June was a promising month for bitcoin, here’s a summary of what made the news:
Bitcoin now legal tender in El Salvador
El Salvador recently passed a law for bitcoin to be accepted as legal tender within its country. In a landmark moment, El Salvador will be the first country in the world to back bitcoin and accept it as legal tender alongside the US dollar.
Salvadoran colón was El Salvador's national currency until 2001, when it went out of circulation. The US dollar is currently in use in El Salvador as the national currency.
El Salvador's president Nayib Bukele has announced plans to create bitcoin mining operations. The country hopes to use geothermal energy from its volcanoes that provide a clean and emission-free solution.
70% of El Salvador residents currently do not have access to traditional financial services like banking. The exchange of bitcoin within El Salvador will also not be subject to a capital gains tax, meaning it can be exchanged freely without taxation.
Miami is now potentially the bitcoin capital of the USA
The Miami 2021 Bitcoin conference took place throughout June. The event hosted prominent bitcoin speakers and is one of the major bitcoin events that allowed people to attend in-person. Usually hosted in Los Angeles, the Covid restrictions meant the event was moved to Miami for 2021. Some noteworthy speakers included Jack Dorsey, Mayor Francis Suarez, the Winklevoss twins, Senator Cynthia Lummis, Tim Draper, Anthony Pompliano, Max Keiser, Nick Szabo, Tony Hawk and Floyd Mayweather.
Miami mayor Suarez announced further plans for the state of Miami to accept and support bitcoin:
- A legislative proposal for workers to be paid in bitcoin
- Taxes payable via bitcoin
- Government to allocate some investment capital in cryptocurrency
Miami adopting bitcoin can hopefully pave the way for other US states and territories to follow, and help further incite mainstream adoption.
Google reverses ban on crypto ads
Google has lifted its ban on cryptocurrency asset exchanges and services being featured in its advertising. Google has outlined requirements for any crypto exchange wanting to advertise on their platform. Exchanges now wanting to advertise using Google’s platform must now register with the Financial Crime Enforcement Network (FinCEN).
This will enforce tighter restrictions on exchanges looking to advertise crypto-based services. Google imposed the ban due to illegitimate services or outright scams being advertised on its search platform. This measure will hopefully make bitcoin adoption safer and more regulated.
Bitcoin’s hashrate has dropped, approximately halving from where it was a month ago. The bitcoin hashrate reached an all-time high throughout May (224 EH/s) and is now currently around 73 EH/s. The reason is mainly due to China’s crackdown on mining operations, which contributes to a large proportion of the network hashing.
Recent studies have shown China to contribute more than half of all mining performed on the bitcoin network. This has raised concerns that mining is too pronounced within one region. Moving mining outside of China benefits bitcoin by allowing the network to become more decentralised.
The exodus of bitcoin miners should hopefully see other countries with renewable energy sources set up bitcoin mining operations. This should help the bitcoin hashrate return to a strong position sometime later this year.
Following on from the major liquidation event on 19th May, the bitcoin price has continued to trade mostly in a tight range between AU$45,000 and AU$53,000. With some intraday movements as low as AU$40,000, there are great buying opportunities if you are able to time them. On 22nd of June the price briefly spiked down below AU$39,000 with above average trading volumes. It is worth noting that the Bitcoin Fear and Greed Index recorded a rating of 10 on this day, it’s equal lowest score in the last year, indicating extreme fear in market participants. As Warren Buffet said, “be greedy when others are fearful”.
It has been very encouraging to see how well supported the price has been at the AU$40,000 level, with trips down to this price being brief. As of the morning of 28th June, the price is now sitting back above the support line at AU45,000 and it appears that the worst of the selling pressure may be over.
It’s important to remember that all financial markets go through correction periods. Bitcoin is currently in one of these, which tend to occur when traders take on too much leverage.
Take a breath
At the end of the day, it’s all a matter of perspective
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