Bitcoin's down but no one's counting it out

After starting the week pumping 4%, Bitcoin, as of writing this, is down 10%. It's safe to say that the market has experienced volatility this week, with several factors likely contributing to the current price action. On the negative side there has been substantial outflows from both Bitcoin and Ethereum ETFs. Also, Thursday a U.S. court granted the Department of Justice approval to sell $6.5 billion worth of Bitcoin seized from the Silk Road assets. Hopefully the Biden-led executive will not do so with less than two weeks remaining in power.

On the positive side, Chilean legislators are considering a proposal to create a strategic Bitcoin reserve. I expect more countries are thinking about it behind closed doors. Despite prices having declined from Tuesday, sentiment online has largely remained positive. On a somewhat related note, the number of Bitcoin obituaries - predictions of Bitcoin's demise - appears to be decreasing over time. Even the naysayers don't think Bitcoin is going anywhere.

This year still looks positive for Bitcoin and crypto. The biggest concern moving forward are macro forces that might delay crypto strength in H1. Things such as the long end of the U.S. yield curve not behaving well, or inflation rising due to Trump tariffs.

What has not been positive is the AI sector. After running up and to the right pretty much since late November, AI crypto darling VIRTUAL, which is a bellwether of the whole sector, has been red for 7 of the last 8 days. AI memecoin GOAT is down 72% from its ATH, and FARTCOIN is 48% off its high. This all seems healthy, as the sector was getting way ahead itself – there are basically no useful products yet!

In other news, this Bitcoin.com News' interview with Fredrik Haga, Co-founder and CEO of Dune Analytics covered, among many things, their new product Dune Index. Index is Dune's foray into measuring the comparative strength of blockchains. In their words, they're measuring "blockchain adoption." Ethereum and Solana supporters argued all last year about which metrics mattered most. The problem was, each side chose metrics that made their respective chain look the best. It's nice to see someone with a bit less bias weighing in.

Bitcoin.com Marketing Lead Graham Stone pointed out in this week's episode of Token Narratives that the overall composite of Dune Index looks like it might correlate well with the total crypto market cap. This needs further investigation, but makes sense to me since part of what Index is trying to measure is blockchain activity. On-chain activity has been shown to correlate reasonably well with price. Take a look at the Dune Index, it's pretty damn bullish.

-David Sencil

Sponsored by Bitcoin.com

For a limited time, get up to 30% bonus VERSE when you buy! Purchase $50, $100, $250, or $500 of VERSE and receive extra rewards worth up to $125. This exclusive offer ends January 16, so don't miss your chance to stack more VERSE. Claim your bonus in the Rewards Center after the campaign!

Buy VERSE now

News

Robert Kiyosaki Calls It: Historic Crash is Here

Economic collapse is here, warns Rich Dad Poor Dad author Robert Kiyosaki, urging investors to seize assets like… read more.

Editor's comment: While it is a safe bet to buy Bitcoin as a hedge, it is perhaps most important to be able to stomach the volatility so you do not get shaken out. Don't buy if you can't handle the deep drawdowns.

XRP Market Update: Short Sellers Capitalize on Bearish Trends

XRP is trading at $2.19 to $2.25 over the last hour, with a 24-hour trading volume of $7.85 billion, a market cap of… read more.

Editor's comment: I'll repeat what I said last week: XRP continues to look like one of the strongest altcoin charts. Doubly true during the market decline this week.

Ripple Execs Meet Trump

A dinner between Ripple's leadership and President-elect Trump has sparked speculation that Ripple's legal battle… read more.

Editor's comment: The fact that Ripple CEO Brad Garlinghouse attended a private dinner with Trump certainly bodes well for any regulatory issues Ripple might still have.

QCP Capital Pioneers First BUIDL-Collateralized Trade

QCP Capital has executed the first derivatives trade using Blackrock's BUIDL tokenized fund as collateral, marking… read more.

Editor's comment: It's great to see tradfi institutions begin to operate in defi. How long until they're depositing into Aave or other lending protocols for yield?.

Matrixport Report Suggests Bitcoin May Enter a Consolidation Phase

The Fed's increasingly hawkish stance could limit bitcoin's rally, leading to another period of price… read more.

Editor's comment: If Bitcoin enters a consolidation phase, then altcoins will run hard.

🗞️ Read more news