THE COIN STREET JOURNAL
Market News - August 19th 2024
BITCOIN TO REACH $500,000 OR $1 MILLION?
Chamath Palihapitiya, a billionaire venture capitalist and co-founder of Social Capital, has expressed a highly optimistic outlook for Bitcoin. He predicts that Bitcoin’s price will reach $500,000 by late 2025 and eventually hit $1 million in the future. Currently, Bitcoin trades at around $58,000, so reaching these targets would require a significant increase of 760% to $500,000 and over 1,600% to $1 million. If Bitcoin were to achieve a $1 million price, its market cap would exceed $21 trillion, surpassing the market cap of physical gold and becoming more valuable than major companies like the Magnificent Seven.
Palihapitiya’s confidence in Bitcoin’s potential is grounded in several factors. He has been a long-time investor in Bitcoin, purchasing 100,000 Bitcoins at an average price of less than $100 back in 2011. Despite spending some of his Bitcoin holdings on a real estate purchase in 2014, he and his firm Social Capital have continued to invest in the cryptocurrency over the years. However, the exact amount of Bitcoin he or his firm owns remains undisclosed.
Palihapitiya’s bullish stance on Bitcoin has remained strong over the years. In early 2021, he predicted that Bitcoin’s price could reach $200,000 within five to ten years, and later claimed that Bitcoin had effectively replaced gold as a store of value. In 2023, he raised his near-term price target to $500,000 by 2025 and reiterated his belief that Bitcoin could eventually reach $1 million per coin. He attributes this potential growth to two main catalysts: Bitcoin’s halving process and its increasing adoption as a reserve asset.
Bitcoin’s halving, which occurs every four years and reduces the rewards for mining by half, is a key factor in Palihapitiya’s prediction. He argues that past halvings have led to significant price increases, as they reduce Bitcoin’s supply and attract more institutional investors. If Bitcoin replicates the gains from its last halving in 2020, it could reach the ambitious price targets Palihapitiya has set. The approval of the first 11 spot price Bitcoin ETFs in January 2024 could further support this growth by making it easier for both retail and institutional investors to invest in Bitcoin.
In addition to the halving, Palihapitiya points to other potential catalysts for Bitcoin’s growth. Lower interest rates, which could draw investors back to speculative assets like cryptocurrencies, are one such factor. Bitcoin’s recognition as a commodity by the Securities and Exchange Commission (SEC) also suggests that it may face fewer regulatory hurdles in the future. Moreover, political support for Bitcoin, such as Donald Trump’s proposal for a “strategic Bitcoin stockpile” and Kamala Harris’s hiring of pro-crypto advisors, could signal a shift in U.S. policy towards cryptocurrencies.
While Palihapitiya’s predictions are ambitious, they are not the most extreme in the market. Other investors, like Cathie Wood of Ark Invest and Michael Saylor of MicroStrategy, have set even higher price targets for Bitcoin, predicting prices of $3.8 million by 2030 and $13 million by 2045, respectively. However, Palihapitiya’s estimates should be viewed with some caution, as his investments stand to benefit significantly from any increase in Bitcoin’s price.
Despite the uncertainty surrounding such high price targets, Palihapitiya’s optimism about Bitcoin reflects a broader sentiment among some investors that the cryptocurrency could continue to rise in value. With factors like the recent halving, the approval of Bitcoin ETFs, and potential lower interest rates, Bitcoin’s price may stabilize and gradually increase in the near future. While it remains to be seen whether Bitcoin will reach $500,000 or $1 million, there is a possibility that its price could double or triple in the coming years, making it an asset worth considering for some investors.
THE PAST WEEK IN THE CRYPTOCURRENCY MARKETS
The past week in the cryptocurrency world has been marked by significant developments involving major players such as Bitcoin, Ethereum, Binance, Solana, and Ripple. The industry continues to be a hotbed of innovation and controversy, with ongoing regulatory challenges and economic impacts shaping the landscape. From legal battles and environmental debates to financial market shifts, the news highlights both the opportunities and risks inherent in the crypto ecosystem.
Ripple, which had recently celebrated a partial victory against the SEC, now faces the possibility of that decision being overturned. Although Judge Analisa Torres ruled that secondary transactions of Ripple’s XRP do not qualify as securities, this decision is under threat. Dennis Kelleher, CEO of Better Markets, suggests that the SEC has a strong chance of succeeding on appeal, which could not only reverse Ripple’s gains but also have broader implications for crypto regulation in the U.S. The ongoing legal uncertainty could destabilize Ripple’s business model and pose challenges for the wider industry.
In a separate development, the FBI’s response to a Freedom of Information Act (FOIA) request concerning Satoshi Nakamoto, the pseudonymous creator of Bitcoin, has reignited speculation about his identity. The agency’s ambiguous statement, which neither confirmed nor denied the existence of relevant documents, has fueled further mystery. This has kept the legend of Bitcoin’s creator alive, maintaining the mythical status of Nakamoto and adding intrigue to the world’s first cryptocurrency.
Meanwhile, BlackRock’s iShares Ethereum Trust (ETHA) is approaching a significant milestone, with nearly one billion dollars in inflows since its launch in July 2024. This rapid accumulation of assets positions BlackRock as a leading Ethereum ETF manager, surpassing major competitors. However, despite this success, Ethereum’s price has remained volatile, fluctuating between $2,800 and $3,400 due to institutional sales. Nevertheless, the renewed interest in Ethereum suggests potential for a medium-term recovery.
The International Monetary Fund (IMF) has targeted Bitcoin in a recent report, criticizing its environmental impact due to the carbon emissions associated with mining. However, Bitcoin advocate Daniel Batten has challenged these findings, arguing that the report relies on outdated data and makes flawed comparisons. Batten contends that Bitcoin mining could contribute to decarbonization by utilizing renewable energy and capturing energy surpluses. He believes this could spur innovation in the energy sector, countering the IMF’s negative portrayal.
Solana, often dubbed the “Ethereum killer,” is embroiled in controversy over allegations of running a disguised Ponzi scheme. The network is accused of manipulating decentralization, with a system that disproportionately benefits powerful validators. The high failure rate of transactions on certain protocols has further fueled criticism, leading to accusations of creating an unsustainable environment where new entrants must continuously inject funds. This situation raises serious concerns about the network’s long-term viability.
In the broader financial markets, gold and silver have seen a significant rise, attracting investors looking for stability amidst economic uncertainty. Gold has climbed to $2,496.30 and silver to $28.525, driven by positive U.S. economic indicators and geopolitical tensions. Conversely, the cryptocurrency market has faced a sharp decline, with Bitcoin and Ethereum experiencing a 25% drop. This downturn has led investors to seek refuge in precious metals, which are currently perceived as safer investments compared to the volatile crypto market.
These developments underscore the complex and often unpredictable nature of the cryptocurrency industry. As major players like Ripple, Bitcoin, and Ethereum navigate legal, environmental, and market challenges, the sector remains in a state of flux. Investors and stakeholders must stay informed and adaptable as the landscape continues to evolve, balancing the potential for innovation with the risks posed by regulatory and economic pressures.
APPLE MAKES ANNOUNCEMENT ENERGIZING THE CRYPTO MARKET
Bitcoin and cryptocurrencies have experienced significant developments this year, starting with a major shake-up on Wall Street and the unexpected support from former president Donald Trump. These events propelled the bitcoin price back to over $70,000 per coin, marking a resurgence before it corrected downward. Despite this fluctuation, many market watchers remain optimistic about another bitcoin price surge by the end of 2024.
A recent announcement from Apple has further energized the crypto market, as the company revealed a substantial update to its Apple Wallet. This update, which follows rumors of an impending U.S. crackdown on crypto, is expected to have significant implications for the bitcoin and cryptocurrency ecosystem. Described as a “powerful” update by industry leaders, it could shape the future of digital payments.
Apple’s update centers around its near-field communication (NFC) payment chip, which will now be accessible to third-party developers. This change comes after years of pressure from European regulators to open up Apple’s platform. The update will allow iPhone users to select third-party payment apps as their default, potentially including apps that support bitcoin, other cryptocurrencies, or stablecoins—cryptocurrencies pegged to traditional currencies like the U.S. dollar.
Circle, the developer behind the USDC stablecoin, has already expressed excitement about the update. CEO Jeremy Allaire noted that developers should prepare for new opportunities, particularly in enabling iPhones to process USDC payments. This could revolutionize how point-of-sale (PoS) systems interact with iPhones, allowing them to communicate blockchain addresses and initiate transactions directly from Apple Wallet.
Allaire further explained that the update would enable a seamless payment experience for users. By integrating with high-performance, low-fee blockchain networks, iPhones could become a powerful tool for direct USDC payments to merchants. This development is poised to make cryptocurrency transactions more accessible and practical for everyday use.
However, Apple will maintain strict control over access to its NFC chip. Developers will need to pay associated fees and enter into commercial agreements with Apple, ensuring that only those who meet specific industry and regulatory standards can utilize the system. This approach underscores Apple’s commitment to maintaining security and privacy within its ecosystem.
The rollout of this program will initially take place in Australia, Brazil, Canada, Japan, New Zealand, the U.S., and the U.K. Notably, the European Union, which has been a major force behind the push for Apple to open its platform, was not mentioned in the initial rollout plan. This could signal potential challenges or delays in bringing the update to EU countries.
Overall, Apple’s update to the Apple Wallet represents a significant step forward for integrating cryptocurrency into mainstream financial systems. As the crypto market continues to evolve, this move could enhance the adoption of digital currencies and reshape how payments are conducted globally, especially if more tech giants follow Apple’s lead.
CRYPTOCURRENCY OWNERS CALLED ON TO URGE KAMALA HARRIS TO DISMISS SEC CHAIR
Tyler Winklevoss, co-founder of the cryptocurrency exchange Gemini, has called on the 50 million Americans who own cryptocurrency to unite and urge Vice President Kamala Harris to dismiss U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler before the upcoming presidential election in November. Winklevoss believes that this collective action could effectively end what he terms the “war on crypto” and help establish the issue of cryptocurrency regulation as a bipartisan concern.
Winklevoss took to the social media platform X to emphasize the political influence that 50 million American crypto owners hold. He suggested that if this group made it clear to Harris that their votes would depend on her firing Gensler and ending the SEC’s current stance on crypto, the result would be a swift conclusion to what he views as an antagonistic approach to the crypto industry. Winklevoss described this strategy as a form of “game theory,” where such pressure from voters could compel politicians to prioritize their concerns.
He has previously highlighted the significance of leadership at the SEC for the future of the cryptocurrency industry, stressing the need for transparency from both political parties. According to Winklevoss, the crypto community should demand that political leaders commit to fair treatment of the industry and work to position the United States as the global leader in cryptocurrency.
Tyler Winklevoss’s brother and business partner, Cameron Winklevoss, has also expressed his views on the matter, cautioning against superficial attempts by Harris or other political figures to mend relations with the crypto industry without taking substantial action. Cameron has made it clear that empty promises will not suffice, and he challenged Harris to demonstrate genuine commitment to the crypto community by taking decisive actions before the election.
The Winklevoss twins’ push for the removal of Gary Gensler comes amid ongoing tensions between the SEC and the cryptocurrency industry. The SEC, under Gensler’s leadership, has pursued a series of enforcement actions against various crypto companies, which the Winklevoss twins and others in the industry have criticized as overly aggressive and harmful to innovation.
Tyler Winklevoss’s appeal to crypto owners reflects a broader frustration within the industry regarding regulatory uncertainty and what many see as a hostile regulatory environment in the U.S. He believes that aligning the interests of crypto holders with political action could force a change in how the industry is treated by regulators.
The upcoming presidential election adds urgency to the Winklevoss brothers’ campaign, as they view the current period as a critical moment for the future of cryptocurrency in the U.S. They argue that the crypto community’s collective voice can be a powerful tool in shaping the political landscape and influencing policy decisions that will affect the industry for years to come.
Ultimately, the Winklevoss twins’ strategy centers on leveraging the significant number of crypto owners in the U.S. to demand policy changes and greater support for the industry. They are urging the crypto community to take a proactive stance in the political process, starting with the call for the removal of Gary Gensler from his position as SEC Chair.