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JP Morgan analysts see a divergence between the behaviour of the older cohorts of the US retail investors' universe, and millennials in their preference for "alternative" currencies. The older cohorts prefer Gold while the younger cohorts prefer Bitcoin. Both Gold and Bitcoin ETFs have been experiencing strong inflows over the past five months, as both cohorts see the case for an "alternative" currency. This simultaneous flow support has caused a change in the correlation pattern between Bitcoin and other asset classes, with a more positive correlation between Bitcoin and Gold but also between Bitcoin and the Dollar as US millennials see Bitcoin as an "alternative" to the dollar. In addition, the simultaneous buying of US equities and Bitcoin by millennials since March has increased the correlation between Bitcoin and S&P500 since March.

Bitcoin can be wrapped onto the ethereum blockchain using a number of ethereum-based tokens, such as WBTC, which has surged in popularity since May, according to data from Dune Analytics. During some periods in August, more bitcoin was wrapped onto ethereum than was created by bitcoin miners. Bitcoin wrapped onto the ethereum blockchain using WBTC is backed 1:1 by bitcoin and minted by locking up bitcoin on the bitcoin blockchain. It's thought that by wrapping bitcoin onto ethereum and making it compatible with smart contracts, users will be able to unlock tools such as lending, liquidity provision, and decentralized exchanges.

"El Salvador's President Nayib Bukele blessed El Salvador's Bitcoin Law, asserting that making bitcoin legal tender would reduce remittance costs. But as things currently stand, the cost of using bitcoin to send remittances to El Salvador is not, in fact, cheaper than traditional money transfer services. Remittances sent via traditional money-transfer services have a realized cost of only 2.85%. But, remittances sent via bitcoin will require Salvadorans to cough up much more than 5% to obtain the dollars they want. It's clear that remittance costs are not the reason that Bukele is preaching from the bitcoin pulpit." For more detail see: https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitcoin-Blunder-Final.pdf

The U.S. Securities and Exchange Commission has pushed back the deadlines for four Bitcoin ETF (exchange-traded fund) applications to late 2021. They include applications for the Valkyrie XBTO Bitcoin Futures Fund (extended to December 8), the Kryptoin Bitcoin ETF (December 24), the WisdomTree Bitcoin Trust (December 11), and the Global X Bitcoin Trust (November 21). They are among at least a dozen outstanding Bitcoin ETF applications on the SEC's desk.

The US Securities and Exchange Commission (SEC ) has delayed decisions on physical (spot) Bitcoin exchange-traded fund (ETF) proposals from Bitwise and Grayscale until February 1 and February 6, respectively. The applications were originally filed on October 14 and 19, 2020, respectively. The SEC has been approving Bitcoin futures ETFs (ProShares and Valkyrie's Bitcoin Strategy ETFs in October, 2020) but it has continued to maintain a hard stance on physical crypto ETFs (it denied the approval of VanEck's physical Bitcoin ETF in November 2020, and WisdomTree's in early December). The SEC is concerned that the spot Bitcoin market is prone to fraud, manipulation and abuse, whereas Bitcoin futures trade on highly regulated exchanges.

The bitcoin blockchain is being clogged up by a recent spate of Bitcoin-based memecoins such as Pepe and Ordi, driving up transaction fees and renewing concern about Binance. Several memecoins use bitcoin for transaction settlement, using a new BRC-20 bitcoin-based token standard. Binance halted withdrawals of Bitcoin twice in less than 12 hours on May 7, 2023, citing congestion on the network, saying that higher fees have been applied to pending transactions so they get picked up by Bitcoin miners.

"What is the price of Bitcoin based on? It's just a bunch of code that exists only in cyberspace. It's not backed by the state. There's no recourse to a central authority. There's no underlying asset, no stream of income. There's just the thing itself. But does that mean it has no inherent worth? The code on which Bitcoin is based does give it scarcity value. Only 21 million Bitcoin will ever be created. And that might be worth something. That scarcity is why some people refer to Bitcoin as 'digital gold'. But the very scarcity on which Bitcoin is based might also be its undoing. Its scarcity may even, ultimately, render Bitcoin worthless."

The IMF published a paper that uses raw Bitcoin data covering both on-chain (on the Bitcoin blockchain) and off-chain (outside the Bitcoin blockchain) transactions globally to gain a better understanding of cross-border Bitcoin flows. It finds that Bitcoin cross-border flows respond differently than capital flows to traditional drivers of capital flows, and differences appear between on-chain and off-chain Bitcoin cross-border flows. Off-chain cross-border flows seem correlated with incentives to avoid capital flow restrictions.

This paper finds that, based on bitcoin transactions between January 3, 2009 and the end of April 2017, approximately one-quarter of bitcoin users are involved in illegal activity. We estimate that around $76 billion of illegal activity per year involve bitcoin (46% of bitcoin transactions), which is close to the scale of the U.S. and European markets for illegal drugs. The illegal share of bitcoin activity declines with mainstream interest in bitcoin and with the emergence of more opaque cryptocurrencies.

The Bank of Canada published a study of the dynamics of Bitcoin awareness and ownership from 2016 to 2021. In 2021, Canadians' awareness of Bitcoin remained stable at about 90%, while ownership increased to 13% from the 5% observed in 2018-2020. Canadian Bitcoin owners in 2021 were more likely to be male, aged 18 to 34 years old, with a university degree or high income. They largely see Bitcoin as an investment. The increase in Bitcoin ownership was driven by widespread increases in savings and wealth by Canadian households during the pandemic, coupled with Fintech firms providing accessible and user-friendly platforms for buying Bitcoin.

"We estimate the effect of Bitcoin ownership on the level of cash holdings of Canadian consumers. Bitcoin ownership positively correlates with cash holdings even after accounting for selection into ownership via a control function approach. On average, Bitcoin owners hold 83 percent (in 2018) to 95 percent (in 2017) more cash than non-owners. Focusing on the quantiles of cash holdings, we find that Bitcoin ownership has a highly nonlinear effect. For example, the difference in cash holdings between Bitcoin owners and non-owners in 2017 varies from 63 percent at the 25th quantile of cash to 176 percent at the 95th quantile of cash. Our results provide some evidence to reject the hypothesis that new digital currencies or technologies, such as Bitcoin, will lead to a decline in cash holdings."

Horizons ETFs Management (Canada) launched an exchange-traded fund (ETF) fund that will allow investors to take short positions on bitcoin futures. The BetaPro Inverse Bitcoin ETF started trading on April 15, 2021 on the Toronto Stock Exchange. It will charge a 1.45% management fee, while a sister product called BetaPro Bitcoin ETF, launched simultaneously, will cost 1.00% and track Bitcoin futures. https://www.horizonsetfs.com/news/Press-Release/Horizons-ETFs-Launches-Long-and-Short-Bitcoin-Futu

The U.S. Securities and Exchange Commission (SEC) hinted that bitcoin's price volatility may mean it's not yet ready to support an exchange-traded fund (ETF). The note called bitcoin is a "highly speculative" asset, and warned that investors in mutual funds that trade bitcoin futures may be taking on more risk than they're aware of. Going forward, SEC staff will "consider whether, in light of the experience of mutual funds investing in the Bitcoin futures market, the Bitcoin futures market could accommodate ETFs." https://www.sec.gov/news/public-statement/staff-statement-investing-bitcoin-futures-market

According to analysis by crypto fund Pantera Capital, the recent crypto-asset rally has likely been driven by an influx of retail investors buying Bitcoin. The main trigger is the October launch of PayPal's new service that enables customers to buy, sell, and hold crypto-assets directly from their PayPal accounts. According to Pantera's projections, PayPal users alone may soon acquire more Bitcoin than there are being mined. Square launched similar capabilities in its cash app in June 2019, but it only gives access to Bitcoin, whereas PayPal's offering supports Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.

There's 131,455 Bitcoin on Ethereum, or $1.497 billion, as of October 11, equivalent to 3.6% of Ethereum's market cap. These are Bitcoin that's been converted into Ethereum-based tokens that represent Bitcoin. The most popular is Wrapped Bitcoin, or wBTC, which holds 73% of the market share. Next up is renBTC, with 20% of the market share. People are moving lots of Bitcoin to Ethereum to make the most of this summer's decentralized finance boom. Such products as decentralized lending protocols, non-custodial exchanges and synthetic derivatives-like wBTC-were all the rage this summer. But you have to use Ethereum-based tokens to use them.

Germany's Eurex derivatives exchange launched its euro-denominated Bitcoin exchange-traded note (ETN) Futures contract. It is based on London-based ETC Group's centrally cleared BTCetc Physical Bitcoin (BTCE) Bitcoin exchange-traded product (ETP). The futures contract allows investors to track the price development of Bitcoin in a regulated environment and will be physically delivered in BTCE, which is 100% backed by Bitcoin and can be instantly converted by any investor into the underlying BTC.

"According to a study by the National Bureau of Economic Research (NBER), the top 10,000 individual investors in Bitcoin control about one-third of the cryptocurrency in circulation. By using a data collection method that differentiated between addresses belonging to intermediaries and individuals, NBER researchers were able to find the former controlled about 5.5 million Bitcoin at the end of last year while the latter controlled about 8.5 million. Additionally, the top 1,000 individual investors controlled about 3 million, and the concentration could be even greater. The concentration of miners is even more profound, data show. NBER found that the top 10% of miners control 90% of the Bitcoin mining capacity, and just 0.1% (about 50 miners) control 50% of mining capacity. Such a high concentration could make the Bitcoin network vulnerable to a 51% attack. NBER found the concentration also decreases following sharp increases in the Bitcoin price, meaning the probability the network is vulnerable to a 51% attack is higher when Bitcoin's price drops sharply."

"ProShares announced it will launch its bitcoin futures-tied exchange traded fund (ETF) on October 19. On October 15, the firm filed a post-effective amendment prospectus stating its intention to list on October 18. Now, additional public documents say that 'the Fund is scheduled to list and begin trading on the NYSE Arca on October 19, 2021.' The ProShares Bitcoin Strategy ETF will trade under the ticker $BITO. It will invest mostly in bitcoin futures, though it will not directly invest in the cryptocurrency. The SEC has yet to approve a spot-based bitcoin ETF, and many proposals have been cast aside due to concerns of price manipulation in the bitcoin spot market."

Stock and cryptocurrency trading app Robinhood is making plans to add the Bitcoin Lightning Network to its platform for speedier Bitcoin transactions. It also shared that eligible users from its beta crypto waitlist can now send and receive crypto through its crypto wallet feature. Robinhood currently offers trading in Bitcoin, Ethereum, Dogecoin, Litecoin, Ethereum Classic, Bitcoin Cash, and Bitcoin SV, with adding crypto deposits and withdrawals being the next natural step the company is taking into crypto.

The European Central Bank (ECB) has published a blog post that predicts the demise of Bitcoin. Authored by Ulrich Bindseil and Jürgen Schaaf, entitled "Bitcoin's Last Stand," the article claims that Bitcoin is in its "last gasp before the road to irrelevance." Noting that Bitcoin is rarely used real-world transactions, the authors hammer Bitcoin as "cumbersome, slow and expensive," adding that "the market valuation of Bitcoin is therefore based purely on speculation." It sounds like someone woke up on the wrong side of the bed!