During a week that saw the market price of Bitcoin plummet more than 40 percent, more than 13,000 “wholecoiners” were added to the Bitcoin blockchain, data analysis shows.
The accumulation comes even as a global recession looms and at a time that the Biden Administration, the Federal Reserve, and establishment media have accelerated chatter on both a crackdown on the so-called “stablecoins” that underpin the industry and replacing crypto with a Central Bank Digital Currency.
Reported by CoinTelegraph on June 20 based on data from analyst firm Glassnode, the number of wallets on the Bitcoin blockchain containing at least 1.0 BTC increased by 13,091.
The number is notable because as Bitcoin can be divided down to eight decimal places, the prestige of owning a whole Bitcoin has increased in tandem with the market value of the token.
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The outlet noted that since May 10, only 14,000 total wholecoiners have been added to the blockchain. The market value for 1.0 BTC that day was roughly $31,000 USD.
“At an approximate price of $20,000 per Bitcoin, the sharp increase in the number of whole coiners would suggest that retail—or ‘plebs’ as they are affectionately known—are buying Bitcoin as fast as their incomes will allow,” the article stated.
Over the weekend, Bitcoin made history—albeit inauspiciously. For the first time since the product’s creation, price traded beneath a previous all time high. During the wee hours of June 18, the price for 1.0 BTC tumbled beneath $19,666, the all time high set on Bitstamp during the 2017 bubble.
The crypto bottomed at slightly more than $17,500, and in classic volatile style, has rebounded above $20,000 again as of time of writing.
But crypto bulls should govern hope that the market has bottomed accordingly.
The milestone having breached a previous all time high is far from a bullish convergence signaling a buy in the current global market conditions.
Just days earlier on June 15, the Federal Reserve hiked the U.S. core interest rate by 75 basis points, the largest hike since 1994.
But what’s most notable about this decision is not only that the Fed declared war on inflation, vowing to use “whatever it takes” to bring America’s out-of-control 8-handle consumer price index back to the 2 percent range, but further comments from Chairman Jerome Powell specifically painted a bullseye on the digital currency market.
On June 16, CNBC reported that Powell testified before the House Financial Services Committee, where he was paraphrased as saying the “main incentive” of initiating a Central Bank Digital Currency would be “to eliminate the use case for crypto coins in America.”
Specifically, Powell was directly quoted as saying, “You wouldn’t need stablecoins; you wouldn’t need cryptocurrencies, if you had a digital U.S. currency,” calling the notion “one of the stronger arguments in its favor.”
Powell elucidated this point in further comments, “We have a tradition in this country where the public’s money is held in what is supposed to be a very safe asset.”
“That doesn’t exist for stablecoins, and if they’re going to be a significant part of the payments universe…then we need an appropriate framework, which frankly we don’t have.”
The “stablecoin” concept is simply a digital currency, almost always issued on a subset of the Bitcoin blockchain or as a token on the Ethereum blockchain, that is allegedly backed by USD on a 1:1 basis, and therefore should, in theory, maintain a $1.00 value no matter what because it can be redeemed for USD.
And this is exactly why crypto bulls should be weary: the chatter against stablecoins is rapidly accelerating.
On June 17 as Bitcoin was crashing, no less than The New York Times published an article coined The Coin That Could Wreck Crypto.
The article was subheaded with the following statement: “As cryptocurrencies have plunged, attention has focused on a potential point of vulnerability: the market’s reliance on a so-called stablecoin called Tether.”
In making its point, The Times referenced a related event that sent shockwaves not only through the cryptocurrency market, but global financial assets, when a second, and lesser, “stablecoin” called TerraUSD—issued by a company called Luna—collapsed last month.
In a May article, The Times responsibly warned the public, “The downfall of Luna and TerraUSD offers a case study in crypto hype and who is left holding the bag when it all comes crashing down.”
But that previous article simultaneously made a sharp distinction between TerraUSD and Tether when it stated, “Unlike the popular stablecoin Tether, it was not backed by cash, treasuries or other traditional assets. Instead, it derived its supposed stability from algorithms that linked its value to Luna.”
Unfortunately for Tether, the winds of sentiment appear to have changed over the course of only a single month.
The Times’ June article conversely stated, “But the company’s financial statements show that a significant portion of its reserves are tied up in unsecured corporate debt known as commercial paper.”
The article took the time to point out that not only was Tether fined $18.5 million in 2021 by the New York Attorney General for lying about its reserves, but that in October, the CFTC fined the company an additional $41 million because “over a 26-month ‘sample period’ between 2016 and 2018, Tether had held sufficient reserves in its accounts only a quarter of the time.”
The outlet also warned, based on the company’s own representations, that Tether “increased its exposure to money market funds, which may invest in commercial paper, to about $7 billion from $3 billion.”
Additionally, “$5 billion of its reserves were tied up in ‘other investments,’ including digital currencies,” they added.
The Times also made a point of noting former Fed Chairman and current Secretary of Treasury Janet Yellen’s testimony before Congress in May, where she specifically called out Tether wavering from its $1.00 peg, stating directly that stablecoins in general pose “the same kind of risks that we have known for centuries in connection with bank runs.”