Investments

Hodlers and whales: Who owns the most Bitcoin in 2022?

While the Bitcoin blockchain is public, knowing who owns the most Bitcoin in 2022 isn’t as simple as it should be. Here’s what we know.

One of the main features of the Bitcoin blockchain is its transparency. Bitcoin lets anyone see every transaction that has ever been made on its network and check the balance of every address out there. Because of this transparency, we’re able to know who owns the most Bitcoin (BTC) in 2022.

It’s important to look at who owns the most BTC, as the cryptocurrency’s supply is limited to 21 million coins. In February, Kim Grauer, director of research at blockchain forensics firm Chainalysis, told Cointelegraph that an estimated 3.7 million BTC have been lost, effectively deflating the cryptocurrency’s circulating supply.

Experts estimate that as Bitcoin’s adoption rises, demand for it will skyrocket. As 3.7 million coins are estimated to be lost and a significant amount is being held on-chain by early investors, what may follow is a supply shock. Such a shock could only materialize if demand skyrockets in the future.

Those who own the most Bitcoin are set to greatly benefit from such a shock. Moreover, a significant supply being held by one entity is seen as a risk because if that entity ends up selling its war chest on the market, it could lead to a significant downside.

Who owns the most Bitcoin?

The entity that is widely acknowledged to hold the most Bitcoin is the cryptocurrency’s creator, Satoshi Nakamoto. Nakamoto is believed to have around 1.1 million BTC that they have never touched throughout the years, leading to several theories regarding their identity and situation.

A significant amount of analysis has been put into determining how many coins Nakamoto actually has. After bringing BTC into existence by mining the genesis block, Nakamoto mined a significant number of blocks through their hardware at the time, with each block coming with a 50-BTC reward.

Nakamoto always used different Bitcoin addresses and disappeared back in 2010. It’s unclear how many blocks they mined as other early adopters got in on the action rather early as well. Lower estimates point to Nakamoto having around 750,000 BTC.

While the exact holdings of Nakamoto aren’t completely clear, those of publicly traded companies, governments, funds and other transparent organizations are.

Public and private company holdings

Over time, several organizations have added Bitcoin to their balance sheets. The most notable is business intelligence firm MicroStrategy, which accumulated 129,218 BTC after first investing in the cryptocurrency in August 2020.

The company’s CEO, Michael Saylor, has doubled down on the company’s Bitcoin strategy throughout the bear market, saying MicroStrategy plans to hold BTC “through adversity.” In early 2021, possibly thanks to influence from Saylor, electric car maker Tesla also invested in Bitcoin, risking $1.5 billion to buy 43,200 BTC.

According to Bitcoin Treasuries, a website tracking the Bitcoin held by publicly traded firms, other companies that have Bitcoin on their balance sheet include Core Scientific, BTC Miner Marathon Digital Holdings, fintech giant Square, crypto exchange Coinbase and crypto investment firm Galaxy Digital.

Thomas Perfumo, head of business operations and strategy at Kraken, spoke to Cointelegraph regarding companies’ cryptocurrency holdings:

“All companies should have an open mind towards Bitcoin, but they should consider what represents the best interests of their shareholders. At Kraken, we hold cryptocurrencies as a treasury asset.”

Perfumo added that Kraken also offers employees the option to take “as much of their salary in crypto as they would like via a payroll solution we call Sidemoon.” He added that a “significant number” of Kraken’s employees take advantage of the solution.

Public companies are estimated to have a total of 268,271 BTC, equivalent to over 1.27% of Bitcoin’s total supply. Over the years, however, several private companies have also revealed they hold BTC.

The private companies with the largest amounts of BTC are the firm behind the EOSIO software Block.one, which holds 140,000 BTC, the Tezos Foundation, which holds 17,500 BTC, and Stone Ridge Holdings Group, with 10,000 BTC. MassMutual comes next, with 3,500 BTC.

In total, private companies reportedly have 202,068 BTC. Speaking to Cointelegraph, Bill Barhydt, CEO of crypto investment firm Abra, noted companies should invest in BTC but opt for the “right size” for their treasuries. Barhydt added:

“Companies with a long-term time horizon should consider putting even more of their liquid assets into Bitcoin and Ethereum.”

The CEO revealed Abra holds Bitcoin by likening it to companies known to have invested in the cryptocurrency, including Tesla. Per his words, as accounting rules in the United States are “fixed and modernized, it will become even easier to replicate” what companies like these are doing.

Countries that own the most Bitcoin

There are several countries holding Bitcoin as well. Most have gotten their hands on the flagship cryptocurrency by seizing it, but these holdings are often quickly sold in auctions to private investors.

El Salvador is the country holding the most Bitcoin, with 2,301 BTC in its treasury. The country adopted the cryptocurrency as legal tender in September 2021 and has invested in it numerous times. It’s planning on creating a Bitcoin City, using power from a volcano.

In April 2022, Finland was reported to be holding 1,981 BTC confiscated during criminal investigations with plans to auction off the funds later on in the year. At the time of writing, no report suggesting the funds have been auctioned emerged.

Ukrainian civil servants have provided data through Opendatabot showing they have owned a total of 46,351 BTC as of April 5, 2021. These declarations came as property disclosure requirements imposed on public officials, meaning they’re the holdings of individuals and not the government itself.

Similarly, Georgian parliament members are said to collectively hold 66 BTC, although the funds belong to private individuals and not the government.

Bitcoin fund holdings

Cryptocurrency investment funds allow investors to gain exposure to their underlying assets without dealing with them. In practice, this means gaining exposure to a cryptocurrency like Bitcoin without having to deal with public or private keys.

Funds add more Bitcoin in response to investor inflows and divest of their holdings as investors withdraw. The largest fund holding Bitcoin is Grayscale’s Bitcoin Trust, which has 643,572 BTC, equivalent to over 3% of the cryptocurrency’s circulating supply. Next is CoinShares, which holds around 42,980 BTC through XBT Provider’s exchange-traded products.

Ahead of this month’s crypto market sell-off, the Purpose Bitcoin ETF was the largest exchange-traded fund by BTC holdings. The sell-off saw the fund’s holdings drop from 47,818 BTC to 23,307 BTC between June 16 and 17, a staggering 51% drop. The fund’s holdings are still estimated to be above those of 3iQ’s CoinShares Bitcoin ETF, which has an estimated 12,115 BTC.

Largest individual Bitcoin holdings

Bitcoin addresses are pseudonymous, which means that while we easily see what addresses have the most Bitcoin in them, we can only identify who’s behind each one through extensive blockchain analysis or if the entity behind them comes forward.

Data from BitInfoCharts shows that the top Bitcoin wallets belong to cryptocurrency exchanges, which means they hold the assets of various users who choose custody of their funds on exchanges. Data shows there are five Bitcoin addresses with between 100,000 and 1 million BTC in them. Four of these have been identified and belong to exchanges.

*Bitcoin holder composition. Source: BitInfoCharts*

While it’s possible to see how many addresses hold how much BTC, this doesn’t exactly answer the question of what individuals have the largest Bitcoin holdings. Analyzing the market and individuals’ statements, however, provides us with various clues.

Changpeng Zhao, founder and CEO of leading cryptocurrency exchange Binance, was said to have a net worth of $96 billion in January 2022, with this estimate reportedly not including holdings of Bitcoin and BNB.

The CEO has said numerous times that he holds no fiat currencies, which would imply significant BTC and BNB holdings. While exact figures aren’t known, it’s rather safe to assume Zhao is among those holding a significant amount of Bitcoin.

Other well-known large Bitcoin holders are Tyler and Cameron Winklevoss, who invested the millions they earned from their lawsuit against Facebook into cryptocurrencies and became the first Bitcoin billionaires. The duo was rumored to at one point own 1% of all Bitcoin in circulation.

Silicon Valley-based venture capital investor Tim Draper is known to have purchased at least 30,000 BTC back in 2014, buying the coins from an auction held by U.S. authorities after seizing the funds from the now-defunct darknet marketplace Silk Road.

Other individuals believed to have large amounts of BTC include Digital Currency Group CEO Barry Silbert, FTX CEO Sam Bankman-Fried, Saylor, and Coinbase CEO Brian Armstrong. Their exact holdings — if they even hold Bitcoin — are unknown.

Bitcoin hodler growth and its supply

As the number of Bitcoin holders out there grows, the available supply of the cryptocurrency goes down, potentially leading to the aforementioned supply shock. Kraken’s Perfumo noted that the magic of crypto is that any individual has complete flexibility in managing their crypto custody.

Abra’s Barhydt said that investors in Bitcoin and Ether (ETH) should have a minimum time horizon of five to seven years or longer and should “assume that those funds are locked up for at least five years, given the volatility inherent in valuing exponentially growing technologies.”

Assuming funds are locked up would add to the potential supply shock. Kent Barton, tokenomics lead at ShapeShift DAO, told Cointelegraph that bear markets “have historically been an excellent time to purchase Bitcoin at relatively low prices,” even though there are no guarantees prices will ever rise again.

During bull markets, Barton said it’s important to “take a certain percentage of your risk off the table,” as moving some BTC to fiat when prices are high “means that you’ll be in a better position to weather the next bear market and have dry powder to buy Bitcoin at low prices.” Barton added:

“On a very long-term timeframe, Bitcoin continues to serve as a potential hedge against the dollar collapsing.”

Whether Bitcoin is a good investment or not depends on who you ask. The currency can neither be debased through inflation nor can its transactions be censored by a central authority. To some of its holders, prices are almost irrelevant as long as these and other qualities are maintained.

OP Crypto launches $100M fund to back early-stage crypto VCs

Targeting a hard cap of $100 million, the OP FoF I fund is expected to close by the end of Q3, OP Crypto’s chief operating officer Lucas He said.

OP Crypto, a cryptocurrency venture capital firm founded by former Huobi executive David Gan, is launching a new fund to support emerging fund managers focused on early-stage crypto investments.

Named “OP Funds of Funds I,” the fund has secured $50 million in commitments from major companies like FTX’s investment subsidiary LedgerPrime and FJ Labs.

The OP FoF I will target a hard cap of $100 million, with founders planning to close out the fund by the end of Q3, OP Crypto’s chief operating officer Lucas He told Cointelegraph.

The fund will work on identifying and supporting crypto fund managers with unique vertical expertise in areas like infrastructure, decentralized finance, nonfungible tokens, metaverse, gaming and others.

While the fund has a “differentiated focus” on the Asia-Pacific region, it will continue to invest on a global scale and seek to get exposure to fund managers in regions like Latin America, Africa, India, Southeast Asia and others, He noted.

Investors in the FoF will get access to the deal flow from all of the managers within the vehicle and have the opportunity to double down on specific projects via co-investment opportunities.

OP FoF I is the second fund to invest in emerging crypto fund managers by OP Crypto. In June 2021, the firm launched its $50 million OP Ventures Fund I, targeting pre-seed and seed projects across the Web 3.0 space. The fund was backed by major companies and institutional investors in the industry, including Mike Novogratz’s Galaxy Digital, the venture capital firm Digital Currency Group, Bill Ackman and Alan Howard.

“OP stands for open, operational and opportunistic,” He said, adding that those are the “traits that the fund ascribes by.” The exec went on to say that despite the current market downturn, there are a lot of investors looking for crypto exposure, stating:

“To our surprise, there is actually quite a lot of picked up demand due to people not knowing where exactly is best to park capital amidst the current bear market.”

Also acting as OP Crypto’s head of research, He will serve as the general partner at the OP FoF I. He is a veteran in the crypto space since 2013 and previously held investment and FoF roles at Huobi Capital and State Street. OP Crypto founder Gan will take the role of president and advisor to the fund.

Gan and He led the FoF strategy at Huobi and deployed capital on Huobi’s behalf and were seed investors in Multicoin Capital, Dragonfly Capital, and 1kx. “All of these investments were done early 2018 when those funds all had sub $50 million in assets under management,” He stated, adding that these funds eventually hit a milestone above $1 billion AUM three years later.

NYDIG study calculates the value of regulation worldwide in terms of BTC price gains

The crypto-positive financial services company looked at Bitcoin prices at intervals following regulatory events and found clear evidence of the events’ effects.

The need for regulation is a common theme in discussions about cryptocurrency, and the claim is often taken to be self-evident. Now, financial services company New York Digital Investment Group (NYDIG) has done some number crunching to prove the point. In a new study, NYDIG quantifies the effect of regulation on the price of Bitcoin (BTC) worldwide.

NYDIG studied Bitcoin prices at regular intervals following regulatory events affecting digital asset taxation, accounting and payments, as well as decisions on the legality of service providers and the digital assets themselves. The research looked at the Americas, Europe, China and Asia except for China, and confined itself to the period between September 30, 2011, and March 31, 2022.

The number of regulatory events considered in the study varied between 17 in the Americas and 10 in China. With the exception of China, Bitcoin price rises were seen in absolute terms at all intervals and in all regions after a regulatory event, with the prices jumping over 100% in all cases in 365 days.

Data relative to “average Bitcoin return” showed similar trends, although less sharply. In the Americas, Bitcoin prices rose 160.4% in absolute terms 365 days after regulatory events, and 32.3% in relative terms. In Europe, those figures were 180.1% and 52.0%, respectively. In Asia except for China, the figures were 116.9% and -11.2%, however.

China was the exception that proved the rule. The authors called regulation in China “existential,” noting that the Chinese government gradually imposed bans on mining and trading of digital assets. Therefore, the negative impact of regulation they found on Bitcoin prices in China was also evidence of the effect of regulation.

The authors conclude, “The results of the study are clear. Both on an absolute basis as well as [a] relative basis, increasing regulatory clarity is advantageous for the price of Bitcoin.” Then they moderate their language almost immediately, writing:

“The implication is that regulatory clarity, while not always perfect, is appreciated by investors. It is worth noting that it is impossible to directly observe the effect of regulation as there are myriad factors impacting price at any given time.”

Nonetheless, the authors express confidence that, due to the scope of their sampling, “the effects of this noise are somewhat cancelled out” in their findings.

MicroStrategy scoops up 480 Bitcoin amid market slump

The business intelligence firm has now amassed 129,699 BTC at an average price of $30,644, according to CEO Michael Saylor.

Business intelligence firm MicroStrategy has added to its Bitcoin (BTC) holdings, reaffirming CEO Michael Saylor’s bullish outlook on the digital asset despite its recent struggles.

In a Form 8-K filing with the United States Securities and Exchange Commission (SEC), Microstrategy disclosed that it had acquired an additional 480 BTC at an average price of roughly $20,817. The total purchase amount was $10 million in cash.

With the purchase, MicroStrategy now holds 129,699 BTC, making it the largest corporate holder of Bitcoin. The total value of its holdings is roughly $3.98 billion.

MicroStrategy has purchased an additional 480 bitcoins for ~$10.0 million at an average price of ~$20,817 per #bitcoin. As of 6/28/22 @MicroStrategy holds ~129,699 bitcoins acquired for ~$3.98 billion at an average price of ~$30,664 per bitcoin. $MSTR https://t.co/leQYTXn817

— Michael Saylor⚡️ (@saylor) June 29, 2022

The business intelligence firm is scooping up Bitcoin during a period of extreme market volatility. On Wednesday, Bitcoin’s price briefly dipped below $20,000, which is more than $10,000 lower than the company’s average acquisition price. The company’s BTC stash is currently sitting at a net unrealized loss of nearly $1.4 billion, according to data provided by Bitcoin Treasuries.

Michael Saylor, the firm’s CEO, remains bullish on Bitcoin’s long-term prospects. Earlier this month, he told his 2.5 million Twitter followers that the firm plans to “HODL through adversity” and has no plans to offload its holdings. The bullish reaffirmation came amid rumors that the company risked a margin call if Bitcoin’s price fell below $21,000. According to Saylor, the margin call rumor is a “nothing issue.”

MicroStrategy reported first-quarter revenues of $119.3 million. Gross profit for the quarter was $93.6 million.

21Shares responds to bear market with crypto winter ETP

The Swiss crypto ETP issuer wants to make it easier for investors to get exposure to Bitcoin amid extreme fear on the market.

21Shares, a global issuer of crypto exchange-traded products (ETPs), is taking action to respond to the current bear market by launching crypto winter-focused investment tools.

The company has rolled out the 21Shares Bitcoin Core ETP (CBTC), an ETP specifically designed to offer low-cost exposure to Bitcoin (BTC) to the ongoing market sell-off.

The physically-backed Bitcoin ETP started trading on the SIX Swiss Exchange on Wednesday, with a total expense ratio of 21 basis points, selected to reflect the 21 million cap on Bitcoin. According to the firm, CBTC’s ratio is 44 basis points below the next lowest product on the market.

CBTC is part of 21Shares wider bear market-focused series of products referred to as the Crypto Winter Suite. The offering aims to provide investors with more options through whichto enter the crypto ecosystem during challenging markets by providing lower costs, 21Shares’ ETP product director Arthur Krause told Cointelegraph.

“Typically, the best time to buy an asset is when prices have fallen — but that is often when investors are the most reluctant to buy,” Krause noted. He added that CBTC aims to make it a bit easier for investors to access Bitcoin during highly volatile markets to optimize portfolio returns.

According to the executive, 21Shares already offers several products that are oriented toward more challenging market conditions, including 21Shares Short Bitcoin ETP and 21Shares Bytetree BOLD ETP. The new crypto winter offering aims to expand these investment opportunities further on bear market-focused products, Krause said, adding:

“CBTC will be a permanent member of the 21Shares product range (as will future products that are launched as a part of the Crypto Winter Suite). We intend to offer investors a full range of products that support them in positioning portfolios for a range of market conditions.”

As previously reported by Cointelegraph, many industry executives were expecting a major crypto market decline to happen in 2022. Some execs even predicted that the next Bitcoin bull run won’t come until 2024 or early 2025, tied to Bitcoin’s fourth halving.

In June, the major cryptocurrency Bitcoin dipped below $20,000 for the first time since late 2020, fueling extreme fear sentiment on markets. Despite many crypto firms suffering major losses due to this bear market, some executives still expressed confidence that bear markets are good for Bitcoin and the crypto industry in general.

True Global Ventures doubles down on Web3 with $146M ‘follow-on’ fund

The TGV4 Plus Follow On Fund was led by a group of 15 general partners who committed over $4 million on average (over 40%) into the fund.

Venture capital firm True Global Ventures 4 Plus (TGV4 Plus) has announced the closure of a $146 million funding round earmarked for a wide range of Web3 projects — highlighting investors’ continued interest in crypto despite an ongoing bear market.

The latest closure, dubbed the TGV4 Plus Follow On Fund, was led by a group of 15 general partners who committed over $4 million on average (over 40%, or $62 million) into the fund. The majority of the funding will be primarily injected into Web3 companies within TGV’s portfolio, while the remaining will be used to invest in late-stage Web3 opportunities.

TGV previously invested in numerous Web3 initiatives using a base fund dedicated to the late-stage Series A, B and C across three business verticals: entertainment and gaming, financial services, and artificial intelligence. Prominent TGV investments include The Sandbox, Animoca Brands and Forge, among others.

Dušan Stojanović, one of TGV’s 15 general partners, shared his thoughts on investing during the bear market:

“It is much easier to see more clearly who the winners are now. This has created a high level of confidence amongst our investors.”

Stojanović also shared that market correction helps to select the strongest players as he advised fellow VCs to continue investing in crypto businesses:

“Regardless of the market situation, there are always good teams having great products at the proper time. Crisis is the best time to invest, not the bull market.”

Last week, on Friday, major crypto exchange Huobi Global launched Ivy Blocks, a new investment arm with a capital of over $1 billion in crypto assets.

In addition to the cash injection, Huobi offers other services including an asset management platform, a new blockchain incubator and a dedicated research arm.

#Huobi launches 1 BILLION investment arm to #BUIDL defi and #web3! https://t.co/I1XJ1S4y1O

— Du Jun (@DujunX) June 11, 2022

Moreover, Lily Zhang, Huobi Global’s chief financial officer, confirmed that Houbi’s asset management department will provide “liquidity investments” to help decentralized finance and Web3 projects take off.

SEC chair warns about ‘too good to be true’ returns amid market downturn

Gary Gensler added that he continued to be “intrigued with the technology,” but did not directly address if the SEC would approve a Bitcoin exchange-traded fund.

Gary Gensler, chair of the United States Securities and Exchange Commission, or SEC, reiterated his call for investor protection in securities offered by crypto firms.

Speaking virtually at the Robert F. Kennedy Human Rights Compass Investor Conference on Tuesday, Gensler said the SEC would use its existing authority to focus on cryptocurrency projects and exchanges, warning people of potentially “too good to be true” returns on investments. According to Gensler, the bulk of the tokens currently in the crypto market fall under the regulatory purview of the SEC, subject to the same disclosure requirements as securities.

“We’ve seen again that lending platforms — they’re operating a little like banks,” said Gensler. “They’re saying: “Give us your crypto. We’ll give you a big return” [….] How does somebody offer 4.75% in the market today and not give a lot of disclosure?”

The SEC chair added:

“If it seems too good to be true, it just may well be too good to be true.”

*SEC chair Gary Gensler speaking at the Compass Investor Conference on Tuesday*

In response to a question on the recent volatility in the crypto market, Gensler said that he continued to be “intrigued with the technology,” but did not directly address if the SEC would approve a Bitcoin (BTC) exchange-traded fund in the near future. He added that most projects in the crypto space were “likely to fail,” reiterating his warning of high returns without appropriate disclosures to the public.

The SEC chair’s remarks came after Senators Cynthia Lummis and Kirsten Gillibrand proposed a bill that, if passed, would give the Commodity Futures Trading Commission “clear authority over applicable digital asset spot markets” as opposed to the SEC. Both U.S. lawmakers met with Gensler in June to discuss finding the best balance of regulatory authority between the CFTC and SEC on cryptocurrencies.

Many in the crypto space have criticized the lack of regulatory clarity in the United States, which can be subject to interpretation from multiple government agencies. Gensler has repeatedly called on crypto projects to register with the SEC in an effort to provide investor protection.

How to survive in a bear market? Tips for beginners

Bear markets represent the most dreaded period in any investment cycle, but there are a few ways to stay ahead and weather the storm.

Usually, bear markets bring about a feeling of uncertainty in any investor. Even more so for a newcomer, for whom it can feel like the end of the world. It may even be common knowledge that during bull cycles, investors are sure of making gains. Whereas in bear markets such as this, an unimaginable amount of pessimism sets in.

The co-founder and strategic lead at the Kylin Network, Dylan Dewdney, told Cointelegraph that the two major mistakes that investors make while feeling anxious are “One, over-investing and two, not investing with conviction.”

“You need to find the sweetspot where you have enough conviction in your investments while managing the resources devoted to them such that you are 100% comfortable with being patient for a long time. Lastly, bear markets are where the magic really happens — buying Ether at $90 in December 2019, for example,” Dewdney said.

According to data from blockchain analysis firm Glassnode, traders made almost 43,000 transactions buying and selling requests on crypto exchanges in early May. This accounted for a whopping $3.1 billion worth of Bitcoin. But, the panic that caused those requests came from the crash of Terra, which saw the market dip even further.

Bear markets occur when there is a general dip in the prices of assets, of at least 20%, from their most recent highs. For example, the current bear market has Bitcoin (BTC) down by more than 55% from its November record high of $68,000. Bitcoin is now trading below the $25,000 mark at the time of writing.

Bear markets: Genesis, severity and how long they last

Bear markets are often tied to the global economy, according to Nerdwallet. That is, they occur either before or after the economy goes into recession. Where there is a bear market, there’s either an ongoing economic meltdown or an upcoming one.

Essentially, a sustained price dip from recent highs is not the only indicator of an ongoing bear market. There are other economic indicators that investors must still factor in. This is to enable them to learn whether a bear market is playing out or not. Some of the indicators include interest rates, inflation and rate of employment or unemployment, among others.

However, the relationship between the economy and a bear market is even simpler than that. When investors notice that an economy is shrinking, there are widespread expectations that corporate profits will soon start to reduce as well. And, this pessimism brings them to sell off their assets, thus, pushing the market even lower. As Scott Nations, author of The Anxious Investor: Mastering the Mental Game of Investing, says, investors often overreact to bad news.

In any case, bear markets are shorter than bull markets. According to a recent CNBC report, bear markets last about 289 days. Bull markets, however, can go even above 991 days. Additionally, an Invesco data analysis report puts the losses attached to bear markets on an average of 33%. So, down cycles are usually not as effective as the average gain of 159% of a bull market.

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Although no one knows for sure how exactly long a bear market might last, there are a few tips on how to weather it.

Navigating a bear market

As an investor, there is probably nothing anyone can do to prevent an unfavorable market condition or the economy at large. Nonetheless, there are lots of potentially great moves that one can make to protect their investments.

Dollar-cost averaging

Dollar-cost averaging (DCA) describes an investment strategy in which an investor buys a fixed dollar amount of a certain asset on a regular basis, regardless of that asset’s price in dollars. The strategy is based on the belief that over time, prices will generally pick up the pace and eventually trend upward during a bull run.

The head of research at CoinShares, James Butterfill, told Cointelegraph that Bitcoin now has a well-established inverse correlation to the United States dollar:

*The symbolic bear and the bull in front of the Frankfurt Stock Exchange. Source: Eva K.*

“This makes sense due to its emerging store of value characteristics, but it also makes it incredibly sensitive to interest rates. What has pushed Bitcoin into a ‘crypto winter’ over the last six months can by and large be explained as a direct result of increasingly hawkish rhetoric from the Fed. The Federal Open Markets Committee (FOMC) statements are a good indicator of this, and we can observe a clear connection to statement release times and price moves.”

When this prudent investment approach is mastered, the investor’s buy price is averaged over time. That is, one can enjoy the benefits of buying the dip and also avoid investing all their life savings during market highs. After all, as dreaded as bear markets are in the investment world, they are also the best times to buy crypto assets at the lowest prices.

Diversify your portfolio

For investors who have a diverse range of assets in their portfolio, the impact of bear markets may not be as severe. When bear markets are fully in progress, the prices of assets generally plunge but not necessarily by the same amounts. So, this valuable strategy ensures that an investor has a mix of winners and losers in their assets during a bear run. Thus, total losses from the portfolio will be reduced to the barest minimum.

Consider defensive assets

During prolonged bear markets, some companies (mostly smaller or younger) tire out along the way. Whereas other more-established firms with stronger balance sheets can withstand the harsh conditions for as long as necessary.

Therefore, anyone looking to invest in company stocks should go for stocks of those companies that have been in business for a long time. Those are defensive stocks. And, they are usually more stable and reliable in a bear market.

Bonds

Bonds can also offer an investor some relief during bear cycles. This is because the prices of bonds usually move opposite to stock prices. So, bonds are a key part of any near-perfect portfolio, giving an investor relative ease to the pain of a bear market.

Index funds or exchange-traded funds

Some sectors are known to thrive reasonably well during market downturns, including the utilities and consumer goods sectors. And more than any other sector, they can perform to earn them the name “stabilizing assets.” Investing in the sectors mentioned above through index funds or exchange-traded funds (ETFs) can be a smart move. This is because each index fund or ETF holds shares across various companies.

Play blind

There is no doubt whatsoever that a bear market will tempt investors to run and never look back. Their will and endurance will also be tested. But, as history has shown, bear markets don’t last forever and neither will the current one.

According to Hartford Funds, more than 26 bear markets have occurred between 1928 and now. And, each one of those bear markets was immediately followed by a bull market, bringing more than enough profits to make up for whatever losses might have been incurred.

So, it is important to always take your mind off the prevailing downturn, especially if you’re investing for the long term, like for retirement. Eventually, the bull markets you’ll witness along the way will outdo the bear markets.

The ultimate decision

As earlier explained, there are massive risks that come along with bear markets. But, they also offer a good basis for success in the next bull run. That is, however, dependent on good strategic investment planning mixed with patience. So, profits can be assured when the market finally turns around, whether you’re always DCA-ing, diversifying into other assets, investing in ETFs and index funds, or stocks.

Losing money is always a hard pill to swallow, but the best way to get through market dips is not by running. Instead, take note of the wide array of recovery options and keep calm.

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“While Bitcoin’s price performance has been weak in the face of an aggressive Fed, this current hiatus in price-performance may very well be short-lived. We believe a policy mistake by the Fed is highly likely where Bitcoin prices are likely to diverge from growth equities. Meanwhile, the former is likely to benefit from a dovish Fed and weaker USD while the latter underperforming in the face of a recession or stagflation,” says Butterfill. He added:

“Sadly, we believe that the U.S. and the rest of the world are likely to slip into economic decline in 2023, although there are many unknowns. Perhaps it will be stagflation that then progresses into recession? As the liquidity trap really takes a grip on central bankers, we believe Bitcoin is a good insurance policy in the face of this monetary policy mess.”

Yellen doubts crypto’s place in 401(k), says Congress could regulate

A head of the Treasury would not recommend investing the retirement money into digital assets “to most people.”

The Secretary of the United States Treasury, Janet Yellen, weighed in on including cryptocurrencies in retirement plans, calling them a very risky investment that should be regulated by Congress.

During an event organized by the New York Times in Washington on Thursday, Yellen shared her opinion on the pioneer attempt to include crypto in retirement plans undertaken by Fidelity Investments:

“It’s not something that I would recommend to most people who are saving for their retirement. To me it’s very risky investment.”

The discussion around digital currencies in 401(k) plans saw the participation of the Department of Labor and senators Elizabeth Warren, Tommy Tuberville and Cynthia Lummis.

Yellen went as far as to say that Congress could regulate the type of assets that can be included in retirement programs:

“I’m not saying I recommend it, but that to my mind would be a reasonable thing.”

The last statement is important in the context of a legislative uncertainty that has been following the topic of crypto as a retirement investment since the very beginning. 401(k) investments are subject to the Employee Retirement Income Security Act of 1974. It doesn’t specify which asset classes can or cannot be included in a 401(k) but obliges fiduciaries to “show the care, skill, prudence and diligence that a prudent person would exercise.”

In April, Fidelity announced that it would allow 401(k) retirement saving account holders to directly invest in Bitcoin (BTC). The United States Department of Labor (DOL) responded with a compliance report, threatening legal action. Meanwhile, senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota requested the firm to provide answers on how they are planning to address risks laid out by the DOL.

Meanwhile, Senator Tommy Tuberville from Alabama has unveiled a “Financial Freedom Act” to allow investors to add cryptocurrency to their 401(k) retirement savings plan, and Wyoming Senator Cynthia Lummis teased the legalization of crypto in 401(k)’s as a part of her long-anticipated crypto bill.

Crypto privacy is in greater jeopardy than ever before — here’s why

Many cryptocurrency hacks are targeted and deliberate, making them extremely dangerous if not addressed.

Despite the latest technology, the world has yet to crack the code for privacy and security online. But that isn’t the only big problem we need to worry about.

Hackers and robbers are tricking innocent users into giving up their private information as society becomes increasingly digital — and virtual currencies have a role in all of this.

Cryptocurrencies smashed records in 2022, with the market topping $2 trillion for the first time ever.

And while this has been greeted with excitement by current investors, it’s made others more wary.

Why? Because as the asset class grows, it becomes more appealing to malicious actors. And for evidence of this, you only need to look at the growing number of users being targets of cryptocurrency robberies.

The big question is this: if these crimes against individuals are so dangerous and only likely to increase as the market expands, why is the value of privacy still being overlooked by the world at large? The answer is a lack of clarity around why security and privacy matter — and how they are interlinked.

Let’s imagine an investor has a considerable crypto stash — 50 BTC — which at $30,000 per coin amounts to $1.5 million.

Their wallet would inevitably become a target for hackers and robbers, and that’s why privacy is so vital. Nobody needs to know that millions are being held in that investor’s wallet.

Security is a crucial tenet if adoption levels are to continue growing, but it’s often overlooked. Precautions and robust measures are needed to give investors a sense of privacy as security — and prove to newcomers that digital assets do have value over fiat currencies.

The history of crypto privacy

A few years ago, the world underwent a privacy currency boom. It was 2016 and 2017 — a time when this was new and unlike anything most of us had ever seen before.

This popularity was quickly overshadowed by decentralized finance (DeFi) and smart contracts. The attention was so significant that the world began recognizing smart contracts as a requirement, leaving “anonymous transactions behind.”

Out of the box, smart contract transactions are not confidential, meaning anyone can access and see all the information sent and stored through this method. And although they are secure, their details are embedded on the blockchain forever.

Around the same time, the development of the Lightning Network, a Layer 2 payment protocol implemented to improve transaction speeds and Taproot, an upgrade that batched multiple signatures and transactions together for easier transaction verification, were attributed to greatly improving Bitcoin privacy.

Another contributing factor is the world at large misunderstanding “privacy technology” as a hindrance to fee stability through scaling and functionalities of a smart contract, which can only be described as a trade-off.

Few understand just how crucial privacy is for cryptocurrency assets, and even fewer recognize how much greater the stakes have become.

Why privacy equates to security

As crypto adoption has increased, the regulation of exchanges has become much stricter, specifically in terms of retention of identification data, including many addresses.

Unfortunately, this creates a single point of failure — resulting in significantly more reported cases of hacks and data leaks. These negative outcomes come down to regulation being aimed at finding adversaries in a given list of users, and the list of users not being supposed to exist on the customer list of an external adversary.

Companies that cannot afford to run a business are too busy complying with regulations that check user identity data and do not pay the cost of actually storing user identity data securely.

An accompanying concern comes down to the vulnerability in the design of exchanges to internal leaks. In a cryptography context, even one bad actor, among an “N” number of innocent persons, can effectively impact security and, therefore, privacy.

As a second major consideration, blockchain analytics and other tracking technologies have proven to be a powerful game-changer in capturing previous perpetrators of old hacking cases. Unfortunately, despite having good intentions, these same tracking tools have the potential to help facilitate targeted attacks when put into the wrong hands.

In this example, privacy, a key differentiator of decentralized assets, is quickly eliminated, underscoring the purpose of the basic infrastructure.

Making a case for cryptographic privacy

Privacy concerns are not new, which is why several technologies have risen to attention for not allowing privacy to interfere with fee stability through scaling — namely, the Lightning Network.

In practice, the Lightning Network assumes that users are online and can communicate with protocol participants based on online assumption. The process effectively ensures that scaling and privacy are compatible.

Together, the online assumption, when combined with zero-knowledge proof, makes it possible to enforce successful online communication, an opportunity that can be extended to an Ethereum-type smart contract. The belief is that if privacy can be efficiently attached to a smart contract, cryptocurrency users will soon recognize the importance of privacy.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Leona Hioki is the CEO of Ryodan Systems AG. In 2013, he worked with security technology and cryptography for the Japanese government’s White Hacker Training Program for youth. Hioki has been researching the scalability of Ethereum for five years and currently building a zkRollup solution.