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7 reasons to be bullish on Bitcoin for Q4

Q4 is finally here, and it kicked off with some positive news. Here are some reasons to be optimistic for this month and what’s left of 2021.

Iran lifts mining ban

Since October 1, miners in Iran can resume operations. The government imposed a four-month mining ban in May in light of the power shortages the country was suffering during the winter.

According to the Cambridge Bitcoin Electricity Consumption Index, Iran hosted around 4.64% in April, just a month before the ban. So it’s logical to expect a jump in hashrate in the following weeks.

Picture by Jernej Furman (License).

Iran’s relationship with crypto doesn’t end with mining, though. Cryptocurrencies may prove a much-needed tool for international trade after the sanctions and restrictions imposed by the US.

“When the summer cryptocurrency ban was implemented, President Hassan Rouhani was at the helm. However, with Ebrahim Raisi taking office in August, it’s possible that the country may revert its harsh view of cryptocurrency mining taking a toll on the electricity grids in lieu of the economic benefits,”

— Prabhjote Gill for Business Insider.

Finally, Iran has the fourth-largest oil reserve in the world. However, they can’t take advantage of it due to economic sanctions. Using cheap, oil-powered energy for mining and crypto adoption could be an excellent method to leverage the country’s natural resources and achieve economic growth and sovereignty.

El Salvador starts volcano mining

After the hype of Bitcoin becoming legal tender — and a pretty rough launch of the Chivo app — , things are moving forward in El Salvador.

According to the president, Nayib Bukele, 2.73 million people are already using the Chivo wallet. Numbers grow bigger every day, and Bukele expects Bitcoin users in El Salvador to overtake the national banking system soon.

Additionally, the very much expected volcano-powered mining facility has finally started running.

This event is a symbol of victory for Bitcoin in many aspects. It’s proof that a sovereign country can incorporate it into its economy without causing any financial instability, and it’s also a hit against the constant environmental accusations about mining.

El Salvador still has a long way to go, and the following months will be crucial to determine the result of the Bitcoin initiative. However, it’s nice to see that things are coming together after a rough start.

Bukele disclosed the first amounts of BTC mined by the volcano-powered facilities.

A smooth exit from China

Could the decade-long story of China’s bans of cryptocurrency finally be coming to an end? The crackdown on mining led to a global reorganization of hashrate, and now, the government has declared all cryptocurrency-related activities and transactions illegal.

Many mining pools have shut down, and China-based exchanges have already stated that they will stop providing services for Chinese citizens and move their headquarters elsewhere. Regarding mining, hardware manufacturers have also confirmed they will transfer their operations out of the country.

China has banned all cryptocurrency activities and is now pushing its own CBDC.

While the community was very concerned about the mining crackdown, it wasn’t the case after the Chinese government doubled down. Indeed, after the massive drop in hashrate, recovery has been slow but constant.

Furthermore, moving away from China’s coal power plants to North America’s renewable energy, the great mining migration has also accelerated Bitcoin’s transition to 100% environmental-friendly sources. Not to mention that it also further decentralized the mining landscape, which was heavily concentrated in China.

It was a great challenge, but as always, Bitcoin came out on top of the Chinese ban. Now, that’s water under the bridge. The community doesn’t care that much anymore, and the way is paved for bitcoin to resume its upward trend.

The Fed says they have no intention to ban crypto

Jerome Powell, chairman of the Federal Reserve.

Whether the United States federal government has a friendly or hostile view on cryptocurrencies is still unclear. Many states have already taken a stance, but the White House remains in a grey area.

While the ever-controversial infrastructure bill will probably determine this undefined position, we’ve had a positive sign from the Fed at the end of September.

The Federal Reserve Chairman Jerome Powell stated they have no plans to ban cryptocurrencies. He also spoke about dollar-pegged stablecoins, comparing them to money market funds or bank deposits.

“[Stablecoins] are to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated. Same activity, same regulation.”

—Federal Reserve Chairman Jerome Powell

Could this mean the United States is finally realizing the potential benefits of welcoming the cryptocurrency industry? Too soon to tell, but we certainly hope so.

Could Q4 finally see the approval of a Bitcoin ETF?

Another novel that keeps adding one chapter after another is the approval of a Bitcoin ETF. The SEC has postponed its decision over every single application. The last four, presented throughout September, were all delayed until November and December.

Gary Gensler, chairman of the Securities and Exchange Commission.

As the Securities and Exchange Commission keeps kicking the ball forward, the pile of pending approvals for Bitcoin spot and futures ETFs gets taller and taller. Currently, more than a dozen investment firms are waiting for the institution’s verdict regarding their applications.

The SEC’s Chairman himself, Gary Gensler, reiterated his support for bitcoin ETFs that would invest in futures contracts.

Gensler’s statements added to a private meeting Fidelity had with the SEC in September — where they demonstrated “increased investor appetite” for bitcoin — are driving increasing pressure to the regulators to finally approve bitcoin ETFs.

This could happen as soon as this month. Back in August, Bloomberg’s ETFs analysts Eric Balchunas and James Seyffart had anticipated that “a launch could come as soon as October” and that they believed the SEC should permit several ETFs at once to avoid handing out a first-mover advantage.

Bitcoin supply on exchanges sit at a yearly low

More bitcoin keeps leaving exchanges with each passing day. In the past, large bitcoin outflows from these platforms corresponded to accumulation moves.

People often withdraw their coins to hold them in cold storage, preparing for the next leg up. Less bitcoin on exchanges usually means less selling pressure.

All exchanges BTC reserves (Source: CryptoQuant).

Although one metric is never enough to predict price action accurately, reduced supply on exchanges is always a good sign.

An excellent start

Bitcoin took a hit in the second half of September, falling from $48,000 to $41,000. However, the last day of the month brought smiles back to Bitcoiners’ faces. In just one day, bitcoin jumped from $43,000 to $48,000, showing great strength.

Yes, it may be just an isolated pump, but it was enough to bring up some optimism among the community.

It’s always good to start off with the right foot, and that’s exactly what Q4 did. And considering all the reasons we listed here, we hope it will continue the same way.

This post is not financial advice.

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