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Friday

23 April 2021

A Summary Of Bitcoin's Massive First Quarter

A Summary Of Bitcoin's Massive First Quarter


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Stanislav Kozlovski walks us through the most important events for Bitcoin in the first quarter of 2021.

Across the “gradually, then suddenly” spectrum, Bitcoin is inching closer and closer to the “suddenly” part—and this quarter is an immaculate example of that.

In this piece, we will provide a short overview of all the Bitcoin news in the first quarter of 2021.

The biggest splash this quarter was made by Tesla’s surprise bitcoin investment when they put $1.5 billion (7.7%) of their cash holdings into bitcoin, started accepting bitcoin payments for their cars (promising to not convert the proceeds into fiat) and, to top it off, contributed an important security patch to the open-source ecosystem’s BTCPay Server project.

Institutions continued to show interest for the asset throughout 2021, with BlackRock, the world’s largest asset manager, admitting it started to dabble in bitcoin and Soros Fund Management implying that they already own bitcoin.

Canada made headlines earlier this year with the approval of North America’s first bitcoin ETF, Purpose’s Bitcoin ETF, has amassed over $950 million ($1.2 billion Canadian dollars) of assets under management so far, beating Canada’s largest gold ETF which is at approximately $855 million (CA$1.08 billion) AUM.

It all started with this anonymously published fear-provoking article about Tether’s alleged instability which might have scared some investors temporarily but ultimately culminated with Tether finally settling their case with the New York Attorney General and promising to issue quarterly reports of what’s backing the stablecoin.

This quarter we saw many government officials speak about bitcoin from Europe’s Christine Lagarde accusing bitcoin of being involved in “funny business” and the United States’ Janet Yellen suggesting curtailing use because cryptocurrencies are mainly used for “illegal financing.” Both of these statements are provably false by Chainanalysis’ latest report, which found that the criminal share of all cryptocurrency activity in 2020 was just 0.34 percent.

History, this quarter including, has proven that countries cannot outright ban bitcoin; they can only temporarily ban their citizens from participating in the network.

While noisy, this year did not bring any new content with relation to FUD, rather, it simply recycled old content that has long been debunked.

Despite the unoriginal negative press, this quarter we saw many people write very eloquently and positively about bitcoin, in particular about its energy use.

Balaji Srinivasan also wrote an extensive piece about how India would be smart in canceling its proposed bitcoin ban and embracing the technology directly, going as far as to exhaustively describe what they should actually do.

As we started the year with the FinCEN proposal that had an unreasonably short comment period of 14 days over the holiday season, the onslaught of comments from the community made it so that they had to considerably extend it, with the new Biden administration significantly extending the comment period by some 75 days.

He said that they are procuring a vendor to offer employees to get a percentage of their salary in bitcoin, allow Miami’s residents to pay for fees in bitcoin, potentially also allow taxes to be paid in bitcoin and rumours say they’re working on giving mining incentives to attract investment.

Many previously outspoken opponents of bitcoin reversed course this quarter, like The Motley Fool which capitulated and bought $5 million worth of bitcoin, or all of the large banks:.

We’ve seen hugely respected names in the investment industry turn from skeptic to lukewarm, like Howard Marks who initially called bitcoin a pyramid scheme only to admit this year that he did not understand it.

In the same way that people never notice the “gradually” part of bankruptcy and are left struggling with solutions once the “suddenly” part hits, today’s market participants are scrambling to establish their position in this new Bitcoin world, be it as a service provider, investor or anything in-between.

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