Bitcoiners Enjoy Christmas Rally As SEC Meetings With Spot Bitcoin ETF Issuers Intensified

December was a great month to celebrate for all of us in the Bitcoin industry. 

We got exciting news from the spot Bitcoin ETF race, a Bitcoin rally rewarding HODLers, and higher on-chain fees pushing Layer-2 protocol adoption. 📈

Oh, and I hit my 2023 weight loss target! 🏋️

SEC Meets With Spot Bitcoin ETF Applicants Before Next Month’s Decision Deadline 🤑

You’ve probably heard it a gazillion times by now. 

ETF applicants X, Y, and Z have met with the SEC or are in discussion for the next steps. 

Last month, we saw major ETF applicants, such as BlackRock, meet with the SEC on a weekly basis and update their applications to fulfill the needs to get them approved. 

The biggest change in the applications was the introduction of cash withdrawals. That doesn’t mean that any of the applicants won’t be buying Bitcoin, but the way investors will interact with it is always a cash-in, cash-out exchange. 

Simply put, the ETFs will track the spot price of Bitcoin, and if a shareholder decides to withdraw their funds, they’ll redeem it in cash (not Bitcoin). 

Now, there might be people in the Bitcoin community who disagree with this decision, but honestly, this was always clear from the get-go. The number one reason many of these institutions want to get into the ecosystem is because of “number go up.” 📈 

They’re not (yet) interested in the true benefits of Bitcoin. 

But such cash-only ETFs are the best current tool to get them on board, and with more money potentially flowing into the ecosystem, the more impact the Bitcoin industry can make. 

Santa Put a Bitcoin Rally Under HODLer’s Christmas Trees 🎄

Long-term HODLers were rewarded this December. Granted, they were rewarded all year long. Nevertheless, if someone started stacking in November and even HODLed for just these two months, they would be up 25%. 

While December was statistically always a correction month for Bitcoin, at least in the last two cycles, this time around, it seemed to break the pattern and go up in December as well. 📈

I imagine some of that rally is also connected to the positive news from the ETF discussions between the applicants and the SEC. 

However, I also believe that many investors are gearing up for 2024. Remember, we will potentially see an approval of the ETFs in January, a halving in April, and the announcement of cheap money by the Fed. 

They will inevitably have to start printing money again to ease some pain; remember, the U.S. Dollar is a giant Ponzi. With that money printing, we’ll see a lot of investors with access to liquidity again. With all the hype surrounding Bitcoin, they might end up investing in Bitcoin.

With that in mind, most Bitcoiners are super bullish for 2024 and beyond! This could be a breakout year, not only for retail but also for institutional investors, as they will finally have an instrument to invest in the Bitcoin ecosystem in a regulated manner. 

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Bitcoin On-Chain Activity Pushes Up Fees, Pushing Layer-2 Protocol Adoption 📈

I’ve written about Bitcoin Ordinals in the past. I think they are great for the ecosystem, as they show how Bitcoin can be used as a foundation on which to build. 

However, there are also drawbacks. 

One of the main drawbacks has been the on-chain fees these Bitcoin NFTs and new Bitcoin-native token protocols, such as BRC-20, produce. Because they often have to attach much more information to a UTXO set, they increase the block size and inevitably cost more. 

This is an issue for everyday users who want to make Bitcoin transactions on-chain. At one point this month, we saw transaction costs as high as $60. This isn’t feasible for anyone, and alternatives are in high demand. 

Luckily, we already have solutions that decrease this problem. If someone wants to make small(er) Bitcoin payments, they can use the Lightning Network. 

Preferably over a big node, which would decrease their on-chain transaction cost to only a channel opening or a small fee for a service provider. Depending on how they’re interacting with the network. 

However, Lightning has its limitations. It’s easier to use than before, but it’s not the best solution if you want to transact larger amounts. 

For that, there is the Liquid Network by Blockstream. It’s a sidechain solution that pegs everything to Bitcoin and allows users to benefit from the low-fee environment. 

Liquid is also interesting because it’s interoperable with other networks, and we already have seen the first prototypes of Lightning wallets that allow you to peg into Liquid and back out if there is a need to spend those sats. 

Such events are critical for the Bitcoin ecosystem as they demand high standards from Bitcoin developers to develop better scaling solutions and build the products in a high-fee environment. 

This way, when we see another spike in the future, we’ll be prepared and have options for everyday users. Once again, the Bitcoin developer community proved to look for alternatives instead of whining about it on social media. A big win in my book!

My Weight’s Still Dropping Faster Than Fiat Currency’s Value 🏋️ 

If you’ve followed me this year, you might have seen my weight loss challenge. The goal was to get back down to 185 lbs, and I was just 0.2 lbs short of achieving this goal pre-Christmas. 

I couldn’t achieve the 185 lbs precisely with all the Christmas food and drinks. However, lo and behold, by December 30th, I achieved my goal! 

I weighed in at 183.9 lbs!

Running an asset management group in an incredibly fast-moving market like Bitcoin regularly takes up a lot of my mental, emotional, and physical energy. Having worked in this industry for a while, I have built up the mental and emotional fortitude to handle the ups and downs well, and now I also have a lot of the physical energy back that I lacked before my weight loss journey began. And for that, I am grateful and proud of! 

Your Stacker in Sats,

Patrick Lowry