For the first time since mid-June, bitcoin is on track to close a week without falling below the psychologically vital $20,000 mark, spending most of the week above $22,000.
In this crypto market, that’s something of a win.
Reading: Will bitcoin rebound
not much of one, mind you, as crypto is still in the red. bitcoin is down as much as 75% since it neared $69,000 in November and has given back all of the 2021 bull market gains. But for now, the near-panic that has crushed the broader crypto market since it freaked out over the crash The $48 billion terra/moon stablecoin ecosystem in May appears to have receded.
see also: unbacked stablecoin collapse lost $48bn; crypto says ‘let’s launch two more’
what’s interesting is why it all happened.
for starters, the biggest influence on bitcoin this week was actually news about another cryptocurrency, no. 2 ether.
the ethereum blockchain reached a gigantic milestone, with developers setting a September date for the “merger” that will make it a much faster blockchain, capable of massive scaling, from the current 12 or 13 transactions per second (tps), the new ethereum 2.0 blockchain will have a capacity of 100,000 tps.
That will make it a very viable payment rail, among other benefits.
read more: ethereum 2.0 targeted for September with 100,000 tps within reach
It will also switch to an environmentally friendly proof-of-stake consensus mechanism that will effectively eliminate its country-sized pollution footprint, something that has damaged the cryptocurrency’s image for some time.
return of optimism
While this boosted ether more than anything else, it didn’t. 2 crypto is up as much as 45% this week – the rare good news from the blockchain industry had a knock-on effect on bitcoin and many other cryptocurrencies.
marked a “return of optimism,” according to influential coindesk podcaster nathaniel whittemore, filling what the breakout host called a “narrative gap” about the ways blockchain and cryptocurrencies can change the world, the outlet said. industry news.
which has been missing a lot since the terrausd algorithmic stablecoin lost its peg to the dollar in early May. on top of the $48 billion lost by investors, it set off a domino effect, sending a wave of bankruptcies through the crypto lending industry that saw hundreds of thousands of small retail investors get locked out of their deposit accounts and saw losses as the companies that invested their funds were hit by huge and poorly vetted loans.
also read: ‘bunch of idiots’: cryptocurrencies pay a heavy price for delinquent due diligence
elon musk sells
Tesla and spacex CEO Elon Musk is well known for his ability to move crypto markets, with everything from huge investments in bitcoin (Tesla bought $1.5 billion in early 2021) to casual memes that have turned dogecoin is a real cryptocurrency that is gaining a foothold in payments.
You May Like It: Despite Massive Failures, Dogecoin Keeps Gaining Wallet Share
So, what was interesting was that the rally wasn’t squashed on Wednesday (July 20), when Musk revealed in a quarterly earnings report that Tesla had sold three-quarters of its bitcoin holdings for $936 million, with a loss of as much as $9,000 per bitcoin, marketwatch calculated. there was a drop, but the oldest cryptocurrency recovered.
That may be because Musk said the sale was to strengthen Tesla’s cash position in the face of what he called Covid-related fears about the Chinese market, rather than a sign that he was giving back to bitcoin. adding that tesla was “open” to buying more in the future.
see here: telsa sells 75% of its bitcoin holdings, adds $936 million to its books
Bitcoin, meanwhile, was able to largely ignore the European central bank’s 50 basis point rate hike on Thursday (July 21). so far, it seems calm in the face of the 75 basis point hike expected from the us. uu. federal reserve next week.
That said, Whittemore, and others, have predicted that a true bitcoin bull market will have to wait until the Federal Reserve stops raising rates in the face of record inflation.
so if you are one of the roughly half of bitcoin buyers in the red, it will likely be a while before you can sell high.
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