Dispatch #162: The Bitcoin Rejuvenation

Oct 20, 2023 4 min read

Dispatch

In this patch of your weekly Dispatch:

El Salvador “reaps fruit” 🇸🇻
Rounding-up regulations 🚦
Wen Lambo? Now Ferrari 🚗

The Big Idea

Ad Astra: Bitcoin’s Time to Shine

Like Atlas in Greek mythology, Bitcoin seemed to hold the entire crypto world on its shoulders last week, as it reached market dominance unseen since 2021 – the numbers are below. And while increased interest rates globally subdue cryptocurrency markets, Bitcoin has had an eventful, positive week regaining energy.

It started early in the week when the SEC chose not to contest the court's ruling that allowed Grayscale to transform its Bitcoin trust into an exchange-traded fund (ETF), which brought the GBTC discount (a critical crypto market indicator) to its lowest in nearly two years. That underscored the optimism around the potential ETF conversion – GBTC shares traded at a mere 15.87% discount to the trust's net asset value. And if you’re still wondering what all the fuss is about with this whole Bitcoin ETF, CryptoQuant came up with their latest numbers:

Bitcoin could become a $900B asset with the crypto market growing by $1T if Bitcoin spot ETFs are approved.
If issuers allocate 1% of their Assets Under Management (AUM) to Bitcoin ETFs, approximately $155B could flow into the Bitcoin market.
Historical data shows that for every $1 of new money entering the Bitcoin market, the market capitalization could increase by $3 to $5.

Moreover, Lightning Labs has launched the Taproot Assets protocol, allowing the issuance of stablecoins and assets on Bitcoin and Lightning, making Bitcoin a multi-asset network while preserving scalability. And don’t even get us started on the upcoming Bitcoin block rewards Halving event in April 2024, we’ve got a lot in mind at Nexo when that time comes.

So there we have it – rarely has there been a better example of the real world aligning for Bitcoin’s rejuvenation, amidst it all only a spark needed to start the bonfire.

The Latest In…

More Bitcoin Effect

El Salvador, the first nation to embrace Bitcoin as legal tender, is experiencing a wave of economic success. Vice President Felix Ullio highlights strong security measures, robust economic recovery, a thriving bond market, and a tourism surge – all influenced by the Bitcoin community. El Salvador's bonds have yielded a remarkable 70% return in 2023, outperforming emerging market bonds. The Bitcoin Law attracted investors and over 80 Bitcoin-related companies to the country. Tech giants like Google and Meta could assist technologically in modernizing the government, combating corruption, and boosting tourism. In short, El Salvador's Bitcoin journey is reshaping its economic landscape.

The Latest In…

Digital Times Call for Digital Measures

California Governor Gavin Newsom has signed the Digital Financial Asset Law to establish crypto industry regulations. The law designates the Department of Financial Protection and Innovation (DFPI) as the regulator with rulemaking authority as well as an 18-month implementation window.
Singapore has established two task forces with 20 prosecutors to combat crypto and technology-related crimes. The initiative focuses on tracking and seizing crypto assets, while the technology crime task force targets computer and technology-assisted crimes.
The European Central Bank (ECB) is progressing with the development of a digital euro central bank digital currency (CBDC) after a two-year investigation. The aim is to offer universal access, instant payments, and high privacy levels, distributed through supervised intermediaries.

The Prancing Horse on Crypto

Ferrari is now accepting cryptocurrency payments for its luxury sports cars in the USA with plans to expand to Europe in response to customer requests. In a Reuters report, Ferrari's Chief Marketing and Commercial Officer, Enrico Galliera, explained that cryptocurrencies have been efficient in reducing the company’s carbon footprint. The move aims to cater to both young investors who have gained fortunes in crypto and traditional investors looking to diversify their portfolios. Ferrari takes Bitcoin, Ether, and USDC, with no additional fees, and aims to shield itself and dealers from crypto price fluctuations.

The Week’s Most Interesting Data Story

The Strength Lies in the Number

Bitcoin's market dominance has soared to its highest level in 2023, reaching 52.17%, as it outshines altcoins amid their ongoing bear market, indicating a strong uptrend that could continue. Some factors to watch for are the approaching halving and the growing attention on Bitcoin.