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Crypto's culture encourages investors to "HODL," or hold on for dear life, in the rollercoaster ride of bitcoin's extreme fluctuations.

But this long-prized practice may diminish as adoption of ETFs grows, particularly if traditional investors who are accustomed to rebalancing their portfolios regularly add in bitcoin exposure.

The cryptocurrency has become increasingly institutionalized in recent years and since the launch of exchange traded funds this year that track bitcoin's price, that trend is expected to increase especially as different wirehouses, brokerages, and advisors start to turn on client access to the ETFs.

"You have so many people in this community who are just diamond-handed holders," Donald Marron,director of economic policy initiatives at Urban Institute, said this week at the 2024 Vision conference in Austin, Texas. "If you convince them to allocate 1% [to bitcoin] today and never touch it, they would see enormous wealth gains if you were on those roads to a much higher bitcoin price."

"If you have people who are actually doing what I view as traditional asset allocation, they're going to face a question every quarter, every month, every year about whether they rebalance," he added. "From a risk management point of view, rebalancing is a good thing. But rebalancing also means that they're going to be sellers along this journey."

At some point, every HODLer becomes a seller, according to Julio Moreno, head of research at CryptoQuant. At the moment, long-term holders are selling, as is normal during bull markets, after accumulating bitcoin during the bear market.

Matt Hougan, chief investment officer at Bitwise Asset Management, the issuer of the Bitwise Bitcoin ETF (BITB), said investors should treat bitcoin "like any other asset add it into a portfolio and include the rebalancing process" pointing to bitcoin's traditional four-year cycle of three good years followed by a down year.

"Bitcoin has has boom and bust cycles," he said, speaking at the Vision conference, a crypto investing forum for advisors hosted by the Digital Assets Council of Financial Professionals. "When you add rebalancing to your portfolio, the impact on 'sharpes' and other measures increases dramatically."

Sharpe ratios help investors assess the return they get from an investment relative to the amount of risk they take.

Rebalancing may help dampen bitcoin's notorious volatility one of the biggest things keeping many investors away from the asset, according to Michael Allegue, an investment officer at MassMutual.

"As more and more institutional capital comes in, there's potential for volatility dampening as many other firms, us included, are probably going to be rebalancing accounts they're not going to be purely buy-and-hold," Allegue said.

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Bitcoin ETFs bring in a new investor who bucks the 'HODL' culture and rebalances as bitcoin soars - CNBC

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Franklin Templeton Weighs New Crypto Fund Investing in Tokens Beyond Bitcoin, Ether: Report - CoinDesk

A visual representation of the digital cryptocurrency Bitcoin is shown in this photo illustration ... [+] taken in Brussels, Belgium, on February 25, 2024. Photo by Jonathan Raa/NurPhoto

The Lightning Network is revolutionizing bitcoin transactions by providing a second-layer solution that enhances speed and reduces costs. By enabling off-chain transfers, it facilitates near-instantaneous processing and lower fees, making bitcoin more practical for everyday use.

David Marcus, co-founder and CEO of LightSpark, sees a future where every corporation uses Bitcoin Bitcoin and the Lightning Network for net settling between suppliers or customers. He sees bitcoin as the global neutral settlement network, capable of interoperating with real-time domestic payment systems such as FedNow in the U.S., PIX in Brazil, SPEI in Mexico, UPI in India, and SEPA in Europe.

A key factor in the effectiveness of the Lightning Network is liquidity, which ensures that transactions can be processed smoothly and efficiently. Liquidity refers to the availability of funds in the network to facilitate transactions. Without sufficient liquidity, even the fastest network can experience bottlenecks.

LightSpark isnt the only solution addressing liquidity issues. Other tools, including Lightning Labs Loop, Breez SDK, C=, Amboss Hydro, and Voltage Flow Flow , are available.

Erik Alvarez, Director of Velas Commerce, points out that some of these services rely on others in the background, such as using Loop on the backend to manage liquidity more effectively.

Since its inception, the Lightning Network's development has been driven by active community and developer engagement. This collective effort aims to enhance bitcoin's functionality and extend its use as a mainstream digital currency. Despite its advantages, the network faces barriers due to its complexity and the technical expertise required to manage payment channels effectively.

A primary challenge for users is maintaining and balancing payment channels, requiring technical know-how. LightSpark addresses these issues by simplifying Lightning node operations, making the network more accessible. Marcus states, "Bitcoin is poised to become the neutral settlement network and asset globally, uniquely positioned to bridge various real-time domestic payment systems."

The network still faces hurdles such as potential centralization, nodes going offline, and difficulties integrating with existing payment infrastructures. Ongoing efforts focus on enhancing user interfaces and simplifying technology for broader adoption. Marcus explains, "We are automating the complexities of managing Lightning operations, allowing companies to maintain control while we handle the underlying technology."

Calle, an open-source developer and creator of Cashu, an open-source Ecash protocol, provides insights into the Lightning Network. Institutions like HRF, Open Sats, and Spiral have facilitated collaboration and provided financial support for development projects. Calle notes, "Spiral is all in on Lightning, doing a lot for its development."

Despite these efforts, the network faces the inherent issue of centralization versus efficiency. According to Calle and Alvarez, the ideal scenario is a fully decentralized network where every participant has equal rights and provisions; the reality is different.

Technical and economic incentives often lead to a more centralized structure. "Most people won't run their own Lightning node; it's a nuisance for individuals but manageable for businesses," Calle explains. The scalability of the Lightning Network involves recognizing that not everyone will have their own Lightning channels, and over-marketing may have led to unrealistic expectations.

Looking forward, cloud nodes offered by companies like Blockstream, Voltage, and LightSpark present a compromise. They run Lightning nodes for individual customers, making the technology more accessible and better than traditional payment systems like MasterCard. Alvarez adds, "Were also big fans of Ecash, and we would argue that bitcoins layers can be seen as Layer 1 for on-chain transactions, Layer 2 for Lightning, and Layer 3 for Ecash."

The Lightning Network offers a promising solution to bitcoin's scalability challenges by enabling faster and more efficient transactions worldwide. As this technology matures, it is set to redefine global finance by making digital payments quicker and more accessible. However, achieving the ideal balance between decentralization and efficiency will require ongoing development and innovation. With continuous advancement and strong community collaboration, the Lightning Network stands ready to transform the future of bitcoin and global digital payments.

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Bitcoin And The Future Of The Lightning Network - Forbes

DeFi Technologies Inc., a public company traded on CBOE Canada (DEFI), has made a strategic decision to adopt Bitcoin as its primary treasury reserve asset, purchasing 110 Bitcoin, according to Newswire.ca,

This move highlights the companys confidence in Bitcoins potential as a hedge against inflation and a safeguard against monetary debasement.

Olivier Roussy Newton, CEO of DeFi Technologies, stated,

We have adopted Bitcoin as our primary treasury reserve asset, reflecting our confidence in its role as a hedge against inflation and a safe haven from monetary debasement.

In addition to this significant adoption, Valour, a subsidiary of DeFi Technologies, reported an impressive AUM of C$837 million ($607 million) as of May 31, marking a year-on-year increase of 64.9%.

Valour has also successfully repaid an additional $5 million in outstanding loans secured by BTC and ETH collateral, following a prior repayment of $19.5 million.

Valour Inc. has launched several innovative exchange-traded products (ETPs), including the Valour Internet Computer (ICP) ETP, Valour Toncoin (TON) ETP, Valour Chainlink (LINK) ETP, and the worlds first yield-bearing Bitcoin (BTC) ETP.

These ETPs highlight the companys continued innovation and financial acumen in the decentralized finance sector.

DeFi Technologies Inc.s share price has increased by 15% following the announcement, bringing its year-to-date (YTD) growth to 176%.

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DeFi Technologies shares spike 15% in a day after it adopts Bitcoin treasury strategy - CryptoSlate

(Bloomberg) -- Bitcoins rally to near a record high is reawakening animal spirits not just in the cryptocurrency market itself, but in the broader financial world that had left the digital asset sector for dead last year.

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The change of heart can be seen in the improved outlook for deal flow, highlighted by Robinhood Markets Inc.s purchase of crypto exchange Bitstamp Ltd. on Thursday, to a resurgence of venture-capital investments to what some analysts are expecting to be record amount of initial public offerings of companies connected to the industry.

In the crypto market itself, theres been a notable return of the hallmarks of previous bull markets: Celebrities are once again promoting crypto, and new tokens are being created at a rate of thousands per day, with some 330,000 coins debuting in the Ethereum ecosystem in April and May alone, according to crypto data tracker Dune.

Taken all together, it demonstrates that theres nothing like rising prices to make investors forget about past financial carnage including bankruptcies of crypto exchange FTX and lender Celsius in a market thats most famous for its scandals and boom-and-bust cycles.

Investors often have short memories, said Campbell Harvey, a finance professor at Duke University. When market sentiment is high, they put extra weight on good news and tend to downplay the bad news that might have happened in the past.

Bitcoin climbed this week to within 2.5% of the all-time high of $73,798 reached in mid-March amid surging demand for recently authorized exchange-traded funds. While the bellwether digital currency is up almost 70% already this year, the gains pale in comparison to the returns of extremely speculative memecoins such as Dogwifhat and Bonk.

This years boom was kicked into high gear when the Securities and Exchange Commission approved ETFs investing directly into Bitcoin in January. Then in May, the agency made a step toward approving similar spot Ether ETFs, a move many in the industry have seen as caving to increased political pressure to legitimize crypto and create new laws that would make it easier for digital-asset companies to operate.

US Bitcoin ETFs attracted inflows for an unprecedented 18th straight day through Thursday. Net subscriptions for the group of almost a dozen products stood at $15.6 billion, taking total assets to $62.3 billion, according to data compiled by Bloomberg.

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Large financial companies are wading deeper into crypto. Earlier this week, Mastercard resumed letting users of the worlds biggest crypto exchange, Binance, make purchases on its network. Binance settled with the Justice Department over anti-money laundering and other violations last year, and is still fighting charges from the SEC.

Over the past several months, we have reviewed the enhanced controls and processes that Binance has put into place, a Mastercard spokesperson said in a statement. It is based on those efforts that we have decided to allow Binance-related purchases on our network. This status is contingent on ongoing reviews.

Crypto MNA is heating up as well. This week, Bitcoin miner Core Scientific Inc. rejected an unsolicited $1 billion takeover offer from artificial intelligence startup CoreWeave Inc., just days after announcing a partnership. On Thursday, Robinhood said it will acquire Bitstamp for $200 million to expand its crypto business in Europe.

A US regulatory framework creates a velocity of innovation environment that accelerates an institutions buy-over-build decision-making and drives a robust M&A environment, Elliot Chun, partner at MNA consultant Architect Partners, said in a recent note. I will be bold and say that in May 2024, our industry officially transitioned from #TheGreatPurge and entered into #TheGreatSurge.

Crypto funds are flourishing, with more such funds launching in the first quarter than in any time since the second quarter of 2021, according to Crypto Fund Research.

Talk of new crypto IPOs is reviving, with Kraken said to be in talks for a pre-IPO funding round, while eyeing an IPO as soon as in 2025, Bloomberg reported Thursday. If crypto prices keep increasing, the next 18 months could see the biggest wave of crypto-related IPOs on record, according to Renaissance Capital, a pre-IPO researcher.

I do think that if these companies can point to explosive revenue growth or strong earnings, that will get investors interest, said Matthew Kennedy, senior market researcher with Renaissance. I suspect that the financials are there, and that investors will take them with a grain of salt they know its a cyclical business, plenty of companies are like that.

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Bitcoin Rally and 'Short Memories' Reignite Everything in Crypto - Yahoo Finance

Markets June 7, 2024, 10:18AM EDT Published 1 minute earlier on

UPDATED: June 7, 2024, 10:34AM EDT

U.S. job growth increased more than expected in May, a reading that could potentially prompt the Federal Reserve to delay cutting interest rates.

On Friday, the U.S. Labor Department reported that the unemployment rate ticked up to 4.0% for the first time since January 2022, while non-farm payrolls (NFPs) increased by 272,000 jobs last month, surpassing economists' forecasts.

The dollar rebounded broadly in the early U.S. trading session following the stronger-than-expected employment data, while bitcoin made gains despite equity indices moving lower.

The employment data coming out of the U.S. hit risk assets. Major European and UK equity indices were red. In London, the FTSE 100 posted a 37.45-point decrease to 8,254.60 in mid-day trading.

The regional Stoxx 600 index traded up in Europe, retraced yesterday's gains and dropped 0.35% to 522.80. Meanwhile, in New York, the Dow Jones Industrial Average opened down 0.23%, the S&P 500 fell 0.3%, and the NASDAQ decreased by 0.42%.

Bitcoin moved lower with depressed equity markets in Friday's trading. The world's largest digital asset by market cap increased by around 0.2% in the past day and was changing hands for $71,366 at 10:08 a.m.ET., according toThe Block's Price Pages.

The European Central Bank (ECB) cut interest rates as expected on Thursday. The European monetary policymakers' move lowers theECBskey rate to 3.75%, down from a record high of 4%, where it has been since September 2023. It's the first time the ECB has cut rates since 2019.

The move by the ECB to cut rates comes after the Bank of Canada (BoC) lowered its policy rate to 4.75% on Wednesday, having held it at 5% since July last year.

Canada was the first G7 country to loosen monetary policy in the current cycle, followed by the ECB.

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Bitcoin rebounds from drop with equity indices as strong US jobs data poses challenge to Fed rate cuts - The Block

Nasdaq-listed medical manufacturer Semler Scientific which made headlines last month for adding Bitcoin (BTC) to its treasury has bought another $17 million worth of the asset and may raise up to $150 million to buy more.

The firms latest Bitcoin purchase was revealed in an S-3 filing to the United States securities regulator on June 6. After making its first 581 Bitcoin purchase on May 28, it now holds 828 Bitcoin, worth over $58.5 million.

Semler isnt wasting too much time, either. It announced that it can raise an additional $150 million of debt securities, with a portion of the proceeds used to buy more Bitcoin.

We intend to use the net proceeds from the sale of any securities offered under this prospectus primarily for general corporate purposes, including the acquisition of bitcoin, the firm wrote.

In a June 6 statement, the firms CEO, Doug Murphy-Chutorian, said Semlers Bitcoin investment strategy has become the firms other top-line priority alongside its healthcare business.

Bitcoin, now Semslers primary treasury reserve asset, can serve as a reasonable inflation hedge and safe haven amid global instability, the firm said in its SEC filing.

We also believe that its digital, architectural resilience makes it preferable to gold, which has a market value that greatly exceeds the market value of bitcoin, Semler said. Given the gap in value between gold and bitcoin, we believe that bitcoin has the potential to generate outsize returns as it gains increasing acceptance as digital gold.

The firm iterated that it has no plans to purchase cryptocurrency assets other than bitcoin.

Semlers (SMLR) stock spiked 30% on news of its May 28 purchase. However, it wasnt able to pop this time around, falling 2.5% to $29.13 on June 6, Google Finance data shows.

Related: Billionaire investor Bill Miller puts 50% of net worth in Bitcoin

Japan-based investment firm Metaplanet is another firm that has followed MicroStrategys Bitcoin playbook.

It first bought $6.5 million of Bitcoin on April 8 and has bought multiple purchases since, totaling 117.7 Bitcoin or $8.3 million at current prices.

Metaplanets last Bitcoin purchase on May 22 contributed to its being the best-performing stock on the Tokyo Stock Exchange for two consecutive days.

Magazine: How to protect your crypto in a volatile market Bitcoin OGs and experts weigh in

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Semler Scientific now holds 828 Bitcoin and has $150M plan to buy more - Cointelegraph

The chief executive of crypto exchange Abra believes that Bitcoin (BTC) is the antidote to hundreds of years of monetary debasement.

In a new Kitco News interview, Bill Barhydt says that historys greatest powers built their empires with sound monetary policy.

But the Abra CEO says world powers eventually betray the trust of its people by resorting to currency devaluation.

After World War II, the intent was there would be a certain amount of gold, countries would give us their gold to the victor goes the spoils. We would print dollars commensurate with a certain value of that gold, and you knew how much your money was worth, and the underlying assets were protected.

That was the grand bargain.

Throughout history, every world power has reneged on that or a similar bargain, time after time.

According to Barhydt, Bitcoin fixes the problem of currency debasement that has plagued powerful nations for centuries. Barhydt notes that BTCs finite supply, predictable inflation and decentralization can serve as the foundation of a strong global financial system.

When you look at it from that perspective, you could actually make a case now where: I get the math, the math proves that its out there; I get the scalability, because Satoshi said that over time you could actually put more data through the blockchain; and I get the decentralization of having clusters of miners

When I brought it all together I was like, This is exactly how money should work. It was incredible This is it. If the world can figure this out what this is really all about, it will change how banking works

This network belongs to the people. You cant shut it off. Thats the last piece of the puzzle. If you have no off switch and it belongs to the people, you now have the answer to the hundreds-year-old problem, which is how do you get rid of this fiat, this rule-by-decree monetary model that weve had for hundreds of years.

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Abra CEO Says Bitcoin Is a Solution to Centuries-Old Problem of Fiat Currency and Rule by Decree - The Daily Hodl

Investing.com - and have been under severe pressure since Friday's U.S. jobs data, which exceeded expectations, and dampened hopes for a Federal Reserve rate cut in September.

Meanwhile, this price drop following the U.S. employment report offers a good buying opportunity, according to Singapore-based trading firm QCP Capital.

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Non-farm payroll data on Friday showed that the U.S. economy added 272,000 jobs in May, significantly higher than the estimated 182,000 jobs, and much more than the downwardly revised reading of 165,000 jobs in April. While the unemployment rate rose to 4%, the average hourly earnings increased by 0.4% month-on-month, above the expectations of 0.3%.

Markets immediately reduced the probability of a 25-basis point Federal Reserve rate cut in September to 60% from 85%, leading to a decline in risk assets, including cryptocurrencies.

JP Morgan and Citi canceled their forecasts for a Federal Reserve rate cut in July, with some analysts putting rate hikes or further liquidity tightening back on the agenda. Bitcoin, which seemed poised to break the $72,000 barrier, fell by almost 3% to $68,400. Ethereum followed Bitcoin's lead.

QCP Capital said the Federal Reserve would struggle to keep interest rates high while other central banks are lowering borrowing costs.

The report stated: "The non-farm payroll report surprised us, as it was confusing enough to stimulate risk aversion ahead of U.S. inflation numbers and this week's Federal Reserve meeting."

"We agree that this is a good buying opportunity as markets will increasingly price in at least one Federal Reserve rate cut. It will be difficult for the U.S. to ignore this as the rest of the world continues to cut interest rates."

The European Central Bank and Bank of Canada cut interest rates last week, as the Group of Seven (G7) began a cycle of monetary easing.

Other central banks, including the Federal Reserve, may soon join the fray by cutting interest rates, leading to increased market liquidity, which inadvertently boosts demand for alternative investments like cryptocurrencies.

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Bitcoin and Ethereum down; Is now the time to buy? By Investing.com - Investing.com

Bitcoin and Ethereum user balances have dropped to levels not seen since 2020.

Glassnode data revealed that user balances of Bitcoin (BTC) and Ether (ETH) on centralized exchanges reached a four-year low as investors held out for higher prices in a bull market.

BTC balances dipped to below 2.3 million coins, valued at around $160 billion, while ETH balances have dropped below 16 million, amounting to less than $59 billion.

The amount of BTC and ETH on exchanges has been in a downtrend since before July 2020, per Glassnode.Data confirmed that users continued to withdraw assets from these platforms following the pandemic, through the previous 2021 peak, during the 2022 Terra-FTX contagion, and even after spot BTC ETFs were approved.

The four-year pattern suggests that crypto users have adopted a bullish long-term outlook, expressing confidence in the future appreciation of these assets regardless of market cycles.

After the COVID-19 crisis in 2020, inflation also rocked world economies and incentivized investors to station capital in technologically sound vehicles. Bitcoins hard-capped supply and immutable design bolstered its status as an inflation hedge and sovereign nations like El Salvador have adopted the cryptocurrency as legal tender.

The bullish thesis is perhaps solidified even further as Wall Street behemoths like BlackRock and Fidelity drove institutional demand through spot BTC ETFs. Companies like MicroStrategy under BTC maxi Michael Saylor have also parked billions in the top digital asset.

As the second-largest crypto and top altcoin asset, ETH commands its own bullish thesis as the leading substitute for BTC. The token powers the biggest decentralized finance (defi) ecosystem worth nearly $70 billion per DefiLlama.

In 2020, developers launched the Beacon chain, which kicked off the eventual transition from proof-of-work (PoW) to proof-of-stake (PoS). The move unlocked Ether staking, a process of locking up ETH for network security and passive yield.

At press time, over 27% of Ethereums supply was staked. In other words, users have deposited over $119 billion worth of ETH in staking providers like Coinbase, Lido, and EigenLayer.

The hype around spot ETH ETF approvals, defi growth, and staking surges has culminated in a positive outlook for the cryptocurrency and has further encouraged users to hold on for dear life, otherwise known in the crypto community as hodl.

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Bitcoin, Ethereum exchange balances at 4-year low - crypto.news