The recent rise of bitcoin toward all-time highs is creating millionaires, on paper, at a fairly rapid clip, according to data from BitInfoCharts.At last check, bitcoin was trading up by over 6.5% on CoinDesk BTCUSD, 3.43% at $49.141.23.

But even with the asset down by about 12% for the week after a jaunt to a record high at $58,332.36 over the weekend, the digital currency’s ascent is helping mint a round of crypto millionaires.

Read: #LaserEyes meme campaign goes viral on Twitter in apparent bid to double bitcoin price to $100,000There are 93,862 accounts holding bitcoins worth at least $1 million and there are 8,214 that own bitcoins valued at more than $10 million, according to BitInfoCharts, as of Wednesday afternoon.



VIA BITINFOCHARTS.COM

That is 102,076 bitcoin accounts that can call themselves diamond hands, in the parlance of Redditors who refer to investment outperformance in that way.

Read: Don’t fight the FUD: HODL onto this list of bitcoin terms you need in your vocabulary

Also, 422,104 accounts can boast bitcoin accounts valued at more than $100,000, the data show.

It is impossible to know where values for the crpyto asset created in 2009 are headed and whether a crypto winter, similar to the one that ensued after bitcoin surged to near $20,000 back in late 2017 only to slip to around $3,000 will take hold, but bitcoin’s climb has been widely attributed to greater institutional ownership.

Bitcoin’s price surpassed $50,000 this month after Tesla announced a $1.5 billion bitcoin investment. The leading cryptocurrency wasn’t finding lasting support from the campaign, with its price having fallen below the $50,000 mark in Tuesday action.

Still, bitcoin’s price is up nearly 70% so far in 2021. By comparison, gold GC00, 0.19%, bitcoin’s closest traditional rival asset, is down 5%. The Dow Jones Industrial Average DJIA, +1.35% and the S&P 500 index SPX, +1.14% are both up around 4.5% thus far this year, while the Nasdaq Composite Index COMP, +0.99% has gained 5.3% over the same period.

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Last Friday, bitcoin hit a market cap above $1 trillion, a momentous occasion with a new crop of players dipping their toes into cryptos, including PayPal Holdings Inc. PYPL, which back in November opened up its cryptocurrency platform to all U.S. customers after conducting a more narrow rollout.

Meanwhile, a number of high-profile Wall Street investors, including Stanley Druckenmiller and Paul Tudor Jones, have embraced bitcoin.

Famed investor Bill Miller, founder of Miller Value Partners, in a letter to clients earlier this month published on the firm’s website, reaffirmed his bullish outlook on bitcoin.

To be sure, investing in cryptos requires a steely constitution. Over the past 12 months bitcoin has registered 8 corrections, defined as a decline from a recent peak of at least 10% but not more than 20%, and two bear markets, which are defined as falls of 20% or more, according to Dow Jones Market Data.

By comparison, the S&P 500 and the Dow have had one correction that then fell further into a bear market over the past year.

On top of that, bitcoin and other cryptos are viewed as highly speculative and assets that could be written out of existence by stern global regulation.

That said, momentum has been on the side of bitcoin enthusiasts in recent days and even comments from regulators are peppered with references to the utility of digital assets and the blockchain technology that underpins most.

TOPLINE

 Tesla's meteoric tear is unraveling this month as experts start to worry that the stock's performance could start to mimic bitcoin's extreme volatility after the firm disclosed a $1.5 billion investment in the world's largest cryptocurrency earlier this month.


Elon Musk, Tesla CEO and founder of SpaceX, speaks at the 2020 Satellite Conference and Exhibition ... [+] GETTY IMAGES

KEY FACTS

Shares of Tesla at one point plunged more than 10% Tuesday morning, pushing their losses since February 8–when the firm first disclosed its $1.5 billion bitcoin investment–to more than 25%.

That crippling blow to Tesla stock has erased about $215 billion in the firm's market capitalization, which stands at about $620 billion, since the investment, at which time the firm's market cap was near a high of $844 billion.

The recent plunge comes as bitcoin prices tank about 7% after Tesla's billionaire chief, Elon Musk, said over the weekend that the cryptocurrency's prices looked "a little high," Oanda Senior Market Analyst Craig Erlam said Tuesday morning.

In a note to clients Tuesday, Wedbush Analyst Dan Ives said that "for both good and bad," Tesla shares are now "heavily tied" to bitcoin prices–a development that's driving a sell-off among cautious investors.

Though he remains bullish on Tesla's stock, Ives also pins the recent losses to the firm halting sales of its lowest-priced Model Y and ongoing price cuts that have led to demand concerns among Wall Street analysts.

CRUCIAL QUOTE 

"The electric-vehicle space is in the early days of playing out," Ives said Tuesday, noting that Tesla dominates the market, which is set to grow to an estimated $5 trillion over the next decade.

"The market… will have many winners around the globe–especially with a President Joe Biden-driven green tidal wave on the horizon in the U.S. However, by weaving bitcoin into the mix, Tesla shares now have added volatility and noise driving the emotional debate around its name."

SURPRISING FACT

Tesla shares soared by more than 740% in 2020. The stock is now at its lowest level since before it entered the S&P 500 in late December. 

CHIEF CRITIC

"The fall that has taken place since [Musk's tweet] shows just how wild an instrument bitcoin is, how overbought it has become and how influential the Tesla CEO now is in the space," Erlam said Tuesday. "I'm not sure any of that is a good thing."

BIG NUMBER

$155 billion. That's how much 49-year-old Musk is worth, according to Forbes. His net worth is down $12 billion Tuesday after falling $12 billion Monday.

FURTHER READING

Tesla Falls Again As Tech Stocks Plunge, S&P Extends Longest Losing Streak Since Stock Market Crash (Forbes)

Microsoft Corp. (NASDAQ: MSFT) co-founder Bill Gates is not bullish on Bitcoin (BTC) and is cautioning others to reconsider such investments — unless they have more money than Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk.

What Happened: Gates told Bloomberg on Monday that he isn’t worried about Musk’s Bitcoin randomly going up or down.“Elon has tons of money and he is very sophisticated,” the tech entrepreneur said, adding that he is more concerned about people getting into such manias who don’t have as much money to spare.

“If you have less money than Elon, you should probably watch out,” Gates told Bloomberg.See also: How To Buy Microsoft Stock

The philanthropist explained that he is not keen on Bitcoin, primarily because of the amount of electricity it consumes and the promotion of irreversible anonymous transactions. and that he is more enthusiastic about digital currencies.

“Digital money is a good thing,” Gates said, claiming the difference lies in terms of being regulatory-compliant and still giving the convenience and low-cost associated with cryptocurrency transactions.

Why It Matters: Gates told CNBC last week that he was “neutral” on Bitcoin and acknowledged the cryptocurrency’s role in bringing down transaction costs.

Gates also showered praises on Musk in a New York Times podcast, dubbing the entrepreneur's work with Tesla "one of the greatest contributions to climate change anyone’s ever made.

"Musk has been increasingly tweeting about cryptocurrencies this year, in particular, the joke cryptocurrency Dogecoin (DOGE).The Tesla CEO’s tweets often move markets and several people, including those in the cryptocurrency community, have expressed concern over such statements from the world’s second-richest person.

The electric vehicle maker also announced a $1.5 billion investment in Bitcoin this month, but Musk said the move wasn’t "directly reflective of my opinion.

”Price Action: Bitcoin traded 14.3% lower at $47.906.71 at press time on Tuesday. Tesla shares are down 3.8% in the pre-market session at $687.

In a closely watched case with wide-ranging implications for the crypto market, Tether has admitted no wrongdoing and will provide reports on USDT’s reserve composition for two years.

A closely watched legal case involving Bitfinex and Tether with major implications for the cryptocurrency industry has been resolved.

The New York Attorney General’s office (NYAG) has settled with Bitfinex over a 22-month inquiry into whether the cryptocurrency exchange sought to cover up the loss of $850 million in customer and corporate funds held by a payment processor.

The NYAG’s office announced the settlement Tuesday, formally ending the inquiry that kicked off in April 2019. Under the terms of the settlement, Bitfinex and Tether will admit no wrongdoing, but will pay $18.5 million and provide quarterly reports describing the composition of Tether’s reserves for the next two years.

More significantly, these reports will match information Tether already provided the NYAG about its reserves. The NYAG will bring no charges as part of the settlement.

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In a statement, New York Attorney General Letitia James said, “Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines. Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.”

The settlement may help resolve, one way or another, a question that has long bedeviled the entire $1.6 trillion global cryptocurrency market.

By requiring Tether to provide a greater level of transparency than ever about the backing of its USDT stablecoin – a foundational piece of crypto’s plumbing – the arrangement could replace whispers and conjecture with regular data. 

Depending on the level of detail provided, investors could have better tools to evaluate the claim that the company has been printing unbacked tokens to artificially drive up the price of bitcoin, the market’s bellwether.

According to the settlement, the NYAG claims Bitfinex and Tether held a portion of Tether’s reserves in trust for several months in 2017 and failed to disclose its troubles with Crypto Capital Corp. in a timely manner in its findings of fact.

The NYAG also found fault with a blog post Bitfinex published after the inquiry was first announced, where the exchange said the funds held by Crypto Capital have been “seized and safeguarded.”

‘Resolves allegations'

Charles Michael, a partner at law firm Steptoe & Johnson LLC who represented the companies in the inquiry, said the settlement “resolves allegations about public disclosures” around Tether’s loan to Bitfinex.

“To the Attorney General’s Office’s credit, after two and a half years of investigation, their findings are limited only to the nature and timing of certain disclosures,” Michael said. “And contrary to online speculation, there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices.”

However, the settlement said, “As of November 2, 2018, tethers were again no longer backed 1-to-1 by U.S. dollars in a Tether bank account, because a substantial portion of the backing in the Deltec account had been transferred to Bitfinex to make up for the funds taken by Crypto Capital, while the corresponding funds transferred from Bitfinex’s Crypto Capital account to Tether’s Crypto Capital account were impaired by Crypto Capital’s actions.”

The $18.5 million that the companies are paying as part of the settlement “should be viewed as a measure of our desire to put this matter behind us and focus on our business,” Bitfinex and Tether general counsel Stuart Hoegner said in a statement.

He said Tether “voluntarily” provided the NYAG with information about Tether’s reserves, and will continue to do so for two years.

“We proposed that as part of the settlement agreement, we would disclose – both to the Attorney General’s Office and to the public – additional information about Tether’s reserves on a quarterly basis,” Hoegner said.

The disclosures will include the breakdown of cash and cash equivalents that are in the reserves. It’s unclear whether this will take the form of attestations or some other type of update, or whether a third-party auditor or law firm will write the reports.

The settlement only said the disclosures will “substantially” match what the companies provided the NYAG during its investigation. Bitfinex and Tether must also disclose any information about fund transfers between themselves.

“Putting aside the Attorney General’s characterization of these disclosure issues as misrepresentations or violations of any legal obligation, the Attorney General’s Office concluded, in essence, that Bitfinex and Tether could have done better in publicly disclosing these events,” Michael said.

22 months

New York Attorney General Letitia James first announced the legal inquiry in the spring of 2019, revealing that Bitfinex had lost access to nearly $1 billion and covered up the losses using funds from its sister firm Tether. Tether, which shares ownership and key executives with the exchange, loaned Bitfinex $550 million and extended a line of credit. 

The NYAG inquiry secured an injunction to freeze this line of credit, prevent any further fund transfers and force the companies to turn over any documentation about the deal, which both firms objected to in court. A judge ruled in favor of the NYAG, which subsequently won an appeal as well. 

Ultimately, the companies turned over more than 2.5 million documents, Hoegner said.

“The loan was made to ensure continuity for Bitfinex’s customers. It has since been repaid early and in full, including interest. At no point did the loan impact customers, or Tether’s ability to process redemptions,” Michael said.

The NYAG inquiry did not lessen demand for USDT (-0.04%), the dollar-pegged stablecoin issued by Tether. Since the case began, the value of the dollar-pegged tokens in circulation has grown from $2 billion to over $34 billion, according to Tether’s transparency page. 

The price of bitcoin (BTC, -9.26%) has more recently gone on a tear, rising to a new all-time high over $58,000. 

“We are pleased that our customers have shown loyalty and commitment to our businesses over the past two years, while this investigation was ongoing. … We look forward to both companies continuing to lead the industry and serve our customers,” Hoegner said.

Missing millions

Since the case entered the public sphere, Bitfinex has tried to recover the funds held by Crypto Capital held by law enforcement officials in Portugal, Poland and the U.S. It’s unclear how long it might take for these cases to resolve, given the different jurisdictions and the ongoing cases against Crypto Capital’s operators. 

Last year, Bitfinex filed for subpoenas in three different states, seeking to depose banks that may have held funds for the payment processor. 

At the time, Hoegner told CoinDesk through a spokesperson that the efforts were “aimed squarely at obtaining further information” about Crypto Capital and its funds. “Bitfinex is the victim of a fraud and is asserting its rights to funds taken by Crypto Capital through legal measures initiated in various countries.”

The exchange has been granted some of these subpoenas. The Bitfinex settlement is among the largest in crypto history. EOS (-17.03%) builder Block.one settled with the SEC for $24 million in 2019 on allegations its $4 billion token sale was an unregistered securities offering.

Telegram, at the time an aspiring digital currency issuer, also settled with the SEC for $18.5 million after raising $1.2 billion for the TON network, which was ultimately scrapped.

• Bitcoin tumbled as much as 17% on Monday after hitting a record above $58,000 over the weekend.
• On Sunday, bitcoin hit $58,042, bringing its year-to-date gain to more than 100%.
• The popular cryptocurrency surged by 305% in 2020.
• Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin tumbled as much as 17% on Monday, to below $48,000.On Sunday, the cryptocurrency hit a record of $58,042, bringing its year-to-date gain to over 100%. On Friday, it reached a market capitalization of $1 trillion.

Monday's slide is a sign of the wariness of the cryptocurrency's rapid ascent. Bears have long said bitcoin is in bubble territory, comparing the recent rally to what played out in 2017, when bitcoin plunged by 45% shortly after reaching highs. In 2020, bitcoin surged by 305%.

Will Hobbs, the chief investment officer of Barclays Wealth & Investments, told Insider that he was steering clear of the cryptocurrency because of its wild swings - a view that many money managers share.

Meanwhile, bitcoin has gained institutional support in the past few weeks with announcements from Tesla and Mastercard, among others.MicroStrategy, the first corporation to directly purchase bitcoin, now owns 70,784 bitcoin, worth more than $3.5 billion.

Michael Saylor, the CEO of the enterprise software company, has long advocated bitcoin, viewing the cryptocurrency as a hedge against a devaluation of the US dollar.On Sunday, Saylor said in a tweet to his half a million followers, "It is only speculation if you don't understand the technology or why you need it.

"As for Tesla, Dan Ives, an equity analyst at Wedbush Securities, estimated that the electric-car maker had racked up profits of $1 billion on its $1.5 billion bitcoin investment.

"Based on our calculations, we estimate that Tesla so far has made roughly $1 billion of profit over the last month from its Bitcoin investment given the skyrocketing price of Bitcoin, which now tops a trillion of market value," Ives wrote in a note published Saturday.

Tesla CEO Elon Musk has been a vocal supporter of the cryptocurrency, most recently describing it as "a less dumb form of liquidity than cash." On Saturday, Musk did acknowledge that the price of bitcoin seemed high.

Many think that bitcoin's dizzying rally could have been driven by buyers looking to hedge against inflation or simply by people trading the cryptocurrency.

Still, some bitcoin bulls have told Insider that they expect the cryptocurrency to rise even more, to as high as $250,000 in the next three years.

(Kitco News) As bitcoin continues to surprise with new milestones almost daily, are U.S. officials signaling that more regulation is coming, and is that a threat to this year's massive price rally?

The crypto space has been all the rage so far this year, with bitcoin at its center.

Yet, despite all the good news, there are signs of worry. After surpassing market capitalization of $1 trillion on Friday, bitcoin prices tumbled from new record highs of $58,000 back to $50,000 on Monday.

At the time of writing, bitcoin was trading at $54,222.74, down 6.30% on the day.

Weighing on bitcoin were the latest comments from Tesla CEO Elon Musk, stating that prices "seem high" after the digital currency hit the latest new record. But what about regulation?

Could increased scrutiny from the U.S. officials trigger even a bigger selloff?Recently, Treasury Secretary Janet Yellen has been speaking about the importance of bitcoin regulation while focusing on illicit financing risks.

Yellen has also been referring to bitcoin as a very volatile and "highly speculative asset.""I think it's important to make sure that it is not used as a vehicle for illicit transactions and that there's investor protection.

And so regulating institutions that deal in bitcoin, making sure that they adhere to their regulatory responsibilities, I think is certainly important," Yellen told CNBC last week.

Earlier in February, Yellen told the Treasury's innovation policy roundtable that the "misuse" of cryptocurrencies like bitcoin is "a growing problem.

""I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they've been a tool to finance terrorism," she said.

Regulations explainedThe existing oversight over bitcoin is a "patchwork of regulations" that varies from state to state, analysts told Kitco News.

"The way federal regulation usually works is that an agency will be assigned to be your primarily federal regulator.

For instance, banks are regulated by the Federal Reserve, brokerages are regulated by the SEC asset managers, and commodities trading firms are regulated by the CFTC.

Each one of those touches on bitcoin but doesn't have primarily federal regulatory authority over bitcoin itself," explained Bloomberg Intelligence analyst Ben Elliot.

Here is a quick breakdown:• Virtual currency spot exchanges are overseen by State Banking regulators via state money transfer laws.

• The U.S. Internal Revenue Service (IRS) treats virtual currencies as property, which is subject to capital gains tax.

• The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) is in charge of monitoring bitcoin's transfers for anti-money laundering activity.• The Securities and Exchange Commission (SEC) has taken action against unregistered ICOs (initial coin offerings).

• On the CFTC side, bitcoin has been declared a financial commodity, which means that the CFTC can regulate futures and other derivatives that are settled in bitcoin or are based on bitcoin.

What this reveals is that there is no federal oversight of bitcoin's spot markets.

 "The companies that allow you to buy and sell bitcoin and then exchange it back into a fiat currency are essentially unregulated," said Elliot. "Their primary regulator is the state they operate, which use their own money-transmitter regulations.

"There are currently no federal laws that say bitcoin is subject to regulation and that a specific agency is in charge of regulating it.

"The federal government has oversight only to the extent of the Bank Secrecy Act and the Patriot Act and other things that govern 'now your customer,' 'anti-money laundering,' and countering the financing of terrorism," Elliot added.

How is bitcoin taxed?Important to note that bitcoin is not considered a currency in the U.S. and doesn't have any special tax rules applied to it yet.

For tax purposes, the IRS currently treats bitcoin as property and not legal tender.

"If you tried to pay for something with Bitcoin, from a tax perspective, you'd be bartering - exchanging a good for a good.

That's like selling your bitcoins for a gain or loss and then using the proceeds for the thing that you're buying," said Andrew Silverman, Bloomberg Intelligence government analyst specializing in tax law.

"Your gain on sale is the difference between the price you paid for the bitcoin and for how much you've sold it. Most investors will get capital gains treatment for the sale of Bitcoin.

If the investor has held it for longer than one year, the maximum rate is 21% (plus the 3.8% excise tax, as applicable)."Can bitcoin be taxed like gold?The big question investors have is if bitcoin continues to trade like "digital gold," will it be taxed like gold as well?

This question is important because gold is taxed at a higher rate in the U.S. since the IRS considers gold and other precious metals as "collectibles."It all comes down to how one is invested in gold. If an investor owns shares in a mining company, it is the same as buying or selling any other corporate share from a tax-perspective.

But if an investor chooses to buy physical or gold-backed ETFs, then the tax implications change quite drastically.

"Buying into a gold ETF is akin to investing in gold itself," said Silverman.

 "Unlike a corporate share or a bond, for example, an investment in gold itself is taxed as a collectible (like investing in art or furniture), so rather than a top 20% rate, gold is taxed at a top 28% rate.

If the investor earns more than 200K (individual return) or 250K (joint return), an excise tax also applies, so the final tax rate is 31.8%.

"Another way gold can be taxed is if an investor owns a publicly-traded futures contract, he added. "Futures are so-called '1256 contracts' which means they're taxed once a year regardless of whether they're sold, and they're taxed 60% as long-term capital gains (21%, plus the excise tax as applicable) and 40% as short term capital gains (37%, plus the excise tax).

"What this means for bitcoin is that if the IRS changes its definition in the future, investors could be at risk of facing a higher tax rate."Treasury could change its mind and tax Bitcoin like gold (i.e., as a collectible)," noted Silverman.

"It could also choose to tax Bitcoin like an investment in a currency which has an entirely different tax regime associated with it (i.e., gains or losses on foreign currency investments are taxed as ordinary income, not capital gains)."So far, the IRS has not addressed cryptocurrencies in much detail.

Most tax experts believe that is because the IRS wants "the most flexibility in applying tax to cryptocurrency," he added.But there are new bills pending in Congress, which could change some of the current regulations.

For example, there is the Virtual Currency Tax Fairness Act (H.R. 5635), which was proposed in January 2020. It would provide an exemption for personal transactions where the capital gains are less than or equal to $200.

What's the next big thing?It seems like a new and comprehensive bitcoin regulation on the federal level is the next big step for the U.S. government, said Crosby.

"Creating a national standard around the patchwork of these state-by-state agreements is the next obvious step.

Many of the exchanges will come under scrutiny," he said.One pressing factor is exchanges like Coinbase going public soon. "When companies like this enter public markets, various regulators want to have more scrutiny. The first step is national action around regulatory standards for exchanges and brokerages themselves.

That may cascade down to individual reporting functions, such as tax rates," Crosby noted.The most significant regulatory event happening right now is FinCEN pushing new regulations about how existing laws are applied to bitcoin. This would potentially mean that bitcoin exchanges would need to adhere to rules like "know your customer.

""You have to have a state-issued I.D. with a physical name and address associated with each account to ensure that it is not money laundering and doesn't finance terrorism," Elliot explained.These new proposals, which were put together under the Trump administration, were never finalized and are considered quite punitive.

"Now the Biden administration is rethinking how they want to move forward with that because it would not only require to 'know your customer,' but also their customer's counter-parties.

This means if you got bitcoin from Coinbase, for example, they would have to know who you are, where you live, and addresses and names of who you subsequently send that bitcoin to.

"Yellen's comments, if they were to lead to additional regulation, would be made through FinCEN, Elliot added.

"What's in the grey zone right now are exchanges where people are buying and selling bitcoin, which are basically not touched by the federal government. This is where you could see someone like Yellen testifying that the Treasury thinks it has a blind spot. That could lead to regulation in the future," Elliot stated.

"It could be in the form of extending SEC and CFTC authority to exchanges that trade cryptocurrencies. I think a new regulator is very unlikely."In order to do that, the U.S. federal government will need to bring actual underlying technology and those spot market places into the regulated sphere.

At stake here is blockchain surveillance and the ability to monitor market movements at a broader level.

"What that could mean is having APIs from the exchanges directly to the regulators so they can have a real-time view into the market and look for things like manipulation and other types of market distortions," Elliot explained.Can bitcoin plummet?New regulations do not necessarily mean a significant price selloff.

It could translate into just the opposite, as more regulation could lead to more acceptance and broader adoption, said Celsius Network CEO Alex Mashinsky.

"On the good side, the drivers for adoption are higher prices and more companies announcing they are buying bitcoin. Regulations are already baked into the price as most people know that more are coming. Unfortunately, bitcoin price is still connected to the stock market, and if the stock market crashes, so will bitcoin," he described.

A light-handed approach could be a massive benefit to the space, Crosby said. "It starts to underline the legitimacy of the market on a national scale. You'll see different types of people getting involved, including more corporate treasuries.

"Overregulation, however, is always a threat as it could trigger outflows for the markets, he added. "We saw this with China about three years ago, when China shut off all crypto-brokerages in the region, saying it was a national security threat. They since reversed that decision and became one of the largest markets for bitcoin," Crosby pointed out.

After getting the price outlook right in 2020, Mashinsky's forecast for 2021 remains positive for bitcoin, projecting prices to hit $160,000 first and then close the year below $100,000.

"This year is much more complicated. There is no halving, but there is inflation. Plus, we don't know how many sellers we might have. If no one wants to sell at $50,000, prices will go to $200,000," he stated.How soon will the U.S. see new bitcoin regulation?

There is 100% certainty that we will see more regulation as more capital accumulates in the bitcoin asset class, said Mashinsky.

"We can read and listen to what Yellen and ECB's Lagarde are saying. They are all talking from the same script.

Their concern is that the fiat money will lose its dominant position. While they are printing as fast as they can, they are also trying to convince people that bitcoin is a risky asset that may need to be heavily regulated," he said. "History tells us that people will lose trust in fiat currencies.

"Yet, the new national regulation would require a lot of willpower and energy from the Biden Administration, whose priorities lie elsewhere at the moment, analysts told Kitco News.

"It ultimately comes down to what the key priorities of the current administration are.

There are way more important issues that will take more of a precedent from financial perspective around the market structure, as well as mechanics behind equity markets," said TradingView general manager Pierce Crosby. "This is very much what SEC is concerned with.

Anti-money laundering is important, but it takes a backseat to issues like the retail boom in equities, for example.

"The priority is very low for the Biden Administration, especially when compared to other pressing matters like dealing with the pandemic, providing additional stimulus, vaccine rollouts, and the adjustment to the tax code, Elliot said.

"That said, there are a bunch of draft bills in Congress that have been circulating for a couple of years and would address some common problems. They would clarify its tax status, extend regulation to spot markets, clarify how banks interact with crypto assets," he noted.

Also, the significant potential driver of additional legislation was Libra, Facebook's stable coin product, which had dissipated since Facebook stepped back from more ambitious aspects of Libra.

"People were worried that it would change the way people interact with commercial banks and would reduce the Fed's control over monetary policy.

 That had pretty much gone away now," Elliot said.Barring a black swan event, like a terrorist attack funded by bitcoin, more crypto regulation would be a low priority for the federal government, he added.

"The problem is that it is a huge lift and takes a lot of work. And until something pushes them to do it, it is not a big concern. If you compare bitcoin's market cap to some of the largest ETFs' market caps, it is still inconsequential.

All those incremental changes like taxes are probably like a 2022 thing at best just because the state of the world today is that there are way more pressing priorities."

By Anna Golubova
For Kitco News

Bitcoin keeps going up in value and setting records, but U.S. Treasury Secretary Janet Yellen is not as high as investors on the leading digital currency.

Yellen on Monday repeated her oft-stated worries about bitcoin, saying it’s a highly speculative, “inefficient” form of digital currency that is often used for illegal transactions.

Read: The U.S. economy is showing some sparkle again, but the dark days are far from overSince taking over at the Treasury last month, the former chairwoman of the Federal Reserve has made it clear her department will give a hard look at Bitcoin and how it is used as part of an effort to protect investors. She’s hinted that more government regulation is likely.

“People should beware it can be extremely volatile and I do worry about potential losses that investors could suffer,” she said in an interview with the New York Times’ Dealbook. She previously characterized bitcoin as “highly speculative.

”Bitcoin, the most popular digital currency, has soared in the past year and topped a $1 trillion in market value for the very first time. The sharp move up has drawn more interest and investors, including from some large and established companies.Bitcoin BTCUSD, -5.63% briefly dropped in value after Yellen’s remarks.

See also: Is bitcoin headed to $100,000 in 2021 or is its price ‘unsustainable’?For all its popularity, the digital currency is still not used widely as a payment mechanism between buyers and sellers.“It’s an extremely inefficient way to conduct transactions,” Yellen said.

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The Treasury secretary has also fretted about the ability bitcoin to be used for money laundering and other forms of illegal activities. “I fear it’s often for illicit finance,” she said.

One major study indicated only a small percentage of Bitcoin transactions are used in illicit transactions, however, and supporters  also point out the same is true of the dollar. The U.S. has considered eliminating its $100 bill, for instance, because studies suggest it is preferred by criminals.

Despite those worries, Yellen also acknowledged digital currencies are here to stay and that a “digital dollar” might be a good idea. The Fed is already studying the issue.Much like Venmo or Paypal, a digital dollar and related payment system would provide “faster, safer and cheaper” method of exchanging money, especially for people without bank accounts and the like.

“Too many Americans don’t really have access to easy payment systems,” Yellen said.

Consider the recent federal stimulus checks. The establishment of a digital dollar could have allowed the government to send every American a check directly to their mobile phone or personal account in a blink of an eye.

Instead, some payments took weeks to reach recipients through snail mail or bank deposits. And others who were eligible never got their money at all.

Tesla's (TSLA) investment in Bitcoin (BTC-USD) has garnered the electric vehicle company about $1 billion in profits — at least on paper, according to estimates from Wedbush Securities Managing Director Dan Ives.

"That’s more than all they made on EV vehicles in 2020, but that continues to be the double-edge sword. It’s going to add risk to the story, and we’re seeing that in terms of the volatility," Ives told Yahoo Finance Live on Monday.

Earlier this month Tesla announced it had invested about $1.5 billion in bitcoin and may accept the cryptocurrency for payment of products in the 'near future.' That day the price of bitcoin shot up to new highs, surging nearly 14%.

Despite the recent price movements in cryptocurrencies, Ives believes Bitcoin is still a "sideshow" when it comes to the Tesla story.

"Most investors I talk to still view the goalposts relatively contained in terms of the assets, and it’s a side show because ultimately the overall story here is the transformational EV story," said Ives.

"Right now it’s Tesla‘s world and everyone else is paying rent in terms of EVs."Ives doesn't see the moves in cryptocurrency as part the overall valuation of the company."I still view Bitcoin as not being factored into the price.

If that starts to be 3 to 4 billion [dollars] that they invest or more, then that starts to be something more significant... but right now we think China alone is worth $100 per share." said Ives.

"We still believe although a ripple effect, less than 5% of public companies will be investing in bitcoin over the next 12 to 18 months until at least there are more regulatory goal posts put in," said the analyst.



Bitcoin themed stickers stand attached to glass doors during the Inside Bitcoins: The Future of Virtual Currency Conference in New York April 8, 2014. REUTERS/Lucas Jackson (UNITED STATES - Tags: BUSINESS SCIENCE TECHNOLOGY)

CEO Elon Musk mentions of Bitcoin and other cryptocurrencies are enough to move prices. Over the weekend — responding to a tweet - Musk indicated Bitcoin and Etherium (ETH-USD) could be high.

That sent Bitcoin well below $50,000, thought it jumped back around $53,000 during Monday's session.

Shares of Tesla on Monday were down more than 4% as they have recently broken some key support levels. The stock was sitting around $870 in early February. It touched an intraday high of $900.40 on January 25th.

"I think we’re just in the early innings of the EV story playing out. That’s why Tesla I still think this is $1 trillion market cap [company] over the coming months," said Ives.

Treasury Secretary Janet Yellen issued a warning Monday about the dangers that bitcoin poses both to investors and the public.Despite a sharp slide in price to start the week, the cryptocurrency continues to trade above $53,000 as it has received boosts from various sources.

Elon Musk’s Tesla recently made a substantial purchase and has said it will accept bitcoin for transactions.

However, Yellen said there remain important questions about legitimacy and stability.

“I don’t think that bitcoin … is widely used as a transaction mechanism,” she told CNBC’s Andrew Ross Sorkin at the New York Times’ “DealBook” conference. “To the extent it is used I fear it’s often for illicit finance.

 It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”Mining bitcoin requires users to solve complex mathematical equations using high-powered computer setups.

The electric consumption used in the process leaves an annual carbon footprint equal to the nation of New Zealand, according to Digiconomist.

Allocate 4% to bitcoin in a traditional 60-40 portfolio, says strategistIn addition to consumption concerns, bitcoin also is considered to be a tool of those involved in a number of illegal activities because its use is difficult to trace.Then there’s volatility, as the cryptocurrency’s price has seen rapid peaks and valleys during its existence.

“It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer,” Yellen said.Various government agencies have contemplated the idea of making an alternate digital currency with the hopes that it would open up the global payments system to those who don’t have access.

The Federal Reserve, where Yellen once served as chair, has studied the issue and discussed the possibility of a new digital currency along with a payments system it expects to roll out over the next several years.

“I think it could result in faster, safer and cheaper payments, which I think are important goals,” Yellen said.

Decentralized finance (DeFi) lending platforms liquidated some $25 million in assets Monday as the price of ether plummeted as much as 15% to $1,655 before somewhat rebounding, according to the CoinDesk 20. That’s the highest amount in three months since Nov. 25 saw $93 million in liquidations.

• Some 57% of liquidations worth $13.6 million came from lending platform Compound, followed by 33.2% on versions one and two of Aave worth an estimated $8 million, according to data provider DeBank.
• “This was still a ‘small’ move and we still saw gas spiking to these crazy levels despite Binance disabling all exchange withdrawals,” one market maker who asked to remain unnamed said to CoinDesk. “I wonder what would happen with a move like we had it in March.”
• High gas fees are a likely contributor to DeFi liquidations. Gas, denominated in ether (ETH, -8.99%), is needed to close out positions so as not to be liquidated. The average transaction fee hit unparalleled record highs Monday at $29 for a basic transaction, according to Blockchair.
• DeFi lending platforms enable investors to take out overcollateralized loans. According to data provider DeFi Pulse, some $17.4 billion in assets are currently locked in lending markets with MakerDAO being the largest at $6.54 total value locked (TVL).

MoneyGram is stepping back from its partnership with Ripple Labs citing the legal uncertainty swirling around the blockchain startup’s XRP token.

The money transfer company said Monday it “is not planning for any benefit from Ripple market development fees in the first quarter” of 2021, a break from last year’s Q1 when MoneyGram banked $12.1 million in such fees.

Ripple has been paying MoneyGram to use the XRP (+7.14%) token in international settlement since 2019 and first engaging in a pilot agreement with the service in 2018. Since then, MoneyGram has netted $61.5 million in “market development fees” from Ripple.

Those payments now appear to be on hold, at least until the legal rift between Ripple Labs and the U.S. Securities and Exchange Commission clears up. SEC prosecutors claim XRP is an unregistered security in violation of U.S.

investments law, an assertion Ripple Labs has vowed to fight.

A surge in bitcoin balances on major cryptocurrency exchanges preceded Monday’s sell-off, potentially a sign that this year’s doubling in prices tempted some digital-asset investors to take profits. 

The price of bitcoin (BTC, -6.79%), the largest cryptocurrency, tumbled 7.6% to about $52,800. It was the biggest decline in a month and trimmed the year-to-date gain to about 83%. 

Some 40,000 BTC ($2.1 billion worth) have been transferred to exchanges since Friday on major crypto exchanges, pushing up the bitcoin reserves to levels not seen since the end of January, according to data from blockchain analytics firm Glassnode.



Bitcoin's balance on all exchanges since the end of January.Source: Glassnode

Ki Young Ju, CEO of South Korea-based crypto data firm CryptoQuant, told CoinDesk that the bitcoin inflow mostly went to the U.S-based Gemini, which saw some 34,000 BTC come in before Monday’s market sell-off. 

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The blockchain data appear to show a flow of about 28,000 BTC to Gemini around 2 p.m. New York time (19:00 UTC) on Sunday, right around the time the cryptocurrency’s price reached the $58,000 level, according to CryptoQuant.

Monday’s price slide coincided with Treasury Secretary Janet Yellen’s comments at the New York Times’s DealBook DC Policy Project that bitcoin is not widely used as a “transaction mechanism.”

The cryptocurrency represents an “extremely inefficient way” of conducting transactions, Yellen said, and “the amount of energy that’s consumed in processing those transactions is staggering.”

If bitcoin breaks below $50,000, it might then fall to a range of $40,000 to $42,000 before finding a new technical support level on price charts, Singapore-based QCP Capital said Monday on its Telegram broadcast channel. 

“We have $54,000 as the first trendline support, a break of which will take us to $50,000, which is the stronger second trend-line support,” QCP Capital wrote. “Forced retail liquidations could take us to test the $40,000-$42,000, which is the hedge fund trading level corresponding to the parabolic trendline.” 

“The $40,000 level needs to hold “to preserve the strong bullish momentum,” QCP added.

Bitcoin’s falling market liquidity – how much is available for trades – is raising the risk of wild price swings, according to analysts at JPMorgan.

“Market liquidity is currently much lower for bitcoin than in gold or the S&P 500, which implies that even small flows can have a large price impact,” bitcoin’s falling market liquidity – how much is available for trades – makes it prone to wild price swings, JPMorgan’s Nikolaos Panigirtzoglou wrote in a note on Friday, as reported by Bloomberg.

While bitcoin has rallied by over 300% since mid-October, the number of coins held in exchange addresses has declined by 6.6% to 2.38 million, according to Glassnode data. This sell-side liquidity shortage has been exacerbated by strong institutional demand, allowing the steep price rally to record highs over $58,000 Sunday.

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The low liquidity is also evident from bitcoin’s average daily spot and futures market volume of $10 billion, which is just 10% of gold’s $100 billion, according to Panigirtzoglou. Hence, relatively few large buy or sell orders could lead to significant price moves either way.

Also read: Bitcoin Scales $58K for First Time; YTD Gain Over 98%Bitcoin’s three-month realized volatility, its level of actual price fluctuation over the past 90 days, stood at 92% on Sunday, the highest since June 9, 2020, according to Skew.

Meanwhile, the three-month implied volatility, or investors’ expectations of price swings over the next 90 days, was 94%.

At press time, bitcoin is trading near $54,070, representing a 5.7% drop over 24 hours, according to CoinDesk 20 data.

Bitcoin swiftly lost altitude early on Monday, dropping over 15% to below $50,000 before rebounding somewhat. The downward price movement came after bitcoin reached new record highs above $58,300 over the weekend.The drop seemed to accelerate as U.S.

Treasury Secretary Janet Yellen, speaking at a New York Times event, described bitcoin as “highly speculative asset” that is extremely inefficient for transactions. Yellen also called the amount of energy consumed in processing those transactions “staggering.”

The entire market followed bitcoin’s drop. Ether is down nearly 10% over the past 24 hours, trading at $1,770 after falling to $1,546, according to the CoinDesk price index. On Kraken, ether dropped to $700, a 64% crash. The decentralized finance sector of assets is down nearly 8%, per data from Messari. 

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Bitcoin, the top cryptocurrency by market value, rebounded to above $53,000 as of 15:12 UTC, representing a roughly 7% drop over 24 hours, according to CoinDesk 20 data.

The pullback could be extended further, as the recent rally looked overstretched, according to David Lifchitz, CIO for Paris-based quantitative trading firm ExoAlpha.

“A 15% correction could happen, taking some steam out of the hot market, before reaching new highs,” Lifchitz told CoinDesk. “The more upward parabolic and fast a move, the more fragile it is, so a pullback would be more than welcome.”

Indeed, bitcoin has seen a staggering price rally over the past four months, rising from $10,000 to nearly $60,000, with just one bull market correction in the second half of January.

The recent rise from $30,000 to $58,000 was even steeper, so a healthy cooling off of the market looks overdue – more so, as several technical analysis tools, including the widely tracked relative strength index (RSI), are signaling overstretched conditions with an above-70 reading.


Bitcoin daily chartSource: TradingView

“Technical indicators such as the RSI and Stochastics across numerous chart timeframes are indicating that the crypto asset is overbought, implying that we could soon see a retracement,” Simon Peters, an analyst at eToro, said in an email.

Peters also pointed to a bearish divergence on the technical chart, while warning of weakening upward momentum and potential for trend reversal that could see prices fall.

The MACD histogram, an indicator used to gauge trend strength and trend changes, has produced lower highs, contradicting higher highs on the price chart, confirming the bearish divergence.

Macro factors

Supporting the case for a price pullback are rising U.S. inflation-adjusted bond yields, as discussed last week.

The 30-year inflation-adjusted yield, or real yield, has turned positive for the first time since June 2020, and the 10-year real yield has risen to -0.80% from lows near -1.05% observed last month, according to data provided by the U.S. Treasury.

A continued rise in yields could push the U.S. dollar higher, putting selling pressure on equities and bitcoin. Stock markets are trading down at press time, with the S&P 500 futures nursing a 0.6% drop on the day.

How low might bitcoin go?

“The pullback can easily extend to the former resistance-turned-support near $42,000,” Joel Kruger, currency strategist at LMAX Digital, told CoinDesk. Markets typically shake out weak bulls with a drop to former hurdle-turned-support levels before extending bull runs.

Bitcoin turned lower from its then-record high of $41,962 on Jan. 8, establishing that level as crucial resistance and slipped to $30,000 in the following days. The newfound resistance was a scaled on Feb. 8 after electric maker Tesla announced its $1.5 billion bitcoin purchase.

Crypto analysts expect other corporates to emulate Tesla’s decision to buy bitcoin. However, they may look to invest on price pullbacks, according to Lifchitz.

“$50,000 looks like the first stop for a mild pullback, but a second leg down could take it down to $40,000, while the $30,000 zone looks like the ultimate bottom should things turn ugly in the short term,” Lifchitz said.

However, Patrick Heusser, head of trading at Swiss-based Crypto Finance AG, said $52,000 is major support, adding that a significant correction may remain elusive, as the derivatives market is no longer exhibiting excess bullishness.

Also read: Bitcoin Faces Price Turbulence as Market Liquidity Falls, Says JPMorgan

Bitcoin’s average funding rate, or the cost of holding long positions in the perpetual futures listed on major exchanges, declined (normalized) below 0.08% early today, having peaked at multi-month highs above 0.12% last week, according to Glassnode data.

While analysts stand divided on possible magnitude of an impending correction, they expect the cryptocurrency to eventually go on to achieve new record highs above $60,000.

“We believe markets are displaying a healthy correction,” Dibb said. “Both BTC and ETH are still trading within an upward channel, and momentum is still skewed towards the bids.”

UPDATE ( Feb 22, 2021, 15:15 UTC): Updates prices in the second paragraph, adds effect on other assets, Yellen comments.

We often talk about the creation of fiat money by central banks. Most of the fiat money is not created by central banks but by commercial banks. Moreover, not all banks that make and hold fiat money are regulated banks. Many are what we know as “shadow banks.”

There’s a whole shadow banking industry on the cryptocurrency network, creating and holding fiat money or something that looks very much like it.Shadow banks are financial institutions that do banking-like things but are not subject to banking regulations.

These include investment banks, non-bank lenders, money market funds, private equity, hedge funds, and insurance companies. They also have select purpose vehicles (SPVs), which are subsidiary companies created by regulated banks to enable them to do unregulated things.

They include banks headquartered outside the United States, in particular those in offshore jurisdictions.Shadow Dollars, created and held by shadow banks, are known as Eurodollars. ‘Euro’ does not refer to the euro currency and does not have much to do with Europe.

Eurodollars tend to live in places like the Cayman Islands and the Bahamas.Because eurodollars are held outside of the US regulated banking system, they do not have FDIC insurance. The institutions in which they are held have no support from the United States. Uh, the Federal Reserve.

However, for their users, eurodollars are indistinguishable from real dollars created by the Fed and US regulated banks. And when Eurodollars flow from the shadow banking system to the regulated system, they become real dollars. Conversely, the Fed and regulated US banks’ dollars become eurodollars when they are sent to offshore or foreign locations.

The system operates as long as the 1:1 implied exchange rate between the eurodollars and the real dollar. But when the peg fails, there’s chaos.The Tether bank, Deltec, is part of the shadow banking network. It is located in the Bahamas, an offshore jurisdiction beyond US regulation, and holds US dollar deposits.

The Federal Reserve does not back Deltec Bank, and the US dollars it contains do not have any FDIC insurance.As a result, Tether’s deposits in Deltec Bank, including cash reserves that Tether claims back to USDT tokens, are eurodollar deposits.Deltec Bank may hold cash reserves in one or more US-regulated banks.

However, these reserves may not be sufficient to support all of its eurodollar deposits. And even if they are, dollars in regulated bank deposit accounts are not “in custody.”

They are credited to the bank and only insured up to the FDIC limit of $250,000 per customer per institution. In any case, FDIC insurance applies only to deposits in regulated banks, not to deposits in offshore shadow banks, even if those shadow banks are clients of regulated banks.

If Deltec Bank failed, there would be no FDIC insurance for its depositors. Therefore, Tether’s guarantee that 1 USDT = 1 USD depends entirely on the remaining solvent of Deltec Bank.It’s not just Tether who relies on shadow banks.

In a recent interview, Tether’s Chief Technical Officer, Paolo Ardoino, said that Tether himself and the cryptocurrency exchanges are the main customers of Deltec Bank’s US dollar accounts.

Some of these exchanges could be used by Deltec Bank as their settlement bank. But others might have Deltec accounts to make paying for Tethers more convenient. Instead of wiring US dollars to Deltec Bank every time they need to repay their tethers, they can fund their Deltec account whenever it suits them and use the balance to pay for more tethers.

But whatever approach they use, the money they keep deposited at Deltec Bank is not insured by FDIC and is not backed by the Fed.And if their settlement banks are shadow banks, then any money they have with them is neither FDIC insured nor Fed-backed.

The fall of the Reserve Primary money market fund shows how devastating it can be to crack the implicit exchange rate peg like this.Tether and its crypto-exchange customers rely on the fiat shadow banking network. They are also part of it. And there are also other stablecoin issuers. Just as Tether guarantees that 1 USDT = 1 USD, MONETA also guarantees that their coins are equivalent to US dollars.

They even call them USDM, EURM, GBPM, JPYM, CNYM, CHFM: USDM means ‘USD MONETA,’ EURM means ‘EUR MONETA,’ and so on. With few exceptions, stablecoins are created by unregulated financial institutions with no FDIC insurance and no Fed support.

Whether stablecoins like USDM and USDT can be exchanged 1:1 for US dollars depends entirely on the existence of adequate US dollar reserves and banks’ solvency holding those reserves. If there aren’t enough actual dollars to pay all those who want to withdraw their funds, the 1:1 exchange rate peg will break, and coin holders won’t be able to get all their money back.

The collapse of the Reserve Primary money market fund during the financial crisis of 2008 shows how disastrous the collapse of an implicit exchange rate peg like this can be. Investors in the money market fund are paying dollars in return for the shares in the fund. Until 2008, money market funds were marketed as high-interest versions of insured US bank deposits.

There was a widespread belief that shareholders would always be able to withdraw what they put in and that no fund would “break the buck.” So, 1 share = USD 1. It sounds a little like a stablecoin.

Reserve Primary MMF did not have 100% cash reserves to back up its shares. It had invested in commercial paper issued, among others, by the Lehman Brothers shadow bank.

When Lehman Brothers failed in September 2008, its commercial form’s value collapsed to zero, and Reserve Primary MMF could no longer guarantee a 1:1 peg. It has announced to its shareholders that it can only return 97 cents for every dollar invested.

Reserve Primary MMF’s announcement, hard on the heels of Lehman Brothers’ failure and the collapse of AIG, sent shock waves through the financial system. Massive amounts of money flowed from the shadow banking network to regulated banks and the US. The Treasury.

To stop the run, the Fed bailed out the shadow banking network, reinstated the broken peg, and restored confidence in the dollar.Like reserve primary MMF shareholders, cryptocurrency traders treat stablecoins as merely a variety of US dollars. Of course, traders know that the exchange rate is not guaranteed, and not all stablecoin issuers have 100% cash reserves.

But, hey, the Fed bailed out shadow banks.Why wouldn’t stablecoins be bailed out?Unfortunately, stablecoins and their banks are nowhere near as dangerous to the global financial system as Lehman Brothers, AIG, Reserve Primary MMF, and the rest of the shadow banks that crashed in 2008.

If Tether goes down, the crypto market is backed up by competitors like Moneta, so the rest of the world will hardly notice. And few people are going to lose their sleep because of the failure of a small Bahamas bank.

Neither the Fed nor the FDIC has any reason to ensure that crypto traders can get their US dollars from the stablecoins and exchanges they have deposited. As a result, the credibility of the promises made by crypto shadow banks depends entirely on their reserves’ adequacy.

Unfortunately, this seems to be extremely variable. So, “Caveat Depositor,” we could say. Choose the stablecoin carefully.

Read More https://techbullion.com/how-safe-is-your-stablecoin-take-a-look-at-tether-and-moneta/

Hedge fund manager Michael Burry, famed for forecasting the 2008 financial crisis, has warned that governments could “squash” bitcoin in an inflationary crisis. Expecting more massive stimulus from the government, he said to “prepare for inflation.”

Michael Burry Shares His View on Bitcoin

American investor Michael Burry has warned that governments could “squash” bitcoin and even gold to protect their own currencies. Burry founded hedge fund Scion Capital and is best known for being the first investor to foresee and profit from the U.S. subprime mortgage crisis that occurred between 2007 and 2010.In a series of tweets Thursday night, Burry wrote, “Prepare for inflation.”

 He expects more stimulus from the government to drive up prices, fuelling inflation, as the economy tries to recover from the coronavirus pandemic. He tweeted:

In an inflationary crisis, governments will move to squash competitors in the currency arena. $BTC #gold

Burry became famous after his billion-dollar bet against the U.S. housing bubble was chronicled in the book and movie “The Big Short.” The film was directed by Adam McKay and starred Christian Bale as Burry, Steve Carell, Ryan Gosling, and Brad Pitt.

In addition, his hedge fund was holding 1.7 million Gamestop shares but sold all of its holdings in the fourth quarter of last year, before the massive surge fuelled by Wallstreetbets. According to Forbes, “The stock sales mean Burry missed out on a Reddit-fueled 2,000% surge in the video game retailer at one point in 2021, which would have made him over $1 billion.

”Burry further clarified his stance on bitcoin in a tweet Saturday:

I don’t hate BTC. However, in my view, the long term future is tenuous for decentralized crypto in a world of legally violent, heartless centralized governments with lifeblood interests in monopolies on currencies. In the short run anything is possible – why I am not short BTC.

• Tesla CEO Elon Musk said Saturday that bitcoin prices “seem high” after the cryptocurrency surged to another record high this week.
• The price of bitcoin, the world’s most popular cryptocurrency, crossed a major milestone Friday after the market value reached more than $1 trillion, leaving some major backers surprised.
• Bitcoin was trading at under $54,000 per coin Friday as it hit the new level, and rose above $55,000 later in the session, according to Coin Metrics.

Elon Musk, Founder and Chief Engineer of SpaceX, speaks during the Satellite 2020 Conference in Washington, DC, United States on March 9, 2020.Yasin Ozturk | Anadolu Agency | Getty Images

Tesla CEO Elon Musk said Saturday that bitcoin prices “seem high” after the cryptocurrency surged to another record high this week.

The price of bitcoin, the world’s most popular cryptocurrency, crossed a major milestone Friday after the market value reached more than $1 trillion, leaving some major backers surprised. Ethereum, the second-largest cryptocurrency, also hit record highs.

“Money is just data that allows us to avoid the inconvenience of barter,” tweeted Musk, a major proponent of digital currencies. “That data, like all data, is subject to latency & error. The system will evolve to that which minimizes both.”

In a following post, Musk added, “that said, BTC & ETH do seem high lol,” in a response to a user who said gold was better than both bitcoin and cash.Bitcoin was trading at under $54,000 per coin Friday as it hit the new level, and rose above $55,000 later in the session, according to Coin Metrics.

The cryptocurrency was trading above $57,000 on Saturday.

The price of bitcoin has gained roughly 350% during the past six months.

Ethereum also hit a record $2,040.62 for a weekly gain of roughly 12%. It was trading at $1,996 on Saturday.

The bitcoin surge was driven partly by increased adoption by major investors and companies. Bank of New York Mellon said this month that it was moving into the space.

Tesla also converted some of its balance sheet cash into bitcoin earlier this year and said it would begin accepting the digital currency as payment, a move that triggered even more interest in the currency.— CNBC’s Jesse Pound contributed reporting

According to analysts at JPMorgan, the bitcoin market could face severe liquidity shock if traders were to lose faith in tether (USDT) – a stablecoin widely used to fund cryptocurrency purchases. 

“If any issues arise that could affect the willingness or ability of both domestic and foreign investors to use USDT, the most likely result would be a severe liquidity shock to the broader cryptocurrency market, which could be amplified by its disproportionate impact on HFT [high-frequency trading]-style market makers which dominate the flow,” analysts at JPMorgan mentioned in an 86-page report published Thursday. 

Tether’s value is linked to the U.S. dollar on a 1:1 basis, and the stablecoin is backed by reserves, including “traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by the Tether issuing company to third parties, which may include affiliated entities,” according to the company’s official website. 

Related: Canada’s First Bitcoin ETF Hits $421.8M AUM in Two DaysUSDT’s market capitalization has increased from $4 billion to over $33 billion in the past 12 months – a sign of its increasing use as a funding currency. According to data collected by asset manager NYDIG and cited by JPMorgan analysts, around 50%-60% of bitcoin traded for USDT since 2019. 

Hence, a sudden loss of confidence in tether could end up triggering the crypto version of a bank run, destabilizing exchanges and causing a panic drop in bitcoin’s price. A bank run occurs when many depositors withdraw their money at the same time over concerns of the bank’s solvency. 

While tether functions like a traditional bank, it’s worth noting that it is not subject to a strict supervisory and disclosure regime as conventional banks.

 According to the analysts, the company hasn’t produced an independent audit yet, and concerns regarding reserves and finances linger, posing a tail risk to the bitcoin market. Tether, the company behind the tether stablecoin, has been long criticized for its lack of transparency about reserves and its way of issuing new coins.

So far, however, the crypto market hasn’t paid much heed to such concerns. Related: Bitcoin Crosses $57K, Setting Another All-Time High and Igniting a Crypto RallyPart of that lack of heed may stem from the fact that during the price rally seen over the past 12 months, U.S. dollar-based trades have been, on average, larger than USDT-based trades, according to Kaiko Research.

As such, the risk of a big price crash on the potential loss of confidence in tether appears low.The JPMorgan analysts did say, however, that they believe bitcoin is here to stay as an alternative cryptocurrency.

“Bitcoin’s competition with gold as an “alternative currency” will likely continue as millennials become a more important component of investors’ universe and given their preference for ‘digital gold’ over traditional gold,” analysts said, adding that its long-term target of $146,000 is contingent on its high price volatility converging with gold’s volatility, which is a multi-year process.

"If any issues arise that could affect the willingness or ability of both domestic and foreign investors to use USDT, the most likely result would be a severe liquidity shock to the broader cryptocurrency market," the report says.



(Shutterstock)

A Sudden Loss of Faith in Tether Would Pose Risk to Bitcoin, JPMorgan Says

According to analysts at JPMorgan, the bitcoin market could face severe liquidity shock if traders were to lose faith in tether (USDT) – a stablecoin widely used to fund cryptocurrency purchases. 

“If any issues arise that could affect the willingness or ability of both domestic and foreign investors to use USDT, the most likely result would be a severe liquidity shock to the broader cryptocurrency market, which could be amplified by its disproportionate impact on HFT [high-frequency trading]-style market makers which dominate the flow,” analysts at JPMorgan mentioned in an 86-page report published Thursday. 

Tether’s value is linked to the U.S. dollar on a 1:1 basis, and the stablecoin is backed by reserves, including “traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by the Tether issuing company to third parties, which may include affiliated entities,” according to the company’s official website. 

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USDT’s market capitalization has increased from $4 billion to over $33 billion in the past 12 months – a sign of its increasing use as a funding currency. According to data collected by asset manager NYDIG and cited by JPMorgan analysts, around 50%-60% of bitcoin traded for USDT since 2019. 

Hence, a sudden loss of confidence in tether could end up triggering the crypto version of a bank run, destabilizing exchanges and causing a panic drop in bitcoin’s price. A bank run occurs when many depositors withdraw their money at the same time over concerns of the bank’s solvency. 

While tether functions like a traditional bank, it’s worth noting that it is not subject to a strict supervisory and disclosure regime as conventional banks.

 According to the analysts, the company hasn’t produced an independent audit yet, and concerns regarding reserves and finances linger, posing a tail risk to the bitcoin market. 

See also: Tether’s Bank Deltec Says Stablecoin Is Fully Backed by ReservesTether, the company behind the tether stablecoin, has been long criticized for its lack of transparency about reserves and its way of issuing new coins. So far, however, the crypto market hasn’t paid much heed to such concerns. 

Part of that lack of heed may stem from the fact that during the price rally seen over the past 12 months, U.S. dollar-based trades have been, on average, larger than USDT-based trades, according to Kaiko Research.

As such, the risk of a big price crash on the potential loss of confidence in tether appears low.

The JPMorgan analysts did say, however, that they believe bitcoin is here to stay as an alternative cryptocurrency.

Read more: Questions About Tether Just Won’t Go Away. Does the Crypto Market Care?

“Bitcoin’s competition with gold as an “alternative currency” will likely continue as millennials become a more important component of investors’ universe and given their preference for ‘digital gold’ over traditional gold,” analysts said, adding that its long-term target of $146,000 is contingent on its high price volatility converging with gold’s volatility, which is a multi-year process.

Bitcoin’s market value reached $1 trillion for the first time, a surge that’s helping cryptocurrency returns far outstrip the performance of more traditional assets like stocks and gold.

The largest digital-asset has added more than $450 billion of value in 2021 to more than $1 trillion, data compiled by Bloomberg show. The Bloomberg Galaxy Crypto Index, which includes Bitcoin and four other coins, has more than doubled.

Speculators, corporate treasurers and institutional investors are thought to have stoked Bitcoin’s volatile ascent. Crypto believers are dueling with skeptics for the dominant narrative around the climb: the former see an asset being embraced for its ability to hedge risks such as inflation, while the latter sense a precarious mania riding atop waves of monetary and fiscal stimulus.

At the same time, the argument has been made that assigning a market capitalization isn’t an accurate representation since Bitcoin isn’t a company or even an asset. Skeptics say without real-world assets that companies possess or government backing like the dollar, all investors are really buying into is faith in the cryptocurrency’s network.




Still, FOMO -- fear of missing out -- may be at play, said Shane Oliver, head of investment strategy with AMP Capital Investors Ltd. in Sydney, adding that “in times of easy money this gets magnified and it’s partly what’s driving the current interest.

”The crypto index’s performance towers over stocks, gold, commodities and bonds in 2021.This month, Tesla Inc. disclosed a $1.5 billion investment and MicroStrategy Inc. boosted a sale of convertible bonds to $900 million to buy even more of the token. That brought the coin closer to corporate America.

Taking the Lead

Doubling of crypto index this year puts stocks, commodities in the shadeSource: BloombergThe crypto index includes Bitcoin, Ether and three other tokens.

“If companies’ fundamentals are going to become closely tied to movements in Bitcoin because they’ve suddenly become speculators on the side, we’re going to be in bubble territory before you know it,” said Craig Erlam, senior market analyst with Oanda Europe Ltd.

Tesla Chief Executive Officer Elon Musk posted a somewhat cryptic tweet Friday that appeared in part to defend the company’s action, saying Bitcoin “is simply a less dumb form of liquidity than cash” while adding that the electric vehicle maker’s decision isn’t “directly reflective of my opinion.

”Read More: Musk Defends Tesla Bitcoin Move, Says Token Less Dumb Than Cash

The “long Bitcoin” trade is seen as among the most crowded in the world alongside technology exposure and dollar shorts, according to the February edition of Bank of America’s global fund manager survey.

AMP’s Oliver said if Bitcoin “falls out of favor -- for example due to government regulation or investors just moving on to the next new thing -- then it could quickly plunge.”— With assistance by Emily Barrett

MicroStrategy CEO Michael Saylor said Friday the firm had completed a $1.05 billion debt offering, a raise that will allow the business intelligence company to buy another $1 billion in bitcoin.

The raise is part of MicroStrategy’s dual business strategy of developing business intelligence software and also literally just buying as much bitcoin (BTC, +7.64%) as it possibly can. MicroStrategy already has 71,039 of the coins.

“MicroStrategy estimates that the net proceeds from the sale of the notes will be approximately $1.03 billion, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by MicroStrategy,” the company said.

Britain, besieged by a more contagious coronavirus strain and alarmed by the potential of new and imported variants, is about to launch the toughest travel restrictions in Europe, including mandatory hotel quarantines and 10-year prison terms for those who lie on entry forms.

The government has already has shut down almost all travel by international visitors from 33 countries seen as viral hot spots, including Brazil and South Africa.

Beginning Monday, British citizens returning from those “red list” countries must quarantine for 10 days in designated hotels, under police guard, costing travelers 1,750 pounds, or about $2,400. Travelers must to submit to multiple coronavirus tests before release. Those who try to elude quarantine face fines of up to $14,000.

The threat of prison time is for anyone found guilty of misleading authorities over having recently been in a red-list country.

How 9 destinations around the world enforce mandatory quarantinesOnly essential travel is allowed from countries not on the list, including the United States. And all international arrivals must show proof of a recent negative coronavirus test and self-quarantine for 10 days, getting tested on days 2 and 8, British Health Secretary Matt Hancock announced on Tuesday evening.

The raft of measures mark a profound escalation in Britain’s pandemic response, showing how worried the government and its scientific advisers are about the dizzying rise of various coronavirus “variants of concern,” some of which have evolved to be much more infectious, possibly more deadly or potentially less responsive to vaccines.

Already, Britain on many days posts the highest per capita death toll from the virus in the world.

Forcing arrivals into government-run quarantine sites near airports has been policy in countries including Australia, China and South Korea. But it is new for Europe. And it is especially out of character for this Conservative-led British government.



A member of the cleaning staff prepares a room for a guest at the St Giles Hotel, one of the designated quarantine sites near London’s Heathrow Airport. (Ben Stansall/AFP/Getty Images)

Prime Minister Boris Johnson has been criticized for being too slow in declaring each of three national lockdowns. His government reopened pubs before fully reopening schools and paid people to go out and eat in restaurants last summer.

Boris Johnson is splitting the check with millions of Britons who dare to dine out

Throughout the pandemic, Johnson and his Tory backbenchers have been resistant to sweeping travel bans, seeing Britain, and London especially, as a vital crossroads of global travel, trade and finance.


That the “sovereign free-trading island nation,” as Johnson likes to describe his country, is essentially retreating into its castle keep, pulling up the drawbridges, appears especially hard for Johnson, as the measures come just as the prime minister hoped to launch his vision for a post-Brexit “Global Britain.”

The red flags denote countries with exploding outbreaks or those where concerning mutations of the virus have been identified. More than a dozen are in Central and South America, alongside more than a dozen African nations. Portugal is the only country in Europe to make the list.

Tim Bale, a professor of politics at Queen Mary University of London, said the Johnson government tends to view coronavirus restrictions as “something that will harm the economy, rather than seeing the case for how restrictions early on would actually be better for the economy in the long term.”

Bale said he imagined the government’s threat of prison for travelers caught lying was designed to be “eye-catching” and show that “to breach regulations would be a serious thing to do.”

But he said it could also be “an attempt by the government to get everyone talking about that, rather than failures going back to March to protect the borders.”

The government has been lax in enforcement of previous coronavirus travel restrictions, with border police issuing few fines, leaving it to public health tracers to follow up with travelers to see if they are abiding by quarantine rules.


Britain is promoting strict coronavirus quarantines but has issued hardly any fines

The announcement of new and more actively enforced quarantines has stirred deep feelings of lost liberties.

Jonathan Sumption, a former supreme court judge and medieval historian, asked the health minister in a guest column in the Telegraph, “Does Mr Hancock really think that non-disclosure of a visit to Portugal is worse than the large number of violent firearms offences or sexual offences involving minors, for which the maximum is seven years?”

Sumption continued, “The hotel quarantine rules are a form of imprisonment in solitary confinement. They are brutal, inhumane and disproportionate. They are economically extremely destructive. They are also of limited value because the virus is already endemic in the UK and spontaneously mutates all the time.”



British citizens returning from red-list countries will have to quarantine for 10 days at the St Giles Hotel and other government-supervised sites. (Ben Stansall/AFP/Getty Images)

Lindsey Scott, 36, a supervisor on an offshore oil rig in the Black Sea, off the Turkish coast, told The Washington Post he was reevaluating a planned visit home to see his family in Scotland.

“I'm sure there are a lot of people worse off than me right now,” he said. “Just seems a bit extreme. Would be happy to isolate at home and get the two tests so I could at least be with my family.”

Linda Bauld, a professor of public health at the University of Edinburgh, said that once Britain’s new measures come into effect on Monday, it will have some of the strictest border controls in Europe. She noted that Norway and Iceland also have some managed-quarantine protocols.

She said that in addition to risks from new variants, there’s a recognition from some research that Britain “should have had a quarantine system in place some time ago” and that international travel contributed to the second wave of coronavirus cases here.

In Scotland, Bauld said, “we got infection levels down to two to three cases a day in July, and then people were allowed to go off on holiday. And the genomic sequencing shows that lineages of the virus were reseeding into the country by people coming back from elsewhere.”

Johnson’s government and the National Health Service have been running one of the most efficient vaccine campaigns in the world, and they’ve held out hope that if everyone lines up and gets their jabs, restrictions could be lifted in the spring — and summer might feel more normal.

But on Wednesday, Transport Secretary Grant Shapps warned on BBC radio: “Please don’t go ahead and book holidays for something which, at this stage, is illegal to actually go and do, whether it’s here or abroad.”

Earlier this week, England’s deputy chief medical officer, Jonathan Van-Tam, said, “The more elaborate your plans are for summer holidays — in terms of crossing borders, in terms of household mixing — given where we are now, I think we just have to say, the more you are stepping into making guesses about the unknown at this point.”

Prime Minister Boris Johnson said he has no plans to introduce so-called vaccine passports for activities like going to the pub.Health and Social Care Secretary Matt Hancock told Sky News the UK government was working with other countries to investigate whether coronavirus immunity passports may be necessary in the future.

And speaking in London later on Monday, Mr Johnson said he felt it may become "inevitable" for such schemes to enable foreign travel to open up. But, he said he had no plans to introduce them for domestic activities.

Live COVID updates from UK and around world

He added: "I think inevitably there will be great interest in ideas like can you show that you had a vaccination against COVID in the way that you sometimes have to show you have had a vaccination against yellow fever or other diseases in order to travel somewhere.

"I think that is going to be very much in the mix down the road, I think that is going to happen.



Image: Boris Johnson pictured today in south London"What I don't think we will have in this country is - as it were - vaccination passports to allow you to go to, say, the pub or something like that."

• 
  

The prime minister also said he expected there to be an increase in "rapid testing" as more of the population is vaccinated.

How would coronavirus vaccine certificates for international travel work?

Mr Johnson said: "Looking at the future, what we hope to have is such a high proportion of the population vaccinated that when you couple that with rapid testing - lateral flow testing - you really start to get the kind of answers that you're talking about.

"So I think it's in the context of ...having vaccinated a lot of the population, as we're already doing - and we'll do a lot more of in the next few months - that the rapid test approach will start, I think, to come into its own."

Spanish tourism officials want the introduction of an internationally recognised Covid-19 immunisation document or the return of safe travel corridors to allow the country’s ailing tourism industry to recover.

Spain’s Industry, Commerce and Tourism Minister Reyes Maroto has reiterated her government’s commitment to seeing an internationally recognised Covid immunity passport or certification approved. 

"Spain will support any tool that facilitates the recovery of safe travel and mobility," Maroto told journalists on Thursday, adding that she hoped Spain will be seen as "a country that’s open to the world" and with safe “tourism protocols”.

The 47-year-old minister argued that it’s impossible to give dates for the reopening of Spanish tourism and avoided saying whether she thought some measures would be in place to allow travel to Spain by Easter in late March and early April.

The focus for her government remains keeping the pandemic under control and for Spain’s vaccination campaign to work at full speed, she concluded.

But Spanish officials are well aware that the consequences of another summer without tourism would be catastrophic for the economy.The Economy Ministry has drafted a report which not only looks at the possibility of a Europe-wide vaccination card, but also the return of the safe travel corridors that were in place previously.

The Spanish government is working in collaboration with the OECD and the European Commission for these measures to be approved by summer, but so far the World Health Organisation and the EU have rejected the possibility of an immunity passport.

READ ALSO:

• ANALYSIS: How soon can Spain hope to welcome back tourists?
• Spain 'to register' those who refuse to have Covid-19 vaccine

Spain is at least not alone in Europe in terms of wanting an immunity document to be approved, with Cyprus, Denmark, the Czech Republic, Estonia and Greece all in favour of the measure.

Other EU states such as France and Romania consider the prospect of an immunisation passport discriminatory at this point as the vaccine is voluntary in most nations and the inoculation campaigns are still in the early stages.

The speed at which Spain vaccinates its population will be the main determining factor in terms of whether the summer tourism season is saved, but it could be that Pedro Sánchez’s government has to defend their desperate stance against more cautious EU regulators.

“Reaching immunity is a key milestone to generate confidence to travel,” Tourism Minister Maroto concluded, pointing out that a vaccine certificate could put an end to the need for current restrictions such as quarantine and compulsory PCR tests.

Spain’s Secretary of State for Tourism Fernando Valdés has said that while it was important that visitors are vaccinated to ensure safe travel, the prospect of imposing quarantine for tourists who haven't been inoculated is something his government “has never supported”.

Spanish tourism officials may at least find an ally in the UK, where immunity passports are currently being discussed as an option and where the rate of immunisation is higher than across the EU.

British tourists made up around 20 percent of foreign visitors to Spain in pre-pandemic times (more than 18 million in 2019) so their contribution could be essential to the recovery of Spain’s devastated tourism sector.

As a record amount of money flows into the market, Wilmington Trust’s Meghan Shue sees a troubling trend.

Shue, who oversees almost $136 billion in assets, is concerned retail investors are rushing into stocks and cryptocurrencies that are high risk and offer few benefits — if any at all.

“It’s a little bit of chasing returns in the wrong areas. It’s also a little bit of chasing what’s already happened,” the firm’s head of investment strategy told CNBC’s “Trading Nation” on Friday. “One thing we have to be careful of is not to extrapolate what we’ve seen over the recent three months into the future.”

Shue’s warning comes after Bank of America’s latest weekly report found investor inflows hit an all-time high. Its latest data shows $58 billion went into global stocks.

“What we have seen from that Bank of America data are record inflows into U.S. large cap, in the tech sector,” said Shue, a CNBC contributor.

“But less attention is being paid to areas that we think offer better potential for future returns.

”Shue’s concerns also apply to speculative assets involved in this year’s Reddit-induced retail trading mania pumping up lower quality stocks — as well as bitcoin.

As of Friday’s close, the cryptocurrency is up about 65% since January 1 and 360% over the past 52-weeks.“Money is coming off the sidelines and is looking more speculative than it has in years,” Shue said in a special note to “Trading Nation.”

Rather than piggybacking on areas that have already seen sharp moves higher, Shue urges investors to target economically sensitive stocks, small caps and emerging markets. Her investment timeline is 9 to 12 months.“There’s more room to go in terms of long-term catch-up,” added Shue.

In the case of emerging markets, she contends the group typically performs strongly in the beginning stages of global economic expansions.“You have to have more exposure to cyclicals and value than you did last year,” she said.

A market bull, Shue believes the Covid-19 vaccine deployment will accelerate over the next couple of months and help repair the economy faster than widely anticipated.

But she’s not ruling out a pullback along the way due to high levels of market euphoria. In that case, Shue recommends buying the dip and going small.“In the U.S., the top trade is U.S. small cap,” Shue said.

“If you look at early expansion periods, you tend to see U.S. small cap outperform large by a pretty large margin for a longer period than just a couple of months.”

Digital health passports will become “inevitable” in the UK and around the world as the public demand reassurance about coronavirus safety, Tony Blair has said.

Speaking to Radio 4’s Week in Westminster, the former Labour prime minister said that a document that combined vaccination and testing status would allow nations to defend themselves better against the virus.

Blair warned that the poorest at home and abroad were suffering most from continued lockdowns and urged Boris Johnson to use the UK’s hosting of the G7 summit to speed up the process of global cooperation on a standardised Covid-status “passport”.

He predicted that rapid coronavirus tests would become the norm at mass spectator events and the workplace as the public sought reassurance about safety at work and places of leisure.

The former premier also said the pandemic should be viewed as a “national security issue” for every country – and admitted that when he was in power dealing with bird flu he had failed to grasp the need to invest much greater sums in anti-virus resilience.

A Cabinet sub-committee met on Friday to discuss plans for a vaccine and testing certificates for when global travel resumes. Ministers want an internationally recognised system.In his interview, Blair said that as vaccines rolled out across the world and countries moved to reopen their borders, digital health passports would be seen as an invaluable weapon in containing the spread of the virus.

“When you start to reopen your borders again, you’ll want to know the disease status of people coming into your country,” he said.

“Once vaccination really starts to be widespread, of course you’re going to ask for proof of what the vaccination status is and the reason for that is that the early evidence seems to be that if you’re vaccinated, you’re less likely to transmit the disease.

“And because of these new variants and because of the mutations that can occur, I think it’s just inevitable and therefore it’s best to start now on trying to devise common standards.

If you start to do this on a vast scale, you’re going to need the technology that allows you to do it digitally.

”Blair, whose push for ID cards met with fierce civil liberties opposition when he was in office, suggested that a combined vaccine and test status document would have popular backing.

Pressed on whether there was a case for a domestic health passport and whether that may unfairly discriminate against some of the population, he said: “People look at this as if it’s a matter of what’s fair or unfair and of course fairness is an important component, but it’s also a matter of what is obvious.

“Suppose you were to go back into your workplace today, you would prefer to know that the people you were going back to work with had been tested. You would prefer to know that they’d been vaccinated when vaccination becomes available to the majority of the population. These things are just inevitable.”



PABoris Johnson and Tony Blair


Blair insisted that he could not see domestic health passports becoming mandatory, but said that the public would probably drive demand, just as they would with widespread use of rapid lateral flow tests to check if someone was negative or positive.“I think it’s very difficult to make it actually compulsory.

But I think there is again an inevitability about vaccination, enabling you to do certain things, and you know we’re not complete masters of this ourselves it’s a question of how the rest of the world is also going to look at it,” he said.

“I still think there’s a very, very strong case for using rapid, point-of-use, cheap antigen tests as an aid to this, not as a substitute for other measures, but as complementary to them.

“To come back to this issue of proof of status, I think it’s unlikely people will want to go to large events, unless they think they’re going to be mixing with people who at least have given some sort of proof of their status.”Silkie Carlo, director of UK Big Brother Watch, said:

“I think he has very little moral authority to talk on these issues and of course he was a champion of ID cards which the British public completely rejected and that’s really what a vaccine passport scheme could easily become.

“Let’s be very cautious of language like inevitability, which is often used by people with power to tell people without power, what they’re going to have.

“Vaccine passports would be discriminatory, they would be coercive, they would almost certainly lead to authoritarian identity systems. It could be the biggest expansion of the surveillance state that we’ve seen in western democracies.

”But Prof Stephan Lewandowsky of the University of Bristol, said his research on “immunity passports” – issued to those who have antibodies after contracting the disease – found that up to 80% of the British public were supportive of the idea.

Blair is understood to have been in contact with both Johnson and Keir Starmer in recent months as his research institute produced alternative strategies for combating the virus.His proposal to speed up vaccination rollout, by offering a first dose to as many people as possible before a second dose, has been adopted by Johnson.

In the interview, Blair said there should be a real urgency from richer nations to roll out the vaccines to poorest countries because with Covid “disease anywhere is disease everywhere”.

“In the end, even those countries that have gone through a policy of eradication because they’ve been able to do so like for example, New Zealand, South Korea, Australia, at some point, they’ve got to open back up again.

“You’ve got to do whatever you need to do at this moment in time, but unless we get international business flowing again, and physical interaction happening again, then the economic damage is going to be absolutely devastating.“And it’s going to affect the poorest people in the world most. In fact, it is affecting the poorest people in our own countries most.

”Asked about Labour’s handling of the pandemic, Blair said the party was in an “incredibly difficult position because, of course they want to hold the government to account, but they’ve got to do that in a way that doesn’t look churlish or mean spirited because most people in the country know whatever government’s in power, this is a nightmare to deal with and is extremely tough”.

He added that Labour “can” win the next election and pointed out that the pandemic was “in a sense not a real situation” to judge the Opposition.“I think Keir Starmer has done the right things in pulling the Labour party back frankly from the Corbyn years.

“The Labour Party can rebuild at the pace that it wants to rebuild. But there’s no doubt at all that it’s only a rebuilt Labour Party, one that is back within the mainstream of British politics, that can win. I’ve got no doubt at all that that’s where he wants to get to.

”The full interview will be on The Week in Westminster, which is presented by HuffPost UK’s Paul Waugh, on BBC Radio 4 on Saturday February 13 at 11am.

United Kingdom residents could have to present so-called COVID-19 vaccine passports to get into bars and grocery stores, a top official said Sunday.Foreign Secretary Dominic Raab said the government hasn’t “ruled out” requiring proof of vaccination in order to get into stores.

“It’s something that hasn’t been ruled out and it’s under consideration, but of course you’ve got to make it workable,” Raab told LBC Radio.

“Whether it’s at an international, domestic, or local level, you’ve got to know that the document being presented is something that you can rely on and that it’s an accurate reflection of the status of the individual,” he added.

But other members of parliament pushed back Sunday on the possibility.Mark Harper, who chairs the Covid Recovery Group, argued the United Kingdom should not “get to a position where we are telling people they can’t do things unless they have been vaccinated with Covid.

”“For everyday life, I don’t think you want to require people to have to have a particular medical procedure before they can go about their day-to-day life,” he told the station. “That is not how we do things in Britain.”

Mastercard is bringing bitcoin to the checkout counter.The company announced late Wednesday that it will support "select cryptocurrencies" directly on its network at some point later this year.

"Our philosophy on cryptocurrencies is straightforward: It's about choice," Raj Dhamodharan, an executive vice president at Mastercard, wrote in a post late Wednesday.

"Mastercard isn't here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value — traditional or crypto — however they want."Although Mastercard was short on details about how customers will be able to use bitcoin, the company said it would work something like this: When someone wants to buy an item with cryptocurrency, Mastercard's crypto partners will convert the digital currency into traditional currency and then transmit them over Mastercard's network.

This change "will allow many more merchants to accept crypto" as well as "cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases," Mastercard said.

It's a major milestone for bitcoin, which has slowly been permeating Corporate America after years of skepticism.

On Monday, bitcoin soared to a then-record high above $44,800 after Tesla (TSLA) said it will soon accept bitcoin as payment for its vehicles, and disclosed it had purchased $1.5 billion in bitcoin as part of its cash holdings. Digital payment giants Square (SQ) and PayPal (PYPL) recently began allowing users to trade bitcoin.

But Mastercard will be bitcoin's most mainstream, major platform yet.And Wednesday's news fed the recent rally in bitcoin (XBT), sending it up 3% in trading early Thursday, hitting a record high earlier in the day. Bitcoin gained about 300% last year.

Mastercard's customers are already using its cards "to buy crypto assets, especially during bitcoin's recent surge in value," the company said in its statement. The company said not all cryptocurrencies will be included, and while it didn't specify that bitcoin will be one of those accepted, it was the only such currency Mastercard cited by name.

"We are also seeing users increasingly take advantage of crypto cards to access these assets and convert them to traditional currencies for spending," Mastercard added.

Meanwhile, BNY Mellon -- the oldest US bank, whose history dates back to Alexander Hamilton's founding of Bank of New York in 1784 -- announced Thursday it had formed an "digital assets" unit that will help clients address needs related to the growth of digital assets, including cryptocurrencies, at an unspecified time later this year.

Client demand and clearer regulation "present a tremendous opportunity for us to extend our current service offerings to this emerging field," said Roman Regelman, Mellon's CEO of asset servicing and head of digital.




The Bitcoin rally isn't enough to dethrone the mighty dollar

In November, Rick Rieder, the chief investment officer of fixed income at BlackRock (BLK), one of the most powerful asset managers in the world, said he could see bitcoin replacing gold as an investment instrument.But others continue to question its value. Last month Michael Hartnett, chief investment strategist at Bank of America Securities (BAC), referred to the recent rally in bitcoin as "the mother of all bubbles."

-- CNN Business' Paul R. La Monica contributed to this

A little over 100 years ago, there was a bubble asset that rose and fell wildly over the course of a decade. People who held it would have lost 100 per cent of their money five different times. They would have, at various points, made huge fortunes, or seen the value of their asset destroyed by hyperinflation.


 The asset I’m referring to is gold priced in Weimar marks. If this reminds you of bitcoin, you are not alone. In his newsletter Tree Rings, analyst Luke Gromen looked at the startling similarities in the volatility of gold in Weimar Germany and bitcoin today.

His conclusion? Bitcoin isn’t so much a bubble as “the last functioning fire alarm” warning us of some very big geopolitical changes ahead.

I agree. Central bankers have over the past 10 years (or the last few decades, depending on where you put the marker) quashed price discovery in markets with low interest rates and quantitative easing.

Whether you see this as a welcome smoothing of the business cycle or a dysfunctional enabling of debt-ridden businesses, the upshot is that it’s now very difficult to get a sense of the health of individual companies or certainly the real economy as a whole from asset prices.


 The rise in popularity of highly volatile cryptocurrencies such as bitcoin could simply be seen as a speculative sign of this US Federal Reserve-enabled froth. But it might better be interpreted as an early signal of a new world order in which the US and the dollar will play a less important role.


 The past four years of Donald Trump’s presidency and his toxic politics have taken a toll on the world’s trust in America. That has also diminished trust in some quarters about the dollar’s stability as the global reserve currency.

This feeling reached an apex during the January 6 attack on the US Capitol building. As financial policy analyst Karen Petrou put it in a recent note to clients:

“There are many casualties of this quasi-coup, but the US dollar may well be among them. It’s no more immortal than any other category-killer brand.”

Trump certainly devalued Brand USA.

But he is also a symptom of longer-term economic problems in the US — problems which have in recent years been papered over by low rates and monetary policy, which kept asset prices high but also encouraged debt and leverage.


 Bitcoin’s rise reflects the belief in some parts of the investor community that the US will eventually come in some ways to resemble Weimar Germany, as post-2008 financial crisis monetary policy designed to stabilise markets gives way to post-Covid monetisation of rising US debt loads.

There are, after all, only three ways out of debt — growth, austerity, or money printing. If the US government sells so much debt that the dollar starts to lose its value, then bitcoin could conceivably be a safe haven.

Germany’s currency debasement didn’t end well. This underscores another aspect of the bitcoin boom.

We have moved from a unipolar world in which the US was the pre-eminent political and economic power, to a post-neoliberal world where there is no longer a consensus in favour of free trade and unfettered capitalism. We will probably have two or even three poles — the US, Europe and China.

China has signalled its desire to become less dependent on the US financial system, buying fewer US Treasuries and rolling out its own digital currency.

In this world, it is easy to imagine that the dollar would continue to be the main reserve currency, with the renminbi and the euro gradually becoming more important stores of value.

But one can also imagine that cryptocurrencies that can easily cross borders would have some advantages over fiat money issued by governments. While the migration of people and goods may become more constrained, digital trade and information flows are still growing.


 Crypto advocates including technology leaders such as Tesla’s Elon Musk, Facebook’s Mark Zuckerberg and Twitter’s Jack Dorsey believe that digital currencies are better suited to this more multipolar world. They are largely unregulated and thus less subject to political forces.

In the same way that large technology platforms recently demonstrated their power by removing Trump from social media, bitcoin could conceivably float above any currency nationalism that might result from the new world order.


 Will cryptocurrency become the new gold — a hedge against a changing world? Will the Big Tech consensus prove more powerful than either the Washington consensus or the Beijing consensus?

Perhaps. But it’s also possible that sovereign states will move to regulate this existential threat. In the US, Treasury Secretary Janet Yellen has already raised the issue of future cryptocurrency regulation.


 None of this makes me want to buy bitcoin. But I also don’t see it as a normal bubble. It was unclear at the beginning of the 20th century which of the hundreds of automakers would win the race to replace the horse and buggy. Now, who knows whether bitcoin, ethereum, or diem, or some yet-to-be-invented digital currency will win out long term.

For now, the bitcoin boom may best be viewed as a canary in the coal mine.

 [email protected]


 Follow Rana Foroohar with myFT and on Twitter

Bitcoin is this close to $50,000, continuing a stunning rise that has sent it soaring nearly $20,000 this year.

The digital currency hit a record $49,714.66 Sunday before pulling back somewhat. Bitcoin is still up about 4% over the past 24 hours.

Investors have sent the price of bitcoin skyrocketing during the pandemic as the Federal Reserve cut interest rates to near zero in March 2020 (and expects to keep them there for several more years), severely weakening the US dollar.That makes bitcoin, comparatively, an attractive currency. There's a set limit to the number of bitcoins on the planet, and investors believe that once the supply runs out, the digital coin's value can only increase.




Everything you need to know about bitcoin

As bitcoin surges to all-time highs, big, name-brand investors are stockpiling it, and huge consumer companies are embracing it, aiding in bitcoin's soaring valuation.

Last week, Tesla said it may soon accept the digital currency as payment for its cars. And Tesla, (TSLA) the most valuable car company on the stock market, said it is holding some of its cash in bitcoin rather than traditional currency.

On Wednesday, Mastercard announced it will support "select cryptocurrencies" directly on its network at some point later this year. That represented a major milestone for bitcoin: Square (SQ) and PayPal (PYPL) recently began allowing customers to trade bitcoin, but Mastercard will be bitcoin's most mainstream, major platform yet.

That's adding a dose of validity and appeal to cryptocurrency for mainstream investors. For example, a top executive at BlackRock said last year that bitcoin could one day replace gold. And Jay Z and Twitter CEO Jack Dorsey announced Friday that the pair are establishing a bitcoin development fund.Bitcoin passed $20,000 for the first time in December, and it has more than doubled in value in three months.

Appetite for risk

Still, the recent cryptocurrency surge is showing signs of a melt-up -- over-enthusiasm fueled by the fear of missing out, not simply market fundamentals. Take Elon Musk's sarcastic tweets about bitcoin rival Dogecoin in recent months:

The digital coin, which itself was constructed as a cryptocurrency parody, shot up 50% earlier this month after Musk tweeted, only to crash over the past week.

Anthony Scaramucci, Skybridge Capital's founder, has a big stake in bitcoin and a fund geared toward wealthy investors: The SkyBridge Bitcoin Fund LP. But even he says people need to watch out. He told CNN Business last month that it could be a solid addition to the average investor's portfolio -- but you've got to have the stomach for it.

After all, bitcoin prices crashed below $4,000 shortly after reaching a previous peak of just under $20,000 in December 2017.

"This could be a blow up top bubble," Scaramucci told CNN Business in January. "We expect the fund to be volatile and it could lose money,"Scaramucci said bitcoin could suddenly tumble 20% to 50%. But he also highlighted bitcoin's staying power over the course of the past decade: If you took $1 and put 99 cents of it in cash and a penny in bitcoin, that investment strategy would have outperformed $1 invested in the S&P 500 over the last 10 years, he noted.

"The more likely trajectory is that people can make a monumental amount of money. Bitcoin is unfettered by Federal Reserve policy or gold supply issues," he said. "There is more demand for bitcoin now than supply. The price should go up."

CNN Business' Paul R. La Monica contributed to this report.