The News Block #25 (02/20/24)
Bitcoin Reclaims $1 Trillion Market Cap, Bitcoin and Gold ETF Flows Diverge, Joe Kernen Defends Bitcoin on CNBC, Research Finds a 51% Attack is “Unfeasible,” Julian Assange Faces Possible Extradition
Listen to the latest episode of the News Block below. 👇
Bitcoin Reclaims $1 Trillion Market Cap:
It’s been nearly two years to the day since Bitcoin first crossed $1 trillion in market cap. In 2021, Bitcoin crossed this milestone in the middle of a raging bull market. Last week, Bitcoin crossed the milestone again, but the market is very different today.
Back in 2021, the halving was more than a year behind us, the Fed was talking about raising interest rates as inflation was hitting multi-decade highs, and speculators were throwing money at anything and everything, including NFTs of rocks and memecoins like Shiba Inu.
Today, the environment is very different. We are emerging from a multi-year bear market where we saw Bitcoin’s price correct by 75%. The Fed is signaling rate cuts as inflation has cooled, and the next halving is only a couple of months away.
One way to tell whether everyday investors are paying attention to Bitcoin yet is by looking at tools like Google Trends. Search interest for the word “Bitcoin” still remains well below the highs set in 2021 despite Bitcoin’s impressive performance over the last year.
Coinbase’s recent trading data also support this. In Q4, the largest US-based crypto exchange saw a small uptick in retail trading volume, but it still remains nearly 85% off the highs seen in 2021.
All of this points to a higher probability that we are at the very beginning of a bull market rather than in the middle or at the end of one. And yet, Bitcoin is once again a trillion-dollar asset, and with this current backdrop, one can only guess how many trillions its market cap will be at the end of this bull market.
Bitcoin ETF and Gold ETF Flows Diverge:
One of the main reasons why Bitcoin has regained a trillion-dollar market cap is the new Bitcoin ETFs, which continue to see record-breaking inflows.
According to Coinshares, last week, the ETFs saw nearly 2.5 billion in inflows, showing significant demand for Bitcoin.
What’s even more interesting is what’s happening to Gold ETFs since the Bitcoin ETFs went live.
According to Bloomberg Intelligence Senior Analyst Eric Balchunas, Gold ETFs have seen 2.4 billion in outflows this year, whereas the Bitcoin ETFs have seen more than 4.5 billion in net inflows.
It’s impossible to know whether this money is flowing out of these gold ETFs and into Bitcoin, but the stark difference in their performance has turned some heads.
Wall Street veteran Fred Krueger went as far as to predict that the market cap of Bitcoin ETFs will surpass that of gold ETFs as soon as the end of 2024.
According to Krueger, the combined market cap of the Bitcoin ETFs already makes up around 40% of the combined market cap of all gold ETFs.
This is pretty shocking, considering that gold ETFs have been around for nearly 20 years, and the Bitcoin ETFs have only been trading for a little over a month.
I talked about how Bitcoin improves upon some of gold’s shortcomings and how it could be a viable alternative to the popping of the sovereign debt bubble in my recent Coin Stories interview with Colonel Douglas Macgregor and this week’s guest, Grant Williams. Make sure you’re subscribed so you don’t miss these shows.
It may not happen as quickly as some predict, but capital will continue to flow out of gold and into Bitcoin over time as investors begin to understand why Bitcoin is a superior store of value and a better way to protect their savings from inflationary policies compared to other alternatives like gold.
Joe Kernen Defends Bitcoin on CNBC:
One of the most interesting moments of the last week came when SEC Chairman Gary Gensler went on CNBC and was asked about Bitcoin.
Gensler argued that Bitcoin is primarily used for criminal activity and even tried to say that Bitcoin is not decentralized because there are only a few major exchanges.
Gensler is right to point out that there are only a handful of major onramps today to buy bitcoin, but that doesn’t mean the protocol is not decentralized.
Bitcoin has tens of thousands of nodes globally enforcing the rules of the protocol, and thus the Bitcoin network is resistant to change and manipulation.
Luckily, CNBC anchor Joe Kernen was there to push back on Gensler’s comments.
Listen to this exchange:
I thought Kernen was pretty spot-on in this exchange. Gensler thinks people don’t care about how the ledger is maintained or who controls it, but that’s literally the whole point!
People can put their trust in Bitcoin because the ledger can’t be manipulated or altered by anyone. Because of this, they can trust there will only ever be 21 million bitcoin and it will hold its value over time.
Kernen also seemed flabbergasted at the argument that Bitcoin is only used for criminal activity. He correctly said that the amount of illicit activity in Bitcoin is a tiny fraction of what can be found in the traditional financial system today.
In fact, this was confirmed just this past week when Brian Nelson, the Treasury’s Undersecretary for Terrorism and Financial Intelligence, testified before the House Financial Services Committee that terrorist groups still prefer the traditional financial system over cryptocurrencies to obtain funding.
During the hearing, Republican Tom Emmer asked, “To be clear, Hamas is using crypto in relatively small amounts compared to what’s been widely reported." To which Nelson responded, “That’s our assessment.”
It was pretty shocking to hear a Treasury official admit this after the uproar from public officials back in October when a WSJ article falsely claimed that tens of millions of dollars worth of cryptocurrencies had funded Hamas operations.
This article led to a letter signed by more than 100 lawmakers asking the Biden Administration to address the “threat” of crypto-financed terrorism.
The reality is, the threat of crypto-financed terrorism is minuscule compared to the threat of dollar-financed terrorism. Whereas Bitcoin is transparent, the traditional financial is opaque, making it the preferred system for criminals.
Years ago, you would never have seen a CNBC anchor defend Bitcoin on live television. But the truth is the truth, and as time passes, I expect more people to publicly dismiss these hollow critiques of Bitcoin, no matter how powerful the person who’s voicing them.
Academic Paper Concludes 51% Attack on Bitcoin “Unfeasible”:
Going back to this whole “who controls the ledger” topic, Bitcoin’s decentralization is key, but so is its security.
The more computational power there is protecting the network, the more costly it is for a bad actor to attack Bitcoin and possibly reverse transactions or change the ledger by taking over 51% of the network.
The good news is as Bitcoin has grown, a successful 51% attack against the network has become increasingly unlikely, and some new research confirms this.
A recently published academic paper from Lucas Nuzzi, Head of Research and Development at Coin Metrics, and others concluded that “the current state of security in Bitcoin makes attacks economically unfeasible.”
The paper goes into detail on how expensive an attack on Bitcoin would be today and estimates that it would cost upwards of $20 billion just to obtain the ASIC machines to take over the network.
Not only that, but the attacker would need to collude with the ASIC manufacturers to secretly acquire the machines without the rest of the network and community knowing. Plus, they would then have to contend with the logistics around setting up the mining operations and pay for the ongoing electricity costs to run them.
It reminds me of this clip from Andreas Antonopoulos 8 years ago:👇
Since Andreas spoke on this, Bitcoin’s hash rate has exploded, making an attack even more improbable. Since 2021 alone, Bitcoin’s hash rate is up more than 400%, which means the network has never been more secure.
As Bitcoin adoption grows, the costs of implementing a 51% attack will only increase, making it more and more improbable as time goes on.
Julian Assange Faces Possible Extradition:
To end with, I want to bring some attention to an icon in the world of freedom advocacy: Julian Assange.
Julian Assange, Founder of WikiLeaks, has been closely followed in the space because he is among the earliest Bitcoin advocates. Nearly 9 years ago, Assange called Bitcoin “The most interesting intellectual development on the Internet.”
He went on to say, “Bitcoin creates “proof of publication” that has the ability to “defend itself and the people who use it against the full might of a superpower...This technology has never existed before, and it has applications far beyond the economic role that Bitcoin can play.”
Assange has been held in a London prison since 2019 and faces possible extradition to the U.S. on spying charges after his company released classified documents that exposed war crimes committed by the U.S. in the Afghanistan and Iraq Wars. His case has shined a spotlight on the freedom of speech and freedom of press in the digital age.
I introduced Julian’s wife, Stella Assange, on stage at Bitcoin Amsterdam 2022, where she gave a keynote presentation describing the parallels between Bitcoin as a permissionless way to transact value and Wikileaks’ mission to disseminate vital information to the public.
Bitcoin is frequently described as a “truth machine” due to its immutable nature – it can’t be tampered with. In the future, I believe that the Bitcoin protocol will be seen as a technology that empowers the individual to fight back against a corrupt State that is increasingly infringing on our freedoms, just like Assange foresaw all those years ago.
In the case of Assange, my hope is that freedom will prevail.
#FreeAssange #DayX
Until next week, keep stacking.
- N₿
If you enjoyed reading this post, you should consider subscribing to the News Block.
I write this simple, insightful market update once a week that’s designed to be read in 10 minutes or less — roughly the time it takes to mine a Bitcoin block.
The News Block is powered by Bitdeer Technologies Group, a publicly-traded leader in Bitcoin mining that stands alone as the only vertically-integrated, technology-focused Bitcoin mining company.
Make sure to listen to some of my latest Coin Stories episodes, including recent interviews with Col. Douglas Macgregor, Danielle DiMartino Booth & Jim Bianco, and Adam Ortolf.
Listen on iTunes: Click here
Listen on Spotify: Click here
Listen on YouTube: Click here
Listen on Fountain and Earn BTC: Click here
NEW: Col. Douglas Macgregor: What Endgame Means for Political Elite, Election, Financial System, Bitcoin
Col. Douglas Macgregor is a retired U.S. Army Colonel Combat Veteran, author, and a defense and foreign policy consultant. He is the CEO of Our Country Our Choice, a new company designed to unite Americans "to create a stronger, more prosperous and secure" country.
Coin Stories Promotional Links and Discounts
Bitcoin 2024 by Bitcoin Magazine - is July 25-27 in Nashville! Get your early bird pass at a steep discount and use code “HODL” for 10% off.
CoinKite - is your go-to tech company for top-notch Bitcoin self-custody solutions, including the popular ColdCard wallet. Get 5% off using my link.
CrowdHealth - offers the Bitcoin community alternative to health insurance. I now spend just ~$100 a month on my health care. Sign up using my link.
Unchained Capital - buy Bitcoin and secure it through multisig collaborative custody today. Sign up using my link.