In today’s bitcoin and cryptocurrency news, hear about when the Federal Reserve raised interest rates by 75 basis points, as expected by the market, volatility was unleashed on the cryptocurrency market. Meanwhile, Bitcoin is ideally suited as a medium of exchange for the kinds of businesses that make up the bulk of SWIFT’s typical user base. Finally, Bitcoin price brushed September lows, causing a 20% rise. On-chain measurements show the highest bitcoin token flood this year. A surge of new bitcoin tokens causes a 20-30% decline before a market reversal.
Bitcoin Falls as the Fed Raises Rates to Fight Inflation
Original Source: Bitcoin Dips as Fed Again Raises Interest Rates to Combat Inflation
The price of Bitcoin plunged when the Fed announced it would raise interest rates by 75 basis points to battle excessive inflation.
The biggest cryptocurrency by market cap fell below $19,000 after the announcement before recovering in market turmoil. It’s now trading at $19,039, down 1% in an hour. Bitcoin’s price has fallen 5.7% in the past week.
The Fed was expected to hike interest rates today by 75 to 100 basis points. Bitcoin, other cryptocurrencies, and stocks appear to have priced in these forecasts this week, but fearful traders sold today. The Dow Jones and S&P 500 both dropped 0.70 percent at time of writing.
Not just the Federal Reserve has raised interest rates to combat inflation. The Fed has been aggressive because U.S. inflation is at a four-decade high, causing investors to seek safe havens like the dollar and avoid “risky” assets like stocks and crypto.
This year, Bitcoin has traded most like a tech stock, according to Arcane Research. It is down 70% from its November 2021 all-time high of $69,044.
The dollar has been rising gradually, and today was no exception: before Fed head Jerome Powell spoke, it had already hit a fresh two-decade high, in part due to Vladimir Putin’s determination to escalate in Ukraine.
OANDA senior market analyst for the Americas Edward Moya told Decrypt there was light at the end of the tunnel. “I think Wall Street expects the Fed to battle inflation, which is hard for riskier assets like crypto,” he said.
“It’s a wait-and-see approach: long-term investors are still committed to crypto and will be undeterred by today’s decision. They want crypto to trade on its own merits, not like tech stocks,” he added.
QCP Capital’s Darius Sit told Decrypt that Bitcoin has been trading like a “macro risk asset,” but it might “break that correlation” in the future.
Ethereum, the second-largest digital asset, fared poorly after the Fed’s policy decision. The asset has fallen 1% in 24 hours to $1,328.
In the past week, despite completing a long-awaited shift to a proof-of-stake blockchain, the asset’s price has fallen 15%.
Prior to replacing VISA, BITCOIN Will Replace SWIFT
Original Source: BITCOIN WILL REPLACE SWIFT BEFORE IT REPLACES VISA
With the Lightning Network, bitcoin as a means of exchange has taken off again in recent years. Ultimately, that’s needed for something to become money. Lightning is the most promising technique to scale the ability to exchange value in the context of money.
The majority of means of exchange’s focus has been on consumers’ day-to-day requirements, such as buying groceries, shopping online, and paying for services. This isn’t the sole economic scale. Enterprises pay suppliers, contractors, and services, and international shipping companies get money from businesses around the world. Imports circulate massively over the world and must deal with intricate currency exchanges.
Medium of exchange is used for purchases considerably larger than a daily Starbucks cappuccino at every level and size of the economy.
Bitcoin will thrive at scale as a medium of exchange here, not when Joe buys his daily coffee. SWIFT processes $5 trillion a day, or $1.25 quadrillion a year. Numerous Russian banks being cut off from SWIFT shows the risks of relying on it to handle foreign payments. This follows a curved distribution where 5% of payments account for 95% of the value and the great majority are for far lower sums (the average payment was $400,000 and the median $5,000 in October 2010). So extremely large payments account for the vast majority of network value, but the remaining little fraction is scattered across a variety of individual actors making small payments that are nevertheless not small amounts of money. This distribution shows why Bitcoin could disrupt SWIFT in this category.
As I wrote in March about utilizing Bitcoin to handle fiat-based payments, liquidity is a crucial limiting issue. Even if 100% of Iran’s mining hashrate, 5% of the network, was owned by the government and they kept 100% of the revenues, they could obtain $700 million in Bitcoin a year to pay for imports. That’s not much. $700 million is a portion of Iran’s $38 billion 2020 imports.
This dynamic shifts in countries with robust Bitcoin fiat markets. Iran considered burning oil instead of exporting it and utilizing Bitcoin mining to fill the shortfall. The challenge is getting enough mining hardware. Consider a country that isn’t significantly sanctioned, but might be, that can still export and has a $10 million-a-day Bitcoin/fiat market. If people throughout the world paid for that country’s exports with Bitcoin, a daily 10 million dollar market could convert it into currency. That’s possibly $10 million a day flowing into the country to pay for exports (I know, this is an oversimplified analysis, ignoring market conditions, how that would affect market liquidity, Bitcoin demand, etc.), but consider the point. $3.6 billion a year. Imagine a $100 million-a-day market, or $36 billion a day. That’s Iran’s 2020 imports.
Imagine the remaining 5% of SWIFT’s value, which makes up 95% of transactions. Imagine all the firms and individuals who make overseas payments. As long as the source country has enough fiat/Bitcoin market liquidity for a payer to buy it and the destination country has enough for the receiver to sell it, Bitcoin is a suitable vehicle to process an international payment with minimum slippage/fees and settle it within a few blocks. Lightning Network can settle that in seconds.
The more speculative liquidity surrounding Bitcoin, the more value may be processed to ease international business. This is valuable even if you’re not a sanctioned country or business. Settlement is instant. SWIFT can take days or weeks depending on where money is flowing and the checks it runs. Bitcoin eliminates the delay and the possibility of a third party stopping a payment. It reduces counterparty risk to the two exchange sites between currency and Bitcoin in each jurisdiction.
Even that can be avoided by directly controlling the Bitcoin. The only risk is Bitcoin’s volatility. Also manageable. A small percentage of a company’s Bitcoin can be placed to a futures exchange and used to short the Bitcoin price to hedge against volatility. 10x leverage means you just need 10% of your Bitcoin to hedge. If Bitcoin’s price rises and your short is liquidated, Bitcoin’s price appreciation will compensate and leave you with the same fiat value. If it depreciates, the money you generate on the short position will offset it, leaving you with the same currency worth.
Discreet Log Contracts (DLCs) allow you to hedge against Bitcoin price volatility using a smart contract on the network. This lets you to directly control Bitcoin, have contracts settle back into your hands in self custody, and employ several price oracles so that trust is not placed in a single one to honestly reflect the price of Bitcoin.
People act as if Bitcoin must reach hyperbitcoinization to become a major payment backbone or an economic system as vital as SWIFT. No. A certain market volume signifies that much Bitcoin is actively traded. That suggests demand exists to regularly handle Bitcoin purchases and trades within that value range during your analysis period. The same applies for futures markets; whatever volume is present there is accessible for anyone who wish to custody Bitcoin themselves instead of being exposed to counterparty risk to hedge against volatility and not have their businesses devastated if Bitcoin’s price suddenly drops.
Bitcoiners have been so focused on grassroots acceptance — which is crucial for Bitcoin to become an actual money — that they’ve lost sight of the other side of the coin. Large settlement, big players. Bitcoin is poised for a big disruption of systems like SWIFT, and I think that time will come sooner rather than later.
Bitcoin and Lightning will be adopted by businesses as an alternative to SWIFT and other settlement methods before consumers. It’s easier to convince a few thousand firms of the value add and utility, and to integrate there, than hundreds of millions of people. Most people tend to follow credible things, so doing the first might make the second simpler.
This Year’s Largest Bitcoin Influx
Bitcoin price is moving
Bitcoin price is 19,189 after a free-falling weekend. The bears succeeded to peg the recently formed swing low at $18.540 which led to a 20% rally over the first week of September. The uptrend reversed, and BTC fell to $18,271. Behind-the-scenes market behavior changed during the collapse.
Santiment’s Exchange Inflow Indicator has showed an upsurge of 620K bitcoin tokens being onboarded onto all exchanges on September 19. 11,879,200,000 dollars in Bitcoin are now liquid and available to sell. 10% of the crypto market has been onboarded in the previous 24 hours.
Historically, 20-30% corrections precede huge bull runs. If history repeats itself, Bitcoin’s next plunge might be the knife.
Summary of today’s Bitcoin and Cryptocurrency news
To put it simply, even after the Federal Reserve’s decision, the second largest cryptocurrency, Ethereum, didn’t fare too well. The price of the asset has dropped by 1% during the past 24 hours, to $1,328.
Meanwhile, Shinobi said, “large players, large value settlements. Bitcoin is ripe for a massive disruption of systems like SWIFT, and at the rate the world is becoming both politically and economically unstable, I think that time is going to come sooner rather than later”.
Finally, Santiment’s Exchange Inflow Indicator shows 620K bitcoin tokens onboarded on September 19. 11,879,200,000 dollars in Bitcoin are now liquid and available to sell. 10% of the crypto market has been onboarded in the last 24 hours.