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Bitcoin Taproot Is Around The Corner - Crypto weekly update

Published: 11. 11. 2021 · Author: Daniel Mitrovsky

This week, the total market capitalization exceeded 2.47 trillion EUR. Increase at the 7-day interval is 5.11 %. Bitcoin increased by 6,33 % during the week to a current value of over 56,800 EUR. Bitcoin dominance is 43.1 %.

Source: Coinmarketcap

Bitcoin Taproot Is Around The Corner

Mainstream adoption and the real-world use cases of cryptocurrencies are still one of the strongest drivers that motivate the entire crypto ecosystem to constantly improve and innovate. This also holds true for the Bitcoin network.

In the following days, the Bitcoin protocol will undergo a soft fork in the name of the Taproot upgrade, which aims to improve the network’s privacy in various terms of delivery, such as multisig transactions or time stamps. The Taproot upgrade was set for deployment after achieving a 90% consensus among the Bitcoin miners (mining nodes).

Taproot is Bitcoin’s first major upgrade since August 2017, which saw the introduction of Segregated Witness (SegWit) and resulted in the launch of Lightning Network. While the previous fork primarily sought to fix transaction malleability and improve Bitcoin’s network scalability, the Taproot upgrade aims to revamp transaction efficiency, privacy and support smart contracts initiatives.

Taproot will implement a new scheme of digital signature known as Schnorr signature. Schnorr signature will allow users to aggregate multiple signatures into one for a single transaction, reducing the inherent visible difference between regular and multisig transactions. The new signing scheme replaces the current Elliptic Curve Digital Signature Algorithm (ECDSA).

The Taproot upgrade is expected to come into force on 14. November 2021. Source

Bitcoin again hits new all-time high

The strongest and most popular cryptocurrency Bitcoin hits new all-time high of $68,789 (€59,949) this week on Tuesday. Bitcoin is only a small step away from the humbling of the yet undiscovered $70,000 (more than €60,000) threshold.

In addition, on-chain data shows several positive signals for further potential growth. According to Glassnode's latest analytical report, the number of bitcoins on centralized exchanges continues to fall.

The trend of accumulation does not appear to be slowing down, with the share of supply held on centralized exchanges also dropping to a record low of 12.9 % as BTC is increasingly placed into secure storage. Glassnode reports that more than 5,000 BTC was withdrawn from centralized trading venues during last week.

Bitcoin investors appear to be increasingly sitting on their hands in hopes of higher prices, with the share of Bitcoin’s supply that has remained inactive for the past three months spiking to a record high of 85%.

Bitcoin with its market cap worth $1.23 trillion (€1.06 trillion) is currently the eighth-most valuable asset in the world just above the market valuation of the corporate entity Facebook’s market cap. Gold remains at the top of this ranking, with total market capitalization estimated at up to $11.6 trillion (€10.09 trillion), up nine times as market cap of "digital gold." Source

Congress passes Infrastructure bill

The United States House of Representatives passed the $1.2 trillion bipartisan infrastructure bill. This is not a positive signal for the cryptocurrency sector, as the IRS will be able to raise an additional $28 billion (€24.4 billion) from taxing crypto.

The infrastructure bill was first proposed by the Biden administration aimed at primarily improving the national transport network and internet coverage. The bill, which passed Congress with a final vote of 228–206, signals a historic moment for crypto in the United States. In drafting the legislation, senators inserted a provision that changes the Internal Revenue Service’s definition of a “broker” to include organizations that trade crypto assets.

Under this law, brokers and cryptocurrency companies would be obliged to collect personal data about their users. Under the term “brokers” are perceived not just cryptocurrency brokers, but also cryptocurrency miners, validators, node operators or software developers.

While the Know-Your-Customer process (KYC) is standard in centralized exchanges, BTC miners or dApps developers cannot comply with this regulation because user information is not available to them.

In addition, the law expanded reporting requirements for brokers, mandating that digital asset transactions worth more than $10,000 (€8,700) are reported to the IRS.

According to the information available, the U.S. Treasury Department has clarified that it will not interpret the new legislative definition of a “broker”. On the other hand, if the IRS decides to strictly comply with this law, it could cause significant complications for the crypto sector in the US. Source

BlockFi joins ETF applicants

Cryptocurrency lending firm BlockFi has filed paperwork with the United States Securities and Exchange Commission, or SEC, to launch a physically-backed Bitcoin exchange-traded fund, kicking off what's expected to be a big week for the crypto markets.

The Form S-1 filing for BlockFi NB Bitcoin ETF was submitted to the SEC on Monday, according to official documents. The filing states that BlockFi will serve as custodian and that the ETF’s investment objective is to reflect the underlying performance of Bitcoin as opposed to any futures or derivatives benchmark.

Spot ETFs differ from Futures ETFs mainly in that it is tied to bitcoin's direct physical trading on exchanges and not to futures contracts that are traded on the CME. According to analysts, they have proven remarkably popular among investors because it provides direct exposure to BTC.

The first spot ETFs could see the light of day as early as next week. The SEC’s decision on the highly anticipated VanEck spot Bitcoin ETF is due this coming Sunday. Source

Tim Cook owns cryptocurrency

Apple CEO Tim Cook said he personally owns cryptocurrency after he was asked at The New York Times DealBook conference if he owns bitcoin or ethereum.

“I do. I think it’s reasonable to own it as part of a diversified portfolio,” Cook told Andrew Ross Sorkin in an interview that aired Tuesday. “I’m not giving anyone investment advice by the way.”

Cook said that he had been interested in cryptocurrency “for a while” and that he had been researching the topic. However, Cook said that his interest was from a “personal point of view” and dismissed suggestions that Apple might take cryptocurrency in exchange for products as tender.

Cook also rejected the possibility of Apple buying cryptocurrency with corporate funds as an investment. Source

Curiosity : 800,000 ETH Burned Since EIP-1559

In August 2021, EIP-1559, also called the London Hardfork, introduced the concept of burning a portion of the gas fee for all Ethereum transactions. EIP-1559 was introduced to stabilize the volatility of transaction fees on Ethereum. However, it also added a deflationary mechanism to its native asset—ETH.

Since the implementation and for all activity on the network, more than 800,000 ETH has been burned, per the latest data. This means that nearly $3.8 billion (€3.31 billion) worth of ETH has been taken out of the supply. The sustained gas fee burn and high demand for ETH across hundreds of dApps support the argument that the asset has become a good store of value, according to its founder Vitalik Buterin.

EIP-1559 implementation has also become a major catalyst for ETH’s rally over the last few months. Notably, the crypto asset has been up around 59% since the start of October and it is currently trading at its all-time high price of $4,837 (€4,215). If the upward movement continues, ETH may surpass the milestone target of $5000 within the next few months. Source

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