The odds are on for a continuation to $40,000, Mike McGlone argues, but not everyone is so sure.

Bitcoin (BTC) is “more likely” to hit $40,000 than $20,000, Bloomberg argues, as the largest cryptocurrency gains 6% in a day.

McGlone eyes “enduring bull market bottom”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reclaiming the $35,000 mark amid new bullish forecasts from analysts.

In a tweet on Wednesday, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, argued that Bitcoin would sooner see a return to $40,000 than its 2017 all-time highs of $20,000.

“Bitcoin Capitulation? $40,000 Appears More Likely Than $20,000,” he wrote.

“The June 8 Bitcoin plunge and revisit of lower-end-range support around $30,000 had many of the earmarks of extreme bearish sentiment typical of more enduring bull-market bottoms.”

McGlone highlighted Bitcoin meeting its 20-week moving average as providing similar bottom signals to March 2020 — the height of the coronavirus-induced market crash.

Moving averages continue to play a key part in concerns over where the BTC price is headed next.

Bitcoin no longer “speculative crypto”

Bitcoin has been gaining on the back of news that El Salvador will be the first country in history to make it legal tender.

The move is a major counterpoint to the sea of “bad news” triggers that have come from various sources in recent days and weeks, including former United States President Donald Trump calling it a “scam.”

As Cointelegraph reported, many market participants still favor a return to bearish price action, such as a further retest of $30,000 or even lower.

#BTC update
0.5fib level from the latest leg down is crucial imo.
Current bounce could be corrective to that 0.5fib level and down from there again.
In case the ABC turns into a 1-5, it is opening the gates for more upside towards $42k pic.twitter.com/VweyziWnwy

— Crypto_Ed_NL (@Crypto_Ed_NL) June 9, 2021

For McGlone, however, the El Salvador announcement, which first surfaced at last week’s Miami conference, marks an unequivocal turning point.

“Woodstock-Like Bitcoin 2021 Miami Backs Mainstream-Adoption View: The June 3–5 Bitcoin 2021 conference further validated our view that Bitcoin has transitioned to a global digital-reserve asset and away from being a speculative crypto,” he tweeted on Tuesday.

At the time of writing, BTC/USD circled $35,000 still while so far not turning the level into reliable support. 

Andreessen Horowitz and Polychain Capital led the raise, with additional contributions from Alameda Research, Blockchange Ventures, CMS Holdings, Coinfund, CoinShares, Collab Currency, Memetic Capital and many others.

Cryptocurrency venture capital funds have poured hundreds of millions of dollars into Solana Labs to support further development and execution of decentralized applications and platforms building on Solana. 

Solana Labs, the blockchain development studio devoted to incubating Solana projects, announced Wednesday that it had raised $314.15 million through a private token sale — marking one of the largest private sales of the year.

The funding will be used to bootstrap existing and forthcoming decentralized applications and platforms building on Solana. It will also be used to establish a venture investing arm and trading desk dedicated to the Solana network.

Anatoly Yakovenko, founder and CEO of Solana Labs, outlined his network’s ambitious vision to onboard 1 billion users, describing the current blockchain environment as an “inflection point akin to the moment that PCs became widely accessible in the 1970s.” He continued:

“The next phase is onboarding a billion users. Solana was built from the ground up to accommodate this scale.”

“The next wave of innovation in crypto will happen at the application layer. It is easy to imagine countless use cases for crypto as a technology, but building them into real products that millions of people use requires the existence of a high-performance blockchain,” said Ali Yahya, a general partner at Andreessen Horowitz. “Solana is a next-generation blockchain that can meet that high bar.”

Solana has received considerable attention of late, with dozens of decentralized finance projects having launched on its platform since March. As Cointelegraph reported, one of those projects is Metaplex, a new NFT marketplace that helps artists and content creators monetize their customized collectibles.

The Solana ecosystem has also set up Solverse, an accelerator program that provides human resources and advisory support for projects building on the platform. Solverse has recruited 21 subject matter experts to advise Solana-based startups on their go-to-market strategy.

The firm initially sought a $400-million bond offering.

Software firm MicroStrategy saw $1.6 billion worth of orders in a recent junk bond offering — four times the initially sought amount.

Earlier this week, the company announced it would issue $400 million worth of junk bonds in a private offering, with a view to using the proceeds to purchase Bitcoin (BTC). 

Junk bonds are debt offerings by companies without investment-grade credit ratings and typically offer investors higher returns while carrying higher risk. Returns between 6.125% and 6.25% have been floated for the bonds, eclipsing the returns offered by treasury bonds.

“The notes will be fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation, a wholly owned subsidiary of MicroStrategy, and certain subsidiaries of MicroStrategy that may be formed or acquired after the closing of the offering,” stated MicroStrategy’s announcement.

One day later, the firm announced it would increase its bond offering to $500 million, after which it was inundated with $1.6 billion worth of orders.

MicroStrategy currently holds the most Bitcoin on its balance sheet out of all publicly traded companies, amounting to a dollar valuation of around $3.2 billion — more than twice the value of Bitcoin held by Tesla ($1.4 billion).

MicroStrategy’s stock price soared throughout much of 2020 and 2021 in line with the rising price of Bitcoin. But holding Bitcoin on its balance sheet wasn’t enough to stop MicroStrategy’s stock slide, which eventually came when the cryptocurrency market dipped. Since Bitcoin peaked in early April, the MicroStrategy share price has sunk by 45%.

MicroStrategy also revealed the formation of a new subsidiary to hold its existing 92,079 Bitcoins, dubbed MacroStrategy LLC.

Reaction to the news on social media was typically varied. Bitcoin supporters celebrated the news, noting the massive excess in demand for MicroStrategy’s bonds.

MicroStrategy proposed $400 Million in bonds to buy more #bitcoin and they got $1.6 Billion of interest.

They got 4x more in demand than what they offered.

— Documenting Bitcoin (@DocumentingBTC) June 8, 2021

Crypto skeptic Peter Schiff questioned the wisdom of purchasing an asset that has been historically volatile. Schiff asked how a sudden drop in the price of Bitcoin would affect MicroStrategy’s business operations.

I don’t think @michael_saylor is familiar with Murphy’s Law. What if #Bitcoin crashes below $20K? Will #MicroStrategy sell stock at depressed prices to shore up its balance sheet? Will it sell Bitcoin to raise cash? If MicroStrategy goes bankrupt will creditors HODL its Bitcoin?

— Peter Schiff (@PeterSchiff) June 8, 2021

Let’s wait and see.

Ruffer revealed on Tuesday that it had sold its $600M position for $1.1B, citing concerns over excessive speculation across the cryptocurrency market.

United Kingdom-based fund manager Ruffer liquidated its $600M Bitcoin bet after growing nervous about the speculative frenzy in the cryptocurrency market, including huge rallies in meme-based tokens like Dogecoin (DOGE).

The fund, which manages roughly $34 billion for wealthy clients and charities, started selling its cryptocurrency stash in December 2020, when the BTC/USD exchange rate rose towards $25,000, the Sunday Times reported.

It continued selling as the pair established newer highs in January 2021, breaking past the $40,000-level. Ruffer winded up its remaining Bitcoin position by April, netting $1.1 billion in profits from the sales, or a 83% return for the fund.

Dogecoin FUD

Ruffer’s sequential Bitcoin dumps appeared in moments that saw analysts predicting greater valuations for the flagship cryptocurrency. For instance, JPMorgan said in a report published January that BTC/USD could rise to $146,000 as it competes with gold to become the world’s leading inflationary hedge.

Guggenheim Partners’ Chief Investment Officer Scott Minerd also called for a $400,000-$600,000 Bitcoin, believing that the cryptocurrency would be able to mousetrap gold’s market in the long run.

Ruffer clarified that it would consider repurchasing Bitcoin as an insurance against inflation, with its investment director Duncan MacInnes telling the Financial Times that they would be assessing the markets “from the sidelines than from in the trenches.”

But for now, MacInnes agreed, Bitcoin is too hot to hold especially when Dogecoin, a joke-based cryptocurrency, is valued at $40 billion. He said:

“It’s hard to say the froth has come out.”

Dogecoin, a satirical homage to Bitcoin, underwent a wild upside rally in 2021 as it rose 15,337% year-to-date at one point in time.

Supportive tweets from Tesla CEO Elon Musk emerged as some of the leading catalysts behind the Dogecoin price rally, including reshared July 2020 meme showing the cryptocurrency storming the global financial system.

It’s inevitable pic.twitter.com/eBKnQm6QyF

— Elon Musk (@elonmusk) July 18, 2020

But the retail frenzy started dying in May after Musk called Dogecoin a “hustle” on a Saturday Night Live episode. The billionaire entrepreneur’s U-turn on the token caused panic selling across the cryptocurrency market, hinting that loss-making traders attempted to cash out gains from still-profitable cryptocurrencies like Bitcoin.

Dogecoin fell 30% instantly after Musk’s statement. As of June 9, the cryptocurrency was trading more than 50% lower than its all-time high of $0.76.

“You could see very clearly that there was a rise in speculative behavior,” said MacInnes while pointing at Bitcoin’s own rise from $30,000 to almost $65,000 amid the Dogecoin retail frenzy. Nevertheless, he added that at least the benchmark cryptocurrency’s boom had some rationality behind it.

Bitcoin “on the menu”

Lower-yielding bonds and devaluated fiat currencies left investors without a better traditional safe-haven asset. As a result, their traditional 60/40 portfolio strategy returned nothing, which led them to “new safe-haven, uncorrelated assets” like Bitcoin.

Ruffer has shifted its funds to Bitcoin-rivaling anti-inflation assets, including gold, inflation-protected bonds and commodity stocks. The firm asserted that it would keep the cryptocurrency “on the menu” for future.

Typing in the keywords for crypto exchanges Binance, OKEx and Huobi on Chinese search engines is currently pulling up no results.

China’s stance toward decentralized cryptocurrency trading appears to be getting even tougher. Chinese journalist Colin Wu and crypto news site 8BTCNews have both claimed that as of Wednesday, search results for some of the world’s leading cryptocurrency exchanges are pulling up zero results.

Cointelegraph’s staff in China have themselves searched for cryptocurrency exchanges on the search engines and confirmed that results are inaccessible. However, a compound search such as “Binance Academy” or “Huobi Research Center” does still seem to be passing through the censors.

If the situation continues, this appears to be the latest step in Beijing’s increasing censorship of cryptocurrency-related information via social media. On Monday, Weibo — China’s Twitter-like microblogging service with over 530 million monthly active users — suspended accounts belonging to multiple popular Bitcoin (BTC) and crypto-related content creators.

Colin Wu, or Wu Blockchain on Twitter, has noted that searches for Binance, Huobi and OKEx are not showing up for users of Baidu and Sogou, two major Chinese search engines. In addition, both Wu and 8BTCNews claim that Weibo has imposed the same black-out measures, with Wu noting that Zhihu — an analog to Quora — has also followed in step.

Censorship measures form just a part of China’s attempt to restrict various cryptocurrency activities, including mining and fundraising themes, deeming the latter illegal. Areas being targeted include financial and payment institutions’ provision of services related to cryptocurrency and token financing platforms that could be used as fiat-to-crypto gateways. 

The crackdown on mining has focused on the government’s concerns over the industry’s carbon footprint, especially in areas such as Inner Mongolia. At least three mining companies — BTC.TOP, Huobi and HashCow — have announced they would be ceasing activities on the mainland.

As of yet, representatives from the targeted exchanges have not made any public announcement regarding the apparent social media censorship measures. 

Binance could not provide comment on the situation but noted “that Binance does not currently hold exchange operations in China.”

Reduced network activity is resulting in lower fees for Bitcoin and Ethereum as both recede heavily from their all-time highs.

The cost of using the Bitcoin and Ethereum blockchains is on the rapid decline, as evidenced by a 93%–95% reduction in average transaction fees over the past couple of months.

Fees are paid to the miners who process transactions on a typical proof-of-work blockchain. The size of the fee depends on the size of the transaction in bytes and how many transactions a coin has gone through in the past (as these need to be checked every time a coin is moved). Supply and demand for space also dictate the size of a transaction fee since blockchains have limited capacity.

Both Bitcoin and Ethereum saw their transaction costs surge to all-time highs in 2021 in April and May, respectively, coinciding with their rising coin valuations and price peaks.

Bitcoin’s average transaction fee hit $62.77 on April 24 — a figure that exceeded the $55 all-time high from December 2017, which stood for more than three years. By Sunday, fees had fallen as low as $4.38. That marked a 93% reduction and sent Bitcoin’s average fee back to levels not seen since December 2020, prior to 2021’s market pump.

The same general pattern was witnessed on Ethereum, where average transaction fees rose as high as $69.92 on May 12. That was another all-time high for the cost of using Ethereum and was undoubtedly fuelled in part by the flurry of activity that accompanied the launch of decentralized finance and the Uniswap exchange, which has long been the biggest consumer of resources on Ethereum.

On Sunday, Ethereum’s average fees were as low as $3.44 — a figure not seen since the first day of January 2021 — amounting to a 95% reduction. Fees on both blockchains tend to jump whenever there is a sudden increase to the coin’s price or a new application that increases network usage.

As reported previously by Cointelegraph, the transaction count on both Bitcoin and Ethereum is also on the decline. Between January and June, the daily number of Bitcoin transactions fell from around 400,000, to just 175,000. Likewise, the number of daily Ethereum transactions fell from 1.6 million to 1 million between May and June alone, marking a 37.5% drop.

Crypto-friendly SEC Commissioner Hester Peirce called for nuanced cryptocurrency regulations as several agencies pursue stricter policy mandates.

Hester Peirce of the United States Securities and Exchange Commission has once again urged regulators to take a step back from attempting to overregulate the crypto space.

Speaking to Financial Times, Peirce, affectionately dubbed “Crypto Mom” due to her positive stance on cryptocurrencies, argued against the need for strict regulatory policies.

According to Peirce, regulators by nature often have a knee-jerk reaction to emerging market spaces, often at the expense of innovation.

The SEC commissioner warned that pursuing stricter regulatory policies eliminates the ability of market participants to carry out peer-to-peer transactions. Rather than emphasizing government regulations, Peirce advocates for industry-led regulatory activities.

Indeed, the commissioner is a longstanding supporter of crypto self-regulation. Back in March 2019, Peirce made the case for crypto self-regulatory organizations in a debate with the current SEC chairman Gary Gensler.

Peirce is not the only U.S. regulator to advocate for crypto self-regulation. As previously reported by Cointelegraph, Commodity and Futures Trading Commission Commissioner Brian Quintenz called for industry stakeholders to create a self-regulatory framework back in February 2019.

Japan remains an example of somewhat effective crypto self-regulation, with the country’s cryptocurrency SRO liaising with government regulators on important legal and policy matters.

Peirce’s latest call for nuanced crypto policies comes amid indications of a significant push for stricter cryptocurrency regulations in the United States. Treasury Secretary Janet Yellen and SEC chairman Gary Gensler have both stated their intention to closely monitor the market.

On Tuesday, the Internal Revenue Service called for congressional authority to regulate cryptocurrencies. Back in May, the Treasury Department announced a new plan to ensure crypto service providers report transactions exceeding $10,000 in value.

Meanwhile, the Senate Banking Committee will hold a session on Wednesday to discuss issues concerning a possible Federal Reserve-issued digital currency. Reports indicate that the discussion could also extend toward the broader crypto market.