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El Salvador Continues Its Crypto Push, Buys a Lot More Bitcoin

Despite all the bitcoin rollout issues the country has been having as of late, El Salvador is not giving up on its crypto agenda, and the country has recently purchased as much as 150 additional BTC units.

El Salvador Has Bought a Lot of BTC

At the time of writing, the country boasts a stash of more than 700 individual bitcoin units, which are worth approximately $31 million at press time. This may not sound like much at first but considering that El Salvador is new to the world of crypto, it can be argued that the country has moved fast and has experienced a fair amount of success in its latest plans.

The purchase was initiated following the recent price dip incurred by bitcoin, which began over the weekend following the problems of Evergrande in China. As the country’s second largest property developer, the company has more than $310 billion in debt, and is required to pay much of it back by the end of the week. This is not likely to happen, and with the firm unable to meet its present bond obligations, many assets – bitcoin included – are taking hits.

El Salvador is using the situation to its advantage and has decided to purchase more BTC. President Nayib Bukele explained in a tweet:

They can never beat you if you buy the dips.

The primary reason for adopting bitcoin as legal tender within the country has a lot to do with remittance payments. Bukele has stated that he is confident bitcoin can make these payments easier and less expensive for residents working abroad.

Several citizens of El Salvador are working out of the country in regions like the United States. They send money home to their families, but due to exchange rates and transaction fees, sending money back in USD or other forms of fiat can often see much of that money vanish before it’s even doled out.

Not Everyone Is Happy

Bukele believes that bitcoin, which is less costly, will allow many of these workers to keep most of their money, which in turn will result in their families getting to keep much of that money. Thus far, El Salvador has installed more than 200 separate bitcoin ATMs on its home turf and in the U.S. to allow for these remittance payments.

Despite these good intentions, several individuals in El Salvador have taken to the streets to protest the maneuver, which they say is going to take the Central American nation down the wrong path. Up to this point, the country has been reliant on USD, and many citizens have grown comfortable with the currency. Thus, they do not see the need for change, and instead have expressed concern over the connection bitcoin allegedly shares with illicit activities like money laundering and terrorist financing.

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Following Evergrande Issues, Bitcoin Is Suffering Big Time

The bitcoin price is suffering today after the Evergrande Group in China took a hard fall. As the nation’s second largest property developer, the firm has too much debt – more than $310 billion – and is struggling to pay it back. The situation is causing many assets to experience nasty drops, bitcoin being one of them.

Evergrande Is Leading to a Drop in Crypto Prices

At the time of writing, bitcoin has fallen to roughly $44,000 per unit. Over the weekend, the asset was trading for about $47,000. Aside from BTC, Ethereum has also incurred a heavy slump, dropping by nearly ten percent in the past day or two. The currency is trading for just over $3,000, while Dogecoin – hit even harder – has dropped by 11 percent and is trading for around 21 cents.

The problem surrounding Evergrande is that it is currently caught in what’s called a “liquidity squeeze” that could cause the company to file bankruptcy in the coming future. The company is having trouble paying back its bond obligations, which are due at the end of this week. If the company cannot meet its financial obligations soon, Evergrande may be forced to sell off hundreds of commercial properties at serious discounts.

In an interview, cryptocurrency specialist James Edwards commented:

Bitcoin is like a very tightly coiled spring right now, but it’s still unclear whether it will shoot forward or buckle under the pressure. Record amounts of bitcoin have been taken off exchanges, with levels being at their lowest point in the past 12 months. Low liquidity typically leads to choppy price volatility, which can easily swing in either direction… The reduction of bitcoin held on exchanges suggests that there is very little appetite for selling, with the market now focused on the next leg up before another wave of profit taking. Unfortunately, the uncertainty surrounding Evergrande may spill out into cryptocurrency markets, which could see bitcoin retest support at $42,000 in the immediate future.

This is now the second time in the past few months where bitcoin tanks hard thanks to activity that is occurring in China. Not long ago, the currency dropped into the low $30,000 range after the country announced that it was purging itself of all crypto miners as a means of becoming more carbon neutral. The order was issued by Beijing – China’s capital city – and all other regions were required to comply.

China Is Sending BTC Miners Away

A mass exodus occurred that saw hundreds of bitcoin and cryptocurrency miners being forced to leave the nation they called home for so many years. Many found themselves relocating to regions such as Kazakhstan to the north, as well as Texas and Florida in the west.

Winston Ma – the managing director and head of North America at China Investment Corp. – has stated the nation is now looking to create a new bank-issued digital currency known as e-CNY, which is set to be launched following next year’s winter Olympics in Beijing.

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Christine Lagarde Is Not a Big Fan of Digital Currencies

Christine Lagarde – the president of the European Central Bank – has issued a warning about cryptocurrencies like bitcoin and Ethereum, calling them highly speculative and saying that they are “suspicious.”

Lagarde: Crypto Is NOT Cash!

Bitcoin and digital assets have shot up like crazy over the past year. The idea is that these assets are becoming hedge tools against inflation and other economic problems caused by the current presidential administration and ongoing coronavirus fears. While many people have garnered newfound respect for these assets, Lagarde feels very differently, and says that they are not cash and should not be treated as such.

In a recent interview, Lagarde commented:

I think we have to distinguish between cryptos that are highly speculative and suspicious occasionally, and high intensity in terms of energy consumption assets, but they’re not a currency.  Cryptos are not currencies, full stop. Cryptos are highly speculative assets that claim their fame as currency, possibly, but they’re not. They are not.

Among the big price highlights to occur for digital assets over the past several months include bitcoin reaching a new all-time high of approximately $64,000 per unit in April. In addition, Ethereum also experienced a new high of about $4,000. Other assets, such as Solana, Ripple’s XRP and Binance’s BNB, have also incurred triple-digit gains.

These currencies – and many others like them – are not garnering affection from Lagarde, though she was rather praising of stable currencies in her interview, claiming:

You have those stable coins that are beginning to proliferate, which some big techs are trying to promote and push along the way, which are a different animal and need to be regulated, where there has to be oversight that corresponds to the business that they’re actually conducting, irrespective of how they name themselves.

Many banks and governments across the globe have been looking at stable coins as of late, recognizing that cryptocurrencies are becoming much more prominent and that they need to stay current to compete. The ECB itself ultimately launched a digital euro project earlier in the year under Lagarde’s direction and guidance. She continued her praise of the stable currency space with:

And in all that, you have the central banks who are prompted by a demand of customers to produce something that will make the central bank and central bank digital currencies fit for the century we are in. I was keen to push the issue, the CBDC issue, on our agenda because I believe that we have to stand ready for that.

Stable Currencies May Provide Solid Answers

One figure sharing this sentiment is Benoit Coeure, the head of innovation at the Bank for International Settlements (BIS). He recently stated of stable currencies:

CBDC (central bank digital currencies) will be part of the answer. A well-designed CBDC will be a safe and neutral means of payment and settlement asset.

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Study: Crypto Mining Has Already Used More Energy in 2021 Than It Did Last Year

According to a recent study conducted by Bloomberg, the amount of energy used for crypto and bitcoin mining purposes in 2021 already outdoes all the energy used in 2020, and we’re not even three quarters of the way through the year.

Crypto Mining Is Using a Lot of Electricity

Some environmentalists are taking this as a bad sign. It suggests that people are not only mining more but may be increasing the carbon footprint that already stems from the mining industry. So far this year, bitcoin mining has surpassed the 67TWh of electricity used over the previous year.

The study explains:

By the end of this year, it looks set to have used 91TWh of energy – as much as Pakistan.

The problem likely comes from the spikes that the bitcoin price has incurred in recent months. Last April, for example, the currency rose to its highest point of $64,000 per unit. This prompted many additional people to step into the cryptocurrency mining sector in the hopes of garnering riches for themselves. However, many of them do not possess energy-efficient machines, and thus contribute more to the carbon emissions that are released into the atmosphere when digital currencies are extracted from the blockchain.

The arguments against digital currency mining have taken serious precedence over the past several months, and many high-ranking individuals in the space have ultimately emerged to suggest that the problem is more dire than originally thought. One of the biggest arguments stems from Elon Musk, the South African entrepreneur behind billion-dollar companies such as Tesla and SpaceX.

Musk commented about six months ago that he was looking to allow individuals to purchase electric vehicles with bitcoin. However, not long after, he rescinded this decision, claiming that he could not vouch for such a move until emissions were lowered and miners made greener decisions.

In addition, Kevin O’Leary from “Shark Tank” fame commented that he was no longer seeking to purchase bitcoin mined in China given that the country did not engage in energy-efficient extraction methods. From there, China engaged in a whole “mining exodus” agenda designed to get crypto miners out of the country and allow China to become more carbon neutral.

Some Think Things Aren’t So Bad

Despite all this, bitcoin mining continues to earn defense from notable figures in the bitcoin and blockchain spaces. One of the biggest arguments in favor of mining comes from Sam Bankman-Fried, the CEO and founder of popular crypto trading platform FTX. He stated in a recent Twitter battle with Massachusetts Senator Elizabeth Warren that the hazards of mining do not compare to the great benefits bitcoin can bring to modern-day society.

Others – such as Yassine Elmandjra of Ark Investment fame – see the impact of bitcoin mining as a good thing, as it will allow companies and project managers to transition faster to renewable energy.

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Fidelity to the SEC: Come On, Just Approve Our BTC ETF!

Fidelity Digital Assets – the cryptocurrency division of Fidelity Investments – has recently sent representatives of the firm to secretly meet with agents of the Securities and Exchange Commission (SEC) as a means of pushing its new crypto-based exchange-traded fund (ETF) further along the way.

Fidelity Wants the SEC to Move Quickly

Fidelity believes that the cryptocurrency industry is now large enough to push such a product, which has been making its way across SEC desks for the past four years. Many companies – from Van Eck to Bitwise – have been trying since early 2017 to get bitcoin and crypto-based ETFs approved for trading purposes, though none have been successful, as the SEC argues that crypto is simply too volatile to be taken seriously.

Tom Jessup – the president of Fidelity Digital – attended a virtual meeting with the regulating agency about two weeks ago to discuss how much investor demand has grown in the bitcoin and crypto spaces. Jessop and his team even cited recent surveys and additional material to show the growing appeal. Some of these items discussed how much institutional investing in BTC has increased over the past year alone, with companies such as MicroStrategy and Square investing hundreds of millions to billions of dollars in digital currency.

In addition, the company also showed evidence of the success of the new bitcoin and Ethereum-based exchange-traded funds in Canada, while similar products – known generally as ETPs – have also seen a boom in regions such as Germany, Sweden, and Switzerland.

Despite all this, however, the SEC has continued to reject the prospects of bitcoin ETFs and has frequently delayed all decisions when it comes to approving these products. This has proved frustrating for many companies, who simply withdraw their applications early when the process takes too long.

Recently, Gary Gensler – the current head of the SEC – has stated that he is willing to open his mind to bitcoin ETFs granted they take on the form of tradable futures. This would place them under a 1940s rule that generally applies to mutual stocks, a choice that has garnered heavy criticism from industry analysts. They say that the rules need to be molded to fit the product in question and that futures are inferior products.

Regulation Coming Soon?

In its presentation with the SEC, Fidelity explained:

We believe bitcoin futures-based products are not a necessary interim step before a bitcoin ETP. Firms should be able to meet investor demand for direct exposure to bitcoin through the 1933 Securities Act.

As of late, Gary Gensler has been pressured by lawmakers in the United States to hurry things up and establish a new set of digital currency regulations that can potentially limit volatility, better classify where cryptocurrencies fall, and keep investors protected during the trading process.

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Ray Dalio: If BTC Works, Regulators May Destroy It

In the past, Ray Dalio – a billionaire investor that started the world’s largest hedge fund – has stated that the governments of the world could potentially try to ban or take one’s bitcoin units if the asset was to be successful enough.

Ray Dalio Warns Crypto Fans of Possible Government Action

Now, his warning has become even more dire, with Dalio saying that governments everywhere could potentially just try to “kill” bitcoin if it goes much further. He commented that the world’s number one digital asset by market cap could wind up being completely shut down by regulators who are looking to ensure banks stay in control and people’s financial futures remain in their hands.

While speaking at the SALT conference in New York, Dalio explained to an audience of listening crypto fans:

I think at the end of the day if it’s really successful, they will kill it and they will try to kill it, and I think they will kill it because they have ways of killing it, but that doesn’t mean it doesn’t have a place. A value and so on.

Banks and governments everywhere are allegedly afraid of bitcoin because it does something that standard financial institutions were never designed to do, and that is to offer monetary freedom to the people of the world. With banks in power, access is potentially limited to services and products for many people that would be necessary to survive each day, and individuals do not have as much say in how far their money goes.

However, bitcoin does not care what your background is. It doesn’t care about your employment history or where you are situated. Rather, if you have access to the internet, anyone from anywhere can potentially open a digital wallet and start trading. Bitcoin makes finance easy, and banks are not crazy about this.

It’s a Good Diversification Tool

Dalio says that he is not an expert on bitcoin. In fact, he has often claimed he prefers gold in the long run, though he has sought bitcoin as a means of keeping his portfolio diversified, and over time, he has become more bullish on BTC, claiming:

I’m no expert on it … I think diversification matters. Bitcoin has some merit. The real question is how much [do you] have in gold versus how much you have in bitcoin. I think it’s worth considering all the alternatives to cash and all the alternatives to the other financial assets. Bitcoin is a possibility. It’s an amazing accomplishment to have brought it from where that programming occurred to where it is through the test of time.

Despite these thoughts, he was quick to warn his audience that everything could go south in a short period, warning that bitcoin could be “tulips in Holland” if people were not careful.

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Lawmakers Pressure Gary Gensler to Establish New Crypto Rules

Gary Gensler and the Securities and Exchange Commission (SEC) are really feeling the heat when it comes to developing new regulations surrounding the bitcoin and blockchain spaces. The agency is now working “overtime” as CNBC puts it to establish a new set of crypto-related rules designed to pause volatility and potentially keep traders (and their money) safe.

Gary Gensler Is Now Under the Gun

Gensler has commented in a recent statement that while he wants the space to be much safer than it is, he does not want to stifle innovation. With so many new assets entering the arena on a regular basis, Gensler says that there is no greater time than right now for regulatory tactics.

According to an SEC statement, there are more than 6,000 separate cryptocurrency projects in play at the time of writing. The organization is now looking to potentially increase its staff as a means of evaluating all of them to see if they would potentially fall under present securities laws.

Gensler commented:

Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending. Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.

Senator Pat Toomey – a republican lawmaker out of Pennsylvania – is among those pressuring Gensler to hurry things along. During a recent hearing, Toomey questioned Gensler about stable currencies, claiming that since they are tied to fiat and do not necessarily return profits, they would not necessarily fall under security-based provisions.

While Toomey seemed to know the answers to these questions, he admits that regulation is not clear, and there are too many traders out there wandering into very vague territory every time they engage in a transaction.

Toomey commented:

My whole point is, I think we need clarity on this. I think you should publicly disclose this… And we certainly shouldn’t be taking enforcement action against somebody without having first provided that clarity.

What Republicans and Democrats Are So Nervous About

While Republicans are more about asserting guidelines for future trades, Democrats have mostly voiced concerns regarding the potential risks that come with digital asset trading. Senator Mark Warner, for example, is a Democrat representing Virginia. He stated humorously that Gensler should have said “wild” more than once to describe the circumstances surrounding the digital currency space. He says:

As someone who shares some of your concerns about crypto, I will acknowledge that you only put one ‘wild’ in front of ‘west,’ as opposed to two. As somebody who managed to do rather well financially because of innovation, I’m all in, but we do need some guidance. We do need some direction. I would go to the two ‘wilds’ in terms of the description of this area, as good as some of the innovation is.

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El Salvador Is Still Experiencing Digital Wallet Issues

El Salvador is reporting that more than half a million residents are using the new Chivo wallet system, which is designed to assist in the country’s rollout of bitcoin as an official legal tender.

El Salvador Doesn’t Have Much to Brag About

This would be fine and dandy except for one thing… El Salvador has more than 6.5 million residents. Thus, many individuals are either still not trusting bitcoin enough to use the wallet, or there are too many problems with the rollout, and at the time of writing, it looks like the latter may be the bigger reason.

El Salvador is touting this half-a-mill figure as something to brag about, but the fact remains that there are still many technical glitches preventing bitcoin from being utilized the way it should. It has been roughly two weeks since the country unveiled bitcoin as an official currency of the nation. However, things have gotten off to a slow start given that the Chivo wallet has crashed and been down for maintenance several times since it was installed.

Some have been unable to download the wallet completely, while others have obtained the wallet but cannot use the $30 in free BTC their wallets give them. One user named Cesar Estrada runs a street vending business and has had this problem himself. In a recent interview, he states:

After several attempts, I managed to download the Chivo wallet, but I haven’t been able to use the $30.

One of the big problems associated with the bitcoin rollout has been false information, according to one employee of the wallet system. While remaining anonymous, the speaker discussed some of the issues at hand:

The problems continue, but there has also been a lot of false information. People are saying that if someone downloads the app, the government can spy on them, or even empty their bank accounts. So many things have been said that it gets into people’s heads, and added to that is at first, the system collapsed, and the errors have continued.

It is hard to know if this is indeed false data, or if it’s just being touted as false data because regulators do not want residents to know what’s being done behind closed doors. Either way, there are certainly trust issues floating around town as of late, and despite months of alleged planning, the system is letting users – and the country – down in a big way.

A Message from the President

President Nayib Bukele commented about the recent rollout disasters on his Twitter feed, explaining:

We set ourselves a goal that was too ambitious and we made mistakes, but we corrected things, and hundreds of thousands of Salvadorians can now use their Chivo wallets with no problem. Soon, everyone who wants to can also enjoy the benefits.

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Altcoins Are Spiking Like Mad, and This Has Analysts Worried

As altcoins spike heavily in recent weeks, many analysts and crypto heads are worried that the digital currency space is heading into dangerous territory similar with what it saw last May.

Altcoins Are All the Rage Right Now

About four months ago, the digital currency arena saw many assets spiking unexpectedly. Bitcoin, for example, had just reached a new all-time high of approximately $64,000 per unit, while Ethereum also hit a new peak of about $4,000. Many altcoins and competitors to BTC saw their prices jumping to unprecedented levels, though this eventually came back to bite them in the butt.

It wasn’t long before the crypto space saw a nasty dive that ultimately took prices down to their lowest points in many months. Bitcoin lost more than 50 percent of its value at one point, falling (albeit briefly) into the $29,000 range, while ETH fell below $3,000. Many analysts are seeing rises in altcoin prices as of late that are comparable to what happened last May. Thus, there is heavy concern that the same falls could occur not too far down the line.

Assets like Cardano’s ADA, Binance Coin, and Ethereum-competitor Solana have jumped in recent weeks given that many traders are excited about their growing presences in the world of decentralized finance (defi). What’s interesting is that many of these altcoins remain in higher positions despite a recent market selloff that caused several mainstream cryptocurrencies to experience solid drops, so the big question is, “How long before these altcoins slip, and how big will those slips be?”

According to Nikolaos Panigirtzoglou – a global market strategist at JPMorgan – says the current altcoin rally is not sustainable and may lead to a heavy period of gloom and doom for interested traders. In a recent interview, he stated:

There is a big question mark here. Is the hype with Cardano, Binance, Solana, [and other] alternatives to Ethereum justified? Will there be enough traffic in these networks [and] wallet addresses to justify these kinds of valuations?

He says that what’s common is for investors to rush mindlessly into the world of altcoins that are spiking as a means of capturing small gains along the way. He says that this behavior never leads to positive results, and that the market may fall in the coming weeks. He comments:

I think we could have a repeat of what we saw in May.

Maybe Things Aren’t as Scary as They Look

At the time of writing, Solana is up by approximately 318 percent. Cardano’s ADA is up by close to 30 percent, while Ripple’s XRP is trading for about 23 percent higher over the past few weeks.

Curtis Ting – managing director for Europe at crypto exchange Kraken – is one of the few analysts that doesn’t see this leading to anything negative. Rather, he feels that altcoins are helping the market to “reset itself.”

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The Crypto Mining Fight in China Is Not Over

It looks like China is still not done clamping down on the crypto mining space. Another region known as the Hebei province has agreed to comply with Beijing’s ruling that all crypto mining should be omitted from China’s workforce. The province is now claiming that the practice is illegal and must end within its borders no later than September 30.

China Is Still Kicking Miners Out

China shocked the world not too long ago when it decided that all crypto mining should cease. The idea was that energy used for crypto mining purposes was hazardous to the planet, and that it was setting humans on the wrong path. Thus, regulators stated that it was time to bring things to an official end.

What was most surprising about the ruling is that the country, at the time, was home to nearly 75 percent of the world’s total crypto mining operations. Thus, it stood to lose a lot of money and tax revenue by initiating the clampdown. In addition, the country is home to two of the world’s biggest developers and distributors of bitcoin mining equipment in Bitmain and Canaan Creative.

Nevertheless, China has moved forward in its decision. Many mining operators were forced to shut down their businesses and move elsewhere, and quite a few have popped up in countries such as Kazakhstan and in states like Texas and Florida. Both these regions in America have stated they are open to crypto mining projects given that they can potentially lead to healthier local and state economies, and they will create jobs for interested workers.

The Hebei province issued the following statement:

Cryptocurrency mining consumes an enormous amount of energy, which is against China’s ‘carbon neutral’ goal.

The arguments against crypto mining have become rather prominent in recent months. One of the most notable stemmed from Elon Musk, the South African entrepreneur behind billion-dollar companies such as SpaceX and Tesla. He stated early in the year that he was willing to permit bitcoin payments for electric vehicles. A few weeks later, however, he rescinded this decision, claiming that miners were not utilizing their energy correctly, and he could not condone bitcoin unless carbon emissions were brought down.

Too Much Bad Energy in the Air!

Another argument came from Kevin O’Leary of “Shark Tank” fame. The billionaire investor claimed that he would no longer be purchasing any BTC mined in China given that the country was not known to utilize green energy for mining purposes. China later took this issue to heart, it seems.

Starting in October of this year, bitcoin and crypto mining in China will be completely illegal. Regulators in the nation have stated that they will keep a close eye on the mining space and will work to punish all those who disobey the rules.

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