🌕 Bitcoin $11,517, ⚔️ Coinbase vs. IRS — Cryptos for the Rest of Us

It’s been a crazy week for the cryptocurrency markets. Operation Dragonslayer clearly didn’t work (or never happened) with Bitcoin smashing through $10,000. In fact, the whole market has had a stellar month with the top 10 cryptocurrencies averaging over 80% gains in the last month!


Bitcoin hits $11,517

Whats the Story?

By now everyone and their dog has probably heard that Bitcoin went above USD10,000 a couple of days ago. If you’d bought some Bitcoin in October when it was around$5,500 you’d be looking at +90% gains in a month. Crazy!

It’s since dropped back to trade around $10,000, still an impressive 1-month gain.

Why did this happen?

There are a few theories about why Bitcoin adoption has accelerated in the last month.

Bitcoin on the Big Bang Theory

On Thursday, popular American sitcom “The Big Bang Theory” dedicated an episode to Bitcoin. This brought Bitcoin to 12.6MM viewers in America and no doubt many more around the world. It’s theorised that this helps bring Bitcoin more mainstream. Especially when people hear numbers like +90% in a month.

Institutional Investors

As cryptocurrencies continue to rise, more traditional investors like Hedge funds, pension funds, family offices are getting involved. Collectively known as institutional investors, these funds are finding it easier to access the cryptocurrency markets with many Bitcoin products launching:

CME is starting futures trading in December
NASDAQ announced they would start in June 2018. 
• More exchanges are getting official recognition with Japanese exchange biFlyer being approved for a US license. This makes it a legitimate trading venue for institutional investors

With this growth in products, Russian oligarchs have been investing heavily in European funds. The founder of TechCrunch also announced a USD100mn fund adding to the pool.

It’s now estimated that there are over 120 funds solely dedicated to trading cryptocurrencies. Collectively they account for over USD2.3bn in assets.

What does this mean?

Even with all this money coming it’s still small amounts compared to the $297,000,000,000 total market cap of all coins. It’s reasonable to assume that adoption will continue to grow. Especially as market access becomes easier for both individuals and institutional investors.

The easier the access, the more capital coming in. The more capital coming in, the higher the total market cap.

Coinbase to hand over 14,000 records to the IRS

What’s the Story?

Coinbase has been ordered to hand over 14,000 accounts’ data to the U.S. Inland Revenue Service (IRS). Coinbase is one of the largest cryptocurrency exchanges. They have been ordered by a court in California to hand over usernames, dates of birth, address, taxpayer IDs and all associated account activity and transaction records for accounts with over USD20,000.

Why Did This Happen?

In the U.S., profits on cryptocurrencies are subject to capital gains tax. While millions are trading cryptocurrencies in the US, the IRS has said that only 800–900 have filed returns with them.

Coinbase are calling this a partial victory. They say that the original demand by the IRS was to hand over all account information. They estimate that over 480,000 users have been protected, a 97% reduction from the original request. The scope of data to hand over has also been reduced.

Is This a Bad Thing?

Cyprtocurrencies are reaching a turning point. While originally conceived as a decentralised, unregulated technology, mass–adoption has brought with it both centralisation and regulation. For purists, it’s a trade-off between maintaining the anarcho-capitalist nature of cryptocurrencies and massive price increases that come with mainstream adoption.

All told, if cryptocurrencies are going to have any meaningful utility value in the future it will be necessary to have mainstream adoptions. In which case both regulation and some degree of centralisation are inevitable.

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Extra Reading

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Infamous Discarded Hard Drive Holding 7,500 Bitcoins Would be Worth $80 Million Today — cointelegraph.com 
 Old timers remember the story of a Welsh man who threw away a hard drive containing 7,500 Bitcoins. That lost drive would be worth over $80 mln today.

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Experts Answer Question: “How Did Bitcoin Reach $10,000?” — cointelegraph.com 
 With Bitcoin having hit the magical $10,000 mark, experts chime in on how we got here.

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Hackers Want In On Bitcoin Action: Expert — cointelegraph.com 
 Hackers are scouring the Internet for Bitcoin wallet archives.

M1401652

Mexican “FinTech Law” Will Legitimize Crypto in Banks, on Payment Platforms | Finance Magnates — www.financemagnates.com 
 The latest draft of the bill includes a framework that will allow banks to store cryptocurrencies and payment platforms to transact with them.