It is worth mentioning that all the negative news that triggered the May, June and November crashes was not about Bitcoin at all. Nothing serious or highly negative happened to Bitcoin during 2022; it just suffered from the difficulties of the cryptocurrency markets.
In other words, there is, and has not been, any negative news regarding Bitcoin that has negatively impacted its price in this bear market.
The only problem related to Bitcoin was the bursting of the speculative bubble in 2021, which however occurred between the end of the year and the beginning of 2022. Instead, since the crash in May, all the problems have come from sources outside of Bitcoin.
The news that exclusively concerns Bitcoin, in fact, continues to be positive.
Bitcoin News: Mining
For example, a few days ago Bitcoin set a new all-time record.
Is that related to difficulty, which rose to nearly 37T.
In reality, the recent increase was insignificant but sufficient to set a new record. It is now since the end of October that the difficulty is close to 37T.
For example, in May it was 28T, while in June it fell to 27T. While at the beginning of the year it was at 24T.
Difficulty, as the name implies, is the difficulty imposed on miners to be able to find the hash that confirms individual blocks. The higher it is, the more it means that miners compete using more computing power.
The difficulty variations are to keep the block time around 10 minutes, then increase as miners use more hashrates and vice versa.
Since early October, Bitcoin hashrates is at an all-time high, implying the difficulty must be too. It is worth noting that the November price crash in no way caused the hashrate to crash; instead, it remains at an all-time high.
A similar thing also happened in May, during the collapse of the BTC price due to the implosion of the Earth/Moon ecosystem, while the hashrate decreased slightly in June.
The mayor of New York City
The new mayor of New York City, Eric Adams, is a supporter of the Bitcoin and cryptocurrency markets because he would like New York to become the world’s leading financial center for this asset class as well.
During a recent interview, he explicitly stated that he believes this industry has its ups and downs, and is still “coming” whether we like it or not.
New York Mayor: Cryptocurrencies are Coming Whether We Like It or Not, All These Sectors Have Ups and Downs pic.twitter.com/MM3ex8koOH
— Blockworks (@Blockworks_) November 22, 2022
He confirmed the city’s commitment to trying to exploit these new technologies, noting that other markets also often have ups and downs.
He also stated that he believes in new markets and new currencies, and that he does not believe at all that the crypto sector is destined to disappear.
New York is by far one of the most important markets in the world for cryptocurrency markets, although the FTX fiasco has certainly had a significant impact on cooling enthusiasm for this sector.
Retail investors on Bitcoin news
While it doesn’t look like the Bitcoin protocol is doing all that badly in 2022, it’s investors who aren’t faring so well.
According to the estimate of a recent Bank for International Settlements (BIS) reporttitled “Cryptocurrency Trading and Bitcoin Prices: Evidence from a New Retail Adoption Database,” between 73% and 81% of cryptocurrency investors are likely to have lost money.
Analysis shows that Bitcoin price increases are linked to more entry into the cryptocurrency markets by retail investors. In fact, it would appear that users make active use of cryptocurrency trading apps in the months following the increase in the price of Bitcoin.
In other words, it is possible that price increases are prompting retail investors to act, which could mean that they tend to buy after the price has gone up.
These are particularly young men with a higher risk tolerance than women and older users. They are also predominantly Android smartphone users.
This leads BIS analysts to conclude that, in general, investors see cryptocurrencies as a speculative investment (or even a gamble), rather than an actual means of payment.
However, once again, these are not problems inherent in the Bitcoin protocol, or related to its use, but instead related to people’s behavior, which is often more emotional than rational.
However, large investors, often generically referred to as “institutional”, behave differently.
For example, whales have already accumulated ETH for a few daysAnd Catie WoodARK Invest is increasing its GBTC exposure these days.
GBTC is the Grayscale Bitcoin Trust, that is Greyscalethe fund that invests in Bitcoin.
In theory, the market price performance of GBTC should replicate that of BTC, but instead, GBTC has been performing much worse than BTC for almost two years.
Indeed, in recent days its NAV discount jumped to 45%, making it an all-time high. It’s now hovering around 42%, which remains a pretty steep discount level.
While the market value of GBTC is much lower than that of the BTC they hold as collateral, this anomaly could be due to fears that Grayscale could fail, on the other hand, this being an issue that started to build up as far back as March last year, it seems that the main reasons are others.
It is trivially possible that GBTC is suffering from competition from alternative but much more competitive financial products, such as ETFs launched on the Canadian market and which have been very successful.
Again, these are not problems related to the Bitcoin protocol, or to the BTC financial asset, but to private companies operating in the crypto markets.
Baron Rothschild once said:
“Buy when there’s blood on the streets, even if the blood is your own.”
It seems that big investors are following the Baron’s advice, while retail investors are doing the exact opposite.