government maintaining a Bitcoin strategic reserve could boost its price, but it is unlikely to materialize soon, says Ari Paul, CIO at BlockTower Capital.
“I’d lay 10:1 against the US adding Bitcoin as a strategic reserve in the next 4 years,” Paul noted in a July 18 X post.
He added, “Plausible to me that Trump might say it, which would be very bullish for the BTC medium time frame,” amidst traders’ concerns over Bitcoin struggling to reclaim the $65,000 price level as support.
Paul elaborated that while a future president might declare they won’t sell any of the government’s Bitcoin holdings, this doesn’t equate to establishing a “Bitcoin Strategic Reserve.”
He questioned what would qualify as a declaration, suggesting it could range from an off-the-cuff statement by Trump to an executive order, highlighting that the U.S. government already confiscates Bitcoin in various scenarios.
A strategic reserve refers to a stockpile of resources held by governments for emergencies. For example, the U.S. maintains the largest supply of emergency crude oil, known as the “Strategic Petroleum Reserve,” to mitigate potential oil supply issues.
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Paul’s remarks come amid social media buzz that former President Donald Trump might announce plans to designate Bitcoin as a strategic reserve if he wins the election.
This speculation is tied to an expected announcement during the Bitcoin 2024 conference in Nashville.
“Getting more and more confirmations that these rumours maybe true. Trump to announce a USA Bitcoin strategic reserve in Nashville,” wrote Simon Dixon, founder of BnkToTheFuture, in a July 18 X post.
“People don’t believe the USA could implement a Bitcoin Strategic Reserve but at this point it is inevitable,” stated Dennis Porter, CEO and co-founder of Satoshi Act Fund, on the same day.
Michael Goldstein, president of the Satoshi Nakamoto Institute, added, “Everyone should have a Bitcoin strategic reserve. You. Your family. Your business. Your city. Your state. Your country. Everyone.”
This follows speculation by entrepreneur Mark Cuban that geopolitical instability and inflationary pressures might propel Bitcoin to become a global reserve asset.
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According to a report by asset manager ARK Invest released on July 18, Bitcoin became oversold in June due to Germany’s government initiating a multibillion-dollar sell-off of 50,000 BTC seized in a 2020 police sting against Movie2k, a streaming platform for pirated content.
This sell-off caused Bitcoin prices to plummet from highs exceeding $70,000 in early June to a low of less than $55,000 during a brief dip in July.
“Based on short-term-holder realized profits/losses and miner outflows, Bitcoin appears oversold,” the report stated.
The report, which focuses on the period through June 30 but includes more recent data, added, “Current levels [of miner outflows] suggest that miners are capitulating, a harbinger of a bullish reversal.”
Another bullish signal identified by ARK is investors’ sustained appetite for BTC exchange-traded funds (ETFs).
The report highlighted that BTC’s sharp sell-off did not trigger a mass exodus from spot BTC ETFs.
By June 30, the drop in BTC’s spot price had overshot the 30-day percent change in BTC ETF flows by 17.3%.
July saw billions of dollars of net inflows into BTC ETFs, with about $1.35 billion entering the funds in the week ending July 15, according to CoinShares.
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BlackRock’s iShares Bitcoin Trust (IBIT) recorded $107 million in inflows on July 18 after nine straight days of inflows, according to Thomas Fahrer, co-founder of the crypto data platform Apollo.
Despite these positive signals, there are risks to BTC’s continued strong performance from global economic data.
ARK noted that corporate profits are steadily falling as pricing power diminishes, indicating economic weakness.
Bitcoin prices also face potential challenges from the defunct cryptocurrency exchange Mt. Gox’s repayment of approximately $9 billion in BTC to creditors.
However, unlike Germany’s abrupt sell-off, industry analysts believe that creditors may opt to hold onto their BTC, which could soften any potential negative impact on the broader market.
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The rise of Bitcoin layer-2 (L2) solutions is gaining significant traction across Asia. Chinese miners, who account for over 50% of the Bitcoin network’s hashrate, are increasingly turning to these solutions to create alternative revenue streams, especially following the recent Bitcoin halving.
The Bitcoin halving, which concluded on April 19, reduced mining rewards from 6.25 BTC to 3.125 BTC, making profitability more challenging for miners.
However, Bitcoin L2 technologies offer a lifeline to these network participants. Robbie Liu, head of Asia at Polyhedra Network, told Cointelegraph:
“Bitcoin L2s are not just an innovation; they’re a necessity for the evolving crypto ecosystem in Asia.
“With the recent halving, miners are looking for ways to maintain profitability, and L2 solutions offer just that.”
Liu noted the dominance of Asian projects in the Bitcoin L2 space, such as Singapore-based Bitlayer, which leads in total value locked (TVL).
He also mentioned notable Western projects like Stacks, BOB, and Anduro.
Despite regulatory challenges, Chinese miners remain resilient, with Bitcoin L2s helping them stay profitable through staking. Recent developments in the Bitcoin L2 space include various staking mechanisms, allowing Bitcoin holders to earn additional income without selling their holdings.
Yongjin Kim, CEO of Flipster, highlighted the importance of staking projects like Babylon for capital efficiency, stating:
“In recent years, there has been a market trend in maximizing capital efficiency, where the rise of real-world assets (RWA), security token offerings and restaking protocols are all part of the boat.
“Asia has followed this lead, and the regional Bitcoin community has begun to think about how to maximize capital efficiency on Bitcoin, which has led to the emergence of these L2s.”
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Investor interest in extending Bitcoin’s utility has surged, leading to increased funding for infrastructure development in Asia. Alex Zuo, vice president of Cobo, said:
“The surge of capital into the Bitcoin L2 ecosystem has accelerated infrastructure development in Asia, attracting more developers to Bitcoin L2 projects and expanding the ecosystem beyond peer-to-peer transactions.”
Zuo highlighted the success of Bitcoin L2 projects like Merlin Chain, which amassed over $3.5 billion in TVL within 30 days of its mainnet launch.
Despite the enthusiasm, challenges remain, particularly in asset and security management protocols.
Alvin Kan, COO of Bitget Wallet, pointed to the complexity and risks of managing decentralized systems and cited projects like the Lightning Network, Rootstock, and Liquid Network as initiatives addressing these issues.
Kan predicts significant growth in the Bitcoin L2 ecosystem, driven by trends like the widespread adoption of solutions such as the Lightning Network and the expansion of cross-chain interoperability solutions.
As countries like Vietnam, Thailand, Singapore, and Hong Kong position themselves as crypto-friendly jurisdictions, Asia is set to lead in Bitcoin L2 innovation, transforming both the Bitcoin network and the broader financial landscape.
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According to a report by asset manager ARK Invest released on July 18, Bitcoin became oversold in June due to Germany’s government initiating a multibillion-dollar sell-off of 50,000 BTC seized in a 2020 police sting against Movie2k, a streaming platform for pirated content.
This sell-off caused Bitcoin prices to plummet from highs exceeding $70,000 in early June to a low of less than $55,000 during a brief dip in July.
“Based on short-term-holder realized profits/losses and miner outflows, Bitcoin appears oversold,” the report stated.
The report, which focuses on the period through June 30 but includes more recent data, added, “Current levels [of miner outflows] suggest that miners are capitulating, a harbinger of a bullish reversal.”
Another bullish signal identified by ARK is investors’ sustained appetite for BTC exchange-traded funds (ETFs).
The report highlighted that BTC’s sharp sell-off did not trigger a mass exodus from spot BTC ETFs.
By June 30, the drop in BTC’s spot price had overshot the 30-day percent change in BTC ETF flows by 17.3%.
READ MORE: CrowdStrike CEO Clarifies Downtime Cause: No Security Breach, Stock Drops 15%
July saw billions of dollars of net inflows into BTC ETFs, with about $1.35 billion entering the funds in the week ending July 15, according to CoinShares.
BlackRock’s iShares Bitcoin Trust (IBIT) recorded $107 million in inflows on July 18 after nine straight days of inflows, according to Thomas Fahrer, co-founder of the crypto data platform Apollo.
Despite these positive signals, there are risks to BTC’s continued strong performance from global economic data.
ARK noted that corporate profits are steadily falling as pricing power diminishes, indicating economic weakness.
Bitcoin prices also face potential challenges from the defunct cryptocurrency exchange Mt. Gox’s repayment of approximately $9 billion in BTC to creditors.
However, unlike Germany’s abrupt sell-off, industry analysts believe that creditors may opt to hold onto their BTC, which could soften any potential negative impact on the broader market.
To submit a crypto press release (PR), send an email to sales@cryptointelligence.co.uk.
The German government aimed to sell its Bitcoin holdings quickly without focusing on minimizing market impact or maximizing profitability.
The selling pattern of the government-labeled wallet, which included large transfers to various centralized cryptocurrency exchanges (CEXs), indicated an intention to cash in short-term profits, according to Miguel Morel, founder of Arkham Intelligence.
Morel noted that the transfers to multiple exchanges were made to maximize Bitcoin liquidity.
He told Cointelegraph during an interview at EthCC, “The last thing I would have expected is that they would just go to five different exchanges and start market selling… The fact that they’re going to so many different exchanges just reads like they’re just trying to get as much liquidity from each order book as possible because otherwise, why wouldn’t you just use one?”
He explained that setting up accounts and transferring funds to five different exchanges is more complex than selling through a single one.
The outflows and news surrounding the German government’s Bitcoin sales exerted downward pressure on Bitcoin.
The price of Bitcoin began to recover from June’s downtrend only after the government exhausted its Bitcoin supply.
Bitcoin’s price recovery above the $60,000 psychological mark occurred on July 14, a day after the government-labeled wallet ran out of BTC.
During June, Bitcoin’s price fell over 7% but then staged an over 11% weekly recovery, trading at $64,688 as of 1:50 pm UTC, according to CoinMarketCap data.
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The decline in Bitcoin’s price was not solely due to the German government’s selling.
Other factors, such as the incoming creditor repayments from Mt. Gox and stagnating Bitcoin exchange-traded fund (ETF) flows, also contributed to the price slump.
According to Morel, the volume of Bitcoin sold by the government had less impact on the price than the market’s reaction to the news.
He explained, “It could well be that there’s $20 billion of Bitcoin volume a day, and the German government selling $60 million a day is easily absorbed.
“It could also be the case that because there’s news of the German government selling… there’s $5 billion going out the door on the retail side because they’re afraid of getting caught.”
Popular analyst RunnerXBT suggested that a real opportunity to gain long exposure for Bitcoin would come after the market has absorbed the Mt. Gox repayments, similar to the scenario following the German government’s Bitcoin sales.
The analyst wrote, “Just like with Germany transfers, eventually, they will have no price impact. That’s when I hope to long.”
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In just three hours on July 16, Mt. Gox moved over 140,000 Bitcoin, valued at nearly $9 billion, to a known cold wallet and two unknown addresses.
According to Arkham Intelligence data, Mt. Gox’s main wallet still holds 138,985 Bitcoin (BTC), worth around $8.7 billion.
This marks the first time in two weeks that funds have been mobilized.
Two major transactions occurred: nearly 96,000 BTC, worth over $6 billion, were transferred to two unknown wallets, while an initial 44,527 BTC was sent to a known Mt. Gox cold wallet.
Arkham Intelligence reported over 140,000 BTC moved in just three hours.
The total volume of Mt. Gox’s BTC transactions on July 16 reached almost 190,000 BTC, equating to over $12 billion in value.
One unknown address, ending in “BHDct9b,” received 42,587 BTC, valued at $2.69 billion. The remaining 4,641.24 BTC, worth $293.94 million, was transferred to “Mt. Gox: Cold Wallet (1Jbez).”
The “BHDct9b” address has yet to transfer the 42,587 BTC, causing market fear and a decline in Bitcoin’s value as sentiment turned negative.
Shortly afterward, another 48,641 BTC, valued at $3.07 billion, was sent to a different unknown address, further depleting the main Mt. Gox wallet.
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The BTC price reached nearly $65,000 earlier on July 16 but dropped to $63,000 within hours, a decline of over 3%.
This ripple effect also led to more than a 5% dip in altcoins like Uniswap, Polkadot, and Bitcoin Cash.
Market sentiment became bearish as BTC’s price began to fall an hour before the first Mt. Gox transaction on July 16, continuing to decline as more outflows hit unknown wallets.
On July 5, Mt. Gox announced it would begin repaying its BTC and BCH debts to creditors, stating that the repayments would be made via designated crypto exchanges.
The announcement identified Mt. Gox Co. Ltd. as the Rehabilitation Debtor and Nobuaki Kobayashi as the Rehabilitation Trustee.
The statement indicated that the remaining rehabilitation creditors would receive funds “promptly” after fulfilling prerequisite conditions.
With over $9 billion in BTC outflows on July 16, the promise of prompt repayments might be realized before August.
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Creditors of the hacked cryptocurrency exchange Mt. Gox are not rushing to sell their Bitcoin payouts, according to a Reddit community vote.
A recent poll on the Mt. Gox Insolvency subreddit revealed that most Mt. Gox creditors plan to retain their Bitcoin payouts.
These payouts are being received nearly 11 years after the Mt. Gox hack.
Mt. Gox Insolvency is a subreddit for those affected by the 2014 collapse of Mt. Gox and participating in the official insolvency process in Tokyo through the Japanese court system.
According to the poll, which closed on July 13, approximately 260 creditors (56% of 467 participants) plan to hold onto their Bitcoin.
This decision aligns with the Bitcoiner strategy known as hodl, where investors hold onto BTC despite price fluctuations.
Conversely, 88 respondents (about 20%) indicated they would sell 100% of their BTC payouts. Around 14% said they would sell up to 25% of their BTC, while about 6% planned to sell up to 50%.
While the poll may reflect investor sentiment on the subreddit, it doesn’t paint the full picture.
Discrepancies in payout amounts and the fact that only a fraction of creditors participated in the vote are significant factors.
“This is all good fun, but doesn’t mean anything,” one Redditor commented, highlighting the variance in BTC holdings among creditors.
Another poster added, “You cannot take the results of this survey and calculate the percentage of Bitcoin that will be sold and be anywhere near accurate unless you get lucky.”
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Despite these limitations, some believe the polls are useful.
“The polls about receiving fiat from the trustee changed every week with the increased disbursement and showed how many creditors were compensated,” a Mt. Gox creditor told Cointelegraph.
Mt. Gox was once the world’s largest Bitcoin exchange, handling approximately 70% of all BTC transactions before its collapse in 2014.
The exchange lost 850,000 BTC (4% of all issued Bitcoin) in a security breach. Over the years, the Mt. Gox trustee has recovered about 141,000 BTC to repay creditors.
As of July 17, more than 36% of the owed BTC had been distributed. Over 13,000 creditors received repayments in Bitcoin and Bitcoin Cash as of July 16.
According to Mt. Gox Balance Bot, the trustee’s current balance is 47,228 BTC, worth about $3 billion. Since May 30, 94,457 BTC has been moved from these addresses.
Django Bits, the creator of Mt. Gox Balance Bot, noted that recent transactions to Kraken might require adjustments to the bot.
“Last week, the trustee sent a big chunk, but it turned out that most of it was sent to a change address,” he told Cointelegraph.
“I did not yet have time to check the movements but I might need to adjust the bot again,” he added.
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Following a recent court ruling in Illinois classifying Bitcoin and Ether as commodities, stakeholders in Nigeria are advocating for a similar approach from the Nigerian Securities and Exchange Commission (SEC) to enhance regulatory clarity.
This call for classification comes amidst the growing importance of cryptocurrencies in global finance.
Lucky Uwakwe, chairman of Nigeria’s Blockchain Industry Coordinating Committee (BICCoN), emphasized the necessity of defining crypto asset classes clearly.
In an interview with Cointelegraph, Uwakwe stressed, “The Nigerian SEC should make rules that define the asset class of crypto assets or break respective crypto into asset classes and explain how such crypto qualifies as securities or commodities.”
He noted the distinction made by the US SEC and the Commodity Futures Trading Commission (CFTC) regarding Bitcoin and Ether as commodities, while highlighting how protocols like proof-of-stake (PoS) or proof-of-work (PoW) could affect the classification of other crypto assets.
In Nigeria, however, the focus of the Commodity Board has traditionally been on physical commodities like agricultural products, with minimal attention given to digital commodities.
Oladotun Wilfred Akangbe, chief marketing officer at Flincap, a platform for African over-the-counter crypto exchanges, underlined the diverse nature of cryptocurrencies and the varied interest from Nigerian governmental bodies.
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“Cryptocurrencies like Bitcoin and Ethereum have become valuable commodities in global markets,” Akangbe remarked, advocating for distinct regulatory strategies tailored to these foundational cryptocurrencies compared to others.
Akangbe suggested that the SEC concentrate primarily on cryptocurrencies used for fundraising, such as initial coin offerings (ICOs).
Another local crypto analyst, Rume Ophi, argued for individual scrutiny of each cryptocurrency to determine its classification as a security or commodity, emphasizing their uniqueness.
These recommendations are pivotal as Nigeria seeks to establish a robust regulatory framework for digital assets.
By classifying Bitcoin and Ether as commodities, the Nigerian SEC can offer much-needed clarity and stability to the market.
This approach not only fosters innovation but also ensures adherence to regulatory standards.
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South Korea’s ruling People’s Power Party has proposed delaying the country’s tax on crypto trading profits.
On July 12, the party submitted the proposal, highlighting a negative sentiment towards crypto assets. The proposal stated that rapidly imposing taxes on virtual assets is “not advisable at this time.”
The party argued that crypto assets have higher risks compared to stocks, and imposing income tax could drive investors away from the market.
Originally, the tax on cryptocurrency gains was set to begin on Jan. 1, 2025. However, if the proposal is approved, the implementation will be postponed until Jan. 1, 2028.
As part of its campaign before South Korea’s general elections in April, the People’s Power Party promised to delay the crypto gains tax by two years.
On Feb. 19, the party emphasized the need to establish a comprehensive crypto framework before diving into taxation.
They stressed that crypto should only be taxed once a solid framework is in place.
A party representative pointed out that, unlike the stock exchange, there are no mandated entities to oversee crypto transactions.
Therefore, the party believes that spending two years to develop such a system is necessary.
The Korea Economic Daily reported that the plan to tax crypto gains was initially set to be implemented in 2021.
However, due to backlash from crypto industry leaders and stakeholders, the government delayed the tax implementation to 2023, and later to Jan. 1, 2025, to address investor concerns.
If the new proposal is accepted, the crypto gains tax will be delayed by nearly seven years from its original schedule.
Currently, South Korean investors must pay a 20% capital gains tax if their annual gains exceed 2.5 million won (approximately $1,800).
This threshold is much lower than that for stocks, where only gains exceeding 50 million won (about $36,000) are subject to taxation.
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During a recent CNBC interview, BlackRock CEO Larry Fink admitted he was “wrong” about Bitcoin, now recognizing it as “digital gold” and a “legitimate” financial instrument.
Speaking with CNBC’s Jim Cramer, Fink said, “I was a skeptic, a proud skeptic,” but his perspective changed after studying the decentralized asset.”
He acknowledged Bitcoin’s potential for uncorrelated returns, stating, “It is a legitimate financial instrument that allows you to maybe have uncorrelated type of returns.
“I believe it is an instrument that you invest in when you’re more frightened, though. It is an instrument when you believe countries are debasing their currency by excess deficits, and some countries are.”
Fink highlighted the economic and political instability in certain countries, suggesting that Bitcoin offers an alternative investment opportunity beyond local geographies for individuals in those regions.
In May, BlackRock’s iShares Bitcoin Trust (IBIT) surpassed Grayscale Bitcoin Trust (GBTC) to become the world’s largest Bitcoin exchange-traded investment fund.
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By July 15, IBIT’s year-to-date inflows had exceeded $18 billion.
The asset manager also incorporated shares of the Bitcoin ETF into its Strategic Income Opportunities Fund (BSIIX) and the Strategic Global Bond Fund (MAWIX), emphasizing Bitcoin’s potential benefits for income-focused investors, including retirees.
CoinShares’ most recent inflows data, released on July 15, showed that Bitcoin investment vehicles recorded their fifth-highest week of inflows, with over $1.35 billion invested in a single week.
Bitcoin’s price reacted positively to Fink’s comments and other bullish developments, including the German government selling its final Bitcoin holdings, which had been creating significant selling pressure by dumping 50,000 coins on the market.
The decentralized asset saw four consecutive days of gains, with the nine-day exponential moving average crossing back over the 200-day exponential moving average.
This technical movement reversed several weeks of negative price action, pushing Bitcoin back above the $60,000 mark.
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