Lost in the Blockchain: Unraveling the Case of Lost Bitcoin

Despite the burgeoning popularity of Bitcoin and other cryptocurrencies, a significant portion of the digital wealth remains locked away, lost in the digital ether due to forgotten passwords, discarded devices, and abandoned wallets. Analysis from reputable sources suggests that about 20% of all existing Bitcoin tokens, roughly 3.7 million, are considered lost, given they have not been moved from their respective addresses in five years or more​​.

The structure of cryptocurrencies places a strong emphasis on privacy and security, making Bitcoin and its counterparts a double-edged sword. Bitcoin investors typically hold their tokens in digital wallets, protected by cryptography and only accessible via private keys.

Read More: The Meaning Behind Not Your Keys, Not Your Coins

This high level of security ensures that it is very difficult for unauthorized individuals to access these holdings. A cold wallet, one that is used offline, is generally seen as a secure way of storing digital assets. However, if the wallet owner loses access to their key, the wallet and its contained tokens may be permanently inaccessible​​.

As an example, Stefan Thomas, a software developer involved in the world of cryptocurrency, has been trying for years to figure out the password to his IronKey, which holds 7,002 Bitcoin. Another case is of an IT worker in the UK, James Howells, who has even tried digging up a landfill site to find his hard drive containing a digital wallet housing 7,500 bitcoins. He threw away the drive back in 2013 when the coins were essentially worthless​.

The loss of Bitcoin is not without its industry. Cryptohunters have arisen to help investors recover lost funds, employing various investigative tactics and tools to aid in their efforts. These hunters typically charge a fee ranging from 5% to 40% of the funds recovered​​. However, the successful recovery of Bitcoin remains a challenging and often fruitless endeavor due to the inherent security of the cryptocurrency.

While the loss of such a significant quantity of Bitcoin can be frustrating for individual investors, it should not substantially impact the broader cryptocurrency industry. Bitcoin is easily split into very small denominations, unlike fiat currency, allowing for the loss of a sizable quantity of BTC without an overall impact on the currency itself. Even as miners approach the final BTC, the rate of loss of tokens can continue for years without significantly impacting the functionality of the coin​​.

However, the inherent risks of cryptocurrency investments should not deter prospective or current investors. A series of steps can be taken to prevent the loss of Bitcoin. These include:

  1. Understanding the unique risks of Bitcoin investments, as cryptocurrency does not have built-in protections that are commonly associated with traditional financial systems​.
  2. Using a wallet to store and protect your Bitcoin. A hot wallet, connected to the internet, provides accessibility but less security, whereas a cold wallet, kept offline, offers increased security​​.
  3. Choosing a reputable exchange to buy or sell Bitcoin. Security should be a top consideration when choosing an exchange, and it is beneficial to use an exchange that has not been hacked and has robust insurance provisions​​.
  4. Developing good internet habits to protect against potential hacking attempts. This includes using a password manager, using long and complex passwords, and maintaining up-to-date antivirus and anti-malware programs​​.

The story of lost Bitcoin serves as a stark reminder of the unique challenges posed by the digital nature of cryptocurrencies. As the adoption of Bitcoin and other cryptocurrencies continues to grow, the focus on secure storage and responsible management of these digital assets will only become more critical.

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How Long Does it Take to Mine One Bitcoin?

The rise of cryptocurrencies, particularly Bitcoin, has sparked global interest in understanding how this digital currency is generated. A critical aspect of this process involves Bitcoin mining. However, the process can be complex, and it is important to know what it entails and, crucially, how long it takes to mine one Bitcoin.

Understanding Bitcoin Mining

Bitcoin mining is the mechanism that maintains and secures the Bitcoin network. It is a process that involves the use of powerful computers to solve intricate mathematical puzzles. Upon successfully solving these problems, the transactions are verified and added to the blockchain, a public ledger.

In return for this effort, miners receive newly minted Bitcoins, making the process financially rewarding. However, the process is competitive and relies heavily on speed and computational power.

Time Frame for Mining One Bitcoin

With respect to time, mining a Bitcoin block takes an average of 10 minutes. To be more precise, Bitcoin’s block time currently sits at 9.93 minutes (as of May 23, 2023) based on the current difficulty adjustment. 

Each block currently rewards miners with 6.25 Bitcoins, following the last halving event in May 2020. However, keep in mind that this is an average and assumes ideal conditions with high-performance mining equipment working without interruption.

The Bitcoin network intentionally regulates the generation of Bitcoins to remain consistent over time. This consistency is maintained through the adjustment of mining difficulty, which balances the rate of block creation with the number of miners in the system.

Factors Affecting Mining Time

Several factors can influence the time it takes to mine one Bitcoin. These include the system’s hash rate, which refers to the computational power dedicated to mining activities. The higher the hash rate, the greater the mining power and the quicker the process.

Another factor is the mining difficulty, which adjusts approximately every two weeks to maintain the 10-minute block creation time. As more miners join the network, the difficulty increases, and thus more computational power is needed. As of today, Bitcoin’s difficulty sits at 49.55 trillion, which is an all-time high.

Energy consumption also plays a role. High-power mining machines consume a significant amount of electricity. The cost of power in your area could be a decisive factor in whether mining Bitcoin is economically viable.

Lastly, Bitcoin’s reward halving, which occurs approximately every four years, impacts the time to mine one Bitcoin. Each halving event reduces the number of Bitcoins rewarded per block, making mining more challenging and time-consuming.

READ MORE: What Happens When All Bitcoins Are Mined?

Final Thoughts

Mining Bitcoin is a complex process requiring considerable resources. With the number of miners and the mining difficulty continuously rising, it can take longer and become more costly to mine one Bitcoin. As such, careful consideration and calculation should be given to understand the potential returns and whether it’s worth your investment.

The difficulty is a measure of how difficult it is to mine a Bitcoin block, or in more technical terms, to find a hash below a given target. A high difficulty means that it will take more computing power to mine the same number of blocks, making the network more secure against attacks. The difficulty adjustment is directly related to the total estimated mining power estimated in the {hashrate} chart. Source:

Remember, HoneyBadger is always here to assist you in your Bitcoin journey. Our cryptocurrency ATMs across Canada provide a simple and secure way to buy Bitcoin, streamlining your entry into the world of cryptocurrency.

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Press Release

HoneyBadger Steps Up as Binance Steps Down

As the cryptocurrency landscape evolves, so too does the network of providers that support this dynamic and innovative sector. Recently, Binance, one of the world’s leading cryptocurrency exchanges, announced its decision to cease operations in Canada. 

The company expressed disappointment, saying it had high hopes for the Canadian blockchain industry. The decision was driven by new regulatory guidance introduced by the Canadian Securities Administrators (CSA) related to stablecoins and investor limits.

    In February, the Canadian Securities Administrators (CSA) revealed new guidance that prohibited crypto asset trading platforms within the country from allowing customers to buy or deposit stablecoins without the CSA’s prior approval. To obtain this approval, crypto trading platforms would need to pass the CSA’s various due diligence checks.

    Binance co-founder and CEO Changpeng Zhao, who is a Canadian citizen, has described the company’s exit from Canada as holding sentimental value.

    With Binance’s exit, we understand that Canadian crypto enthusiasts might be seeking a reliable and trusted platform to continue their crypto journey. We want to assure you that HoneyBadger is here to provide just that. Our ATMs and online portal offer a tangible, user-friendly way to buy and sell cryptocurrencies, making them a great option for both newcomers and seasoned crypto users.

    Our strength lies in our deep understanding of local Canadian markets, our commitment to compliance, and our dedication to providing excellent customer service. As a Canadian company, we understand the unique needs and preferences of our customers, and we tailor our services to meet those needs.

    We are excited about the future of cryptocurrency in Canada. As the landscape continues to evolve, HoneyBadger will continue to adapt and innovate, providing our customers with the best crypto services in the country. We’re ready to step up, fill the gap, and support our customers during this transition. 

    While the world of cryptocurrency may be rapidly evolving, our dedication to providing you with secure, reliable, and convenient services remains constant.

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    What is Bitcoin Backed By?

    The Bitcoin Phenomenon: A Mirage or a Masterpiece?

    With Bitcoin making headlines and turning heads in the financial world, skeptics often find themselves questioning the ‘real’ value of this digital currency. The entire concept seems to be shrouded in mystery, primarily because Bitcoin is a virtual asset and isn’t tied to any physical commodity or government directive. However, to understand Bitcoin’s value, we need to take a step back and examine the nature of money itself.

      The value of CAD, much like other fiat currencies, is fundamentally based on our shared belief and trust in its value. In this example of fiat money, the CAD is backed by the faith and trust of the Government of Canada.

      From Gold to Belief: The Evolution of Money

      Once upon a time, our money was backed by gold, a tangible asset. This was known as the gold standard, or the Bretton Woods System. But after many economic ups and downs (and a dash of global drama), the world decided to shift to the fiat model in the early 1970s when President Richard Nixon announced that the United States would no longer exchange gold for U.S. currency.

      This means our money is no longer tied to a physical commodity. Instead, it’s backed by the trust we have in our government and its economic stability.

      Bitcoin: The Digital Trust Manifested

      Now, back to Bitcoin. What is it backed by? While it may not have a physical entity underpinning its value, Bitcoin is backed by something equally, if not more, robust—mathematics and cryptography.

      Bitcoin operates on blockchain technology, a decentralized ledger system maintained by countless computers worldwide. These computers solve complex mathematical problems to validate transactions, a process known as proof-of-work. Transactions are irreversible and are final settlement. This intricate system ensures security, transparency, and trust, making Bitcoin not just a piece of code but a well-structured digital asset.

      Unlike fiat currencies, Bitcoin’s supply is capped at 21 million, creating a sense of digital scarcity, akin to gold. This scarcity, coupled with increasing acceptance and demand, gives Bitcoin its value. What is becoming increasingly more apparent is the value that Bitcoin displays has caught the eye of governments across the globe.

      Central bank digital currencies (CBDCs) are being discussed, even directly on the Bank of Canada’s website. There’s only one issue, CBDCs will again be backed by governments that can use them to easily track your transactions, instead of the decentralized nature that creates part of Bitcoin’s lure.

      HoneyBadger and Bitcoin: Navigating the Crypto Landscape Together

      As Bitcoin continues to gain acceptance and make waves in the financial world, HoneyBadger is here to help you navigate the crypto landscape. We provide secure, quick, and user-friendly access to Bitcoin through our crypto ATMs and online portal, spread coast to coast across Canada.

      So, is Bitcoin a worthy investment? That’s a question that depends on various factors, including your financial goals, risk tolerance, and understanding of cryptocurrencies. Like any investment, it’s essential to do thorough research and make informed decisions. And when you’re ready to embark on your crypto journey, HoneyBadger will be right here, ready to guide you every step of the way.

      Bitcoin may not be backed by a physical commodity or a government decree, but it is backed by a combination of cryptography, a global network of computers, and the belief of millions in it. That said, why should we trust our money in the hands of governments and not in the hands of the masses?

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      Press Release

      HoneyBadger Enterprises Ltd. Introduces New Online Portal for Bitcoin Transactions

      VANCOUVER, May 1, 2023 – HoneyBadger Enterprises Ltd. (“HoneyBadger” or the “Company”), (hosted on, is one of Canada’s largest and most secure network of Bitcoin ATMs with over 200 from coast to coast. HoneyBadger makes it easy for Canadians to buy, sell and understand Bitcoin and we are excited to announce the launch of our new online portal for transactions and account creation. The new portal is available on our website and enables customers to buy or sell Bitcoin, Litecoin, and Ethereum with ease and convenience.

      The new portal provides customers with a seamless and secure platform to conduct Bitcoin transactions. The portal is user-friendly and allows customers to easily navigate the website and purchase or sell cryptocurrencies with just a few clicks. Additionally, the portal is secure and provides customers with a safe platform to carry out their transactions.

      We are now providing our customers with more ways to buy Bitcoin online through Visa and Mastercard. Interact, Apple Pay, and Google Pay are coming soon.

      HoneyBadger management remarked, “We are committed to providing our customers with innovative solutions to meet their needs. Our new online portal for Bitcoin transactions is a testament to our commitment to make Bitcoin and cryptocurrency accessible to all Canadians.”

      The portal is also equipped with a user-friendly dashboard that provides customers with access to their transaction history and allows them to easily monitor trends in cryptocurrency pricing.

      The transfer of coins is instant (pending blockchain confirmation time), and HoneyBadger does not custody any fiat or coins on a customer’s behalf.

      “We understand that the world of Bitcoin can be complex, which is why we have made it our mission to simplify transaction processes for our customers. Our new online portal for cryptocurrency transactions is just one way we are delivering on that promise,” said management.

      HoneyBadger is committed to providing customers with quick and easy experiences when it comes to cryptocurrency transactions. With the launch of the online portal, we are poised to continue this commitment.

      For more information on HoneyBadger and our new online portal for Bitcoin transactions, please visit our FAQ page.

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      From Pizza to Penthouses: Why is Bitcoin Worth So Much?

      How Much is Bitcoin Worth?

      If you’ve been keeping an eye on the digital asset scene, you know that Bitcoin has gone from being worth mere cents to over USD$30,000 and is now known as a powerhouse in the world of investments. So, how did we end up here? Sit back and let’s dive into the world of Bitcoin valuation.

      Bitcoin: Digital Gold or a Mere Mirage?

      First, let’s address the question: why is Bitcoin valuable at all? The answer lies in its unique combination of currency-like characteristics and people’s perception of its worth.

      Bitcoin’s non-counterfeitability and easy transferability make it similar to traditional currencies, however, its limited supply is a key difference. Bitcoin’s value hinges on the demand that savvy investors and crypto enthusiasts place on it, much like other assets, like artwork, that derive value from their perceived worth.

      A New Asset, Not Backed by Traditional Means

      Unlike fiat currencies that have states backing them, Bitcoin does not enjoy the same support. Rather, Bitcoin is supported by its immense decentralized network of computers. Bitcoin’s value is often compared to gold, as both have limited supply and are considered valuable by investors. Gold has been a popular choice for centuries, and some believe that Bitcoin might take up a similar mantle in the digital age.

        The Rollercoaster Ride of Bitcoin Valuation

        Bitcoin’s value is driven by factors like mainstream and institutional adoption, regulations around transactions, and the safety of ownership. It is sensitive to news, both positive and negative, as well as regulatory developments. 

        For example, Bitcoin prices have been positively impacted by announcements from companies like Tesla and Square adopting the cryptocurrency as a means of payment and investment for their balance sheets. Meanwhile, events like the Mt.Gox hack, FTX bankruptcy, and China’s ban on cryptocurrency mining have had negative impacts.

        Navigating the Future of Bitcoin

        Predicting the future value of Bitcoin is like trying to predict the weather in Canada – it’s a tricky business. The cryptocurrency’s value depends entirely on public perception and a myriad of factors that can change quickly. However, as interest in Bitcoin continues to grow among both mainstream and institutional investors, it’s clear that this digital asset is carving out a place for itself in the world of investments.

        As the cryptocurrency landscape evolves, it will be fascinating to see where the future takes Bitcoin and how its value continues to develop. Who knows, maybe Bitcoin will finally rise above USD$100,000 before 2024.

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        How Many Satoshis Are in a Bitcoin?

        Today, let’s unravel the mystery behind the smallest unit of Bitcoin, the Satoshi (or Sats for short), and explore how this tiny denomination has made a significant impact on the world of digital currencies.

        What is a Satoshi?

        In the ever-evolving landscape of cryptocurrencies, one term stands out as the most microscopic unit of measurement: the Satoshi. Named after the enigmatic and pseudonymous creator of Bitcoin, Satoshi Nakamoto, a single Satoshi represents a hundred millionth of a Bitcoin (0.00000001 BTC).

        Why So Many Decimals?

        One might wonder why Bitcoin has such a large number of decimal places. The answer lies in its ingenious design. Unlike traditional fiat currencies that rely on central banks to control inflation, Bitcoin has a finite supply capped at 21 million coins. This limited supply ensures scarcity, which in turn drives up the value of the cryptocurrency over time.

        With such a limited number of coins and an ever-increasing global demand, it was crucial to create a system that allowed for smaller transactions. Thus, the Satoshi was born. This minuscule unit enables users to conduct microtransactions, paving the way for Bitcoin’s widespread adoption as a viable currency for day-to-day transactions.

          Satoshis in Action

          Let’s consider a real-life example to better understand the importance of Satoshis. Imagine you’re purchasing a burger for USD$10. With the current price of Bitcoin hovering around USD$30,000, that burger would cost roughly 0.00033333 BTC. By converting this figure into Satoshis, we arrive at 33,333 Satoshis – a much more manageable and understandable figure for a day-to-day transaction.

          Satoshis and the Future of Bitcoin

          As Bitcoin continues to gain traction worldwide, the relevance of Satoshis in everyday transactions will only grow. The Lightning Network, a second-layer payment protocol built on top of the Bitcoin blockchain, further enables the use of Satoshis for instantaneous, low-fee transactions. This network significantly expands the possibilities for Bitcoin to function as a true currency, enabling even the smallest of transactions to be completed efficiently and affordably.

          Embrace the Satoshi

            The Satoshi, both captivating and intelligent, is a testament to the foresight and innovation of Satoshi Nakamoto. By creating a system that allows for microtransactions, Bitcoin’s reach extends far beyond traditional fiat currencies, ensuring a bright future for cryptocurrency adoption in Canada and around the globe.

            So the next time you visit a HoneyBadger ATM, remember that you’re not just buying or selling Bitcoin – you’re investing in the legacy of Satoshi Nakamoto and the boundless potential of digital currencies. After all, it’s the little things – or in this case, the Satoshis – that can make the biggest difference.

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            What’s the Bitcoin Fear and Greed Index?

            The Bitcoin Fear and Greed Index is a popular tool that measures the overall sentiment and emotions surrounding the cryptocurrency market. It was first introduced by in 2018 and, as its name suggests, the index aims to capture the fear and greed of Bitcoin investors and traders by analyzing a range of factors.

            The index is calculated on a scale of 0 to 100, with a score of 0 indicating “extreme fear” and a score of 100 indicating “extreme greed.” Its score is calculated based on various metrics such as price volatility, trading volume, social media sentiment, and Google Trends data.

            The higher the score, the more optimistic investors are about the market, and the lower the score, the more pessimistic they are.

            In total, the five factors comprising the index are weighted as the following:

            • Volatility (25%)
            • Market Momentum/Volume (25%)
            • Social Media (15%)
            • Dominance (10%)
            • Trends (10%)

            *Surveys (15%) are currently paused from the list of factors.

            The main indicator within the index is price volatility, which measures the magnitude of price swings in the market. If the market is experiencing high volatility, the fear index will increase, meaning that investors are feeling more anxious and fearful about the market. Conversely, if the market is stable, the index will be lower, suggesting that investors are feeling more optimistic and greedy.

            Another key indicator that the index uses is trading volume. When trading volume is high, it indicates that there is a lot of interest in the market, which can lead to higher prices. If trading volume is low, it means that there is less interest in the market, which can lead to lower prices.

            The index also factors in social media sentiment and Google Trends data to gauge the overall sentiment of the market. If social media sentiment is positive and Google searches for Bitcoin are high, it suggests that investors are feeling bullish about the market. Conversely, if sentiment is negative and searches for Bitcoin are low, it indicates that investors are feeling bearish.

            The highest rating was on June 29th, 2019, with a Greed Score of 95. During this time, the Facebook Libra project hype was luring in risk-takers while the price was climbing to incredible heights before sharply correcting.

            The lowest rating was on June 19th, 2022, when Bitcoin’s price dipped below USD$20,000 for the first time since December 2020.

            The Bitcoin Fear and Greed Index Twitter account has over 670,000 followers and posts daily with the current day’s rating.

            Latest Crypto Fear & Greed Index

            Ethereum has its own Fear and Greed Index and Twitter account.

            While the Bitcoin Fear and Greed Index is a useful tool for understanding the overall sentiment of the market, it is important to remember that it is just one indicator among many. Investors should always do their own research and analysis before making any investment decisions.

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            who is on the bitcoin rich list?

            Who’s on the Bitcoin Rich List?

            Bitcoin, the world’s first cryptocurrency, has been making headlines for years. Despite the volatility and controversy surrounding it, Bitcoin has attracted a lot of attention from investors and enthusiasts alike.

            As Bitcoin continues to gain more mainstream acceptance, it’s worth taking a look at who the biggest players in the Bitcoin world are. Or as some people call the biggest players, “whales.” Here is an overview of the richest people, countries, companies, and institutions in terms of the amount of bitcoin they own.

            The Bitcoin Rich List

            • Satoshi Nakamoto – The mysterious creator of Bitcoin, who has never been identified, is estimated to have around 1 million bitcoins. At today’s market value, that puts his net worth at over US$24.4 billion.
            • Barry Silbert – Founder and CEO of Digital Currency Group, Barry Silbert is a prominent figure in the world of cryptocurrency. It is unknown how much he personally owns, but his digital currency investing firm, Greyscale, holds plenty which we will get to later in this article.
            • The Winklevoss Twins – Famous for their legal battle with Mark Zuckerberg over the ownership of Facebook, the Winklevoss twins are also major players in the Bitcoin world, They are the founders of the cryptocurrency exchange, Gemini and reportedly own around 100,000 bitcoins, worth over $2.4 billion.

            • Michael Saylor – CEO of business intelligence firm MicroStrategy, Michael Saylor is known for his bullish outlook on Bitcoin. He has invested heavily in the cryptocurrency and reportedly owns 17,732 bitcoins, worth over $432 million.

            • Chamath Palihapitiya – A former Facebook executive and founder of Social Capital, Palihapitiya has been an outspoken advocate for Bitcoin. He reportedly owns around 26,000 bitcoins, worth over $630 million.

            Countries Bitcoin Rich List

            • El Salvador – In September 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender. The country has purchased over 2,381 bitcoins so far, worth over $58 million.

            • Bulgaria – The Bulgarian government seized over 200,000 bitcoins from a criminal organization in 2017. The bitcoins are currently worth over $4.8 billion.
            • The United States – The US government has seized a significant amount of bitcoins in various criminal investigations. It’s unclear exactly how much the government owns, but estimates range from tens of thousands to hundreds of thousands of bitcoins.

            Richest Companies in Bitcoin

            • Tesla – In February 2021, Tesla announced that it had purchased $1.5 billion worth of Bitcoin. The company also indicated that it may purchase additional bitcoins in the future.
            • MicroStrategy – As mentioned earlier, MicroStrategy CEO Michael Saylor is a major Bitcoin bull. The company has invested heavily in Bitcoin and currently owns over 130,000 bitcoins, worth over $3.1 billion.
            • Square – In October 2020, Square announced that it had purchased $50 million worth of Bitcoin. The company’s CEO, Jack Dorsey, is a well-known Bitcoin enthusiast.

            Richest Insitutions in Bitcoin

            • Grayscale Bitcoin TrustGrayscale is a digital currency asset management firm that allows investors to gain exposure to Bitcoin through a trust. The Grayscale Bitcoin Trust currently holds over 630,000 bitcoins, worth over $15 billion.
            The Grayscale booth at the Exchange ETF Conference in Miami Beach, Florida, U.S., on Wednesday, April 13, 2022. Photographer: Eva Marie Uzcategui/Bloomberg
            • Binance – Binance is the largest cryptocurrency exchange in the world by trading volume. The company holds a significant amount of Bitcoin on behalf of its users, although the exact amount is not publicly known. As of November, Binance holds $74.7 billion worth of crypto in its reserves and approximately 40% are its own tokens.
            • Fidelity Investments – Fidelity is one of the largest asset managers in the world. The company has been exploring the potential of Bitcoin and blockchain technology and has reportedly invested in Bitcoin mining companies.

            *All prices are represented in US dollars.

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            Are Bitcoin and the Stock Market Correlated?

            Since bitcoin’s inception in 2009 to the late 2010s, it has shown a lack of correlation to the broader stock markets. Because of this, bitcoin proved to be an asset class for investors that remained largely independent of broader markets.

            However, with an increase in awareness from retail and institutional investors, beginning largely in 2017 when BTC pushed through the USD$10,000 threshold, its independence has waned.

            Increasing Interest Rates

            For most of the last twelve months, bitcoin has been fighting the same downward pressure that’s been impacting both the stock and bond markets. Major central banks around the globe have been on a quest to tighten monetary policy in a battle to tame inflation down to a target of two percent.

            Trailing twelve months comparison between bitcoin and the S&P 500 measured by percentage change. (Source: Yahoo!Finance).

            “The price of bitcoin is maintaining the $19,000 level, but with the FOMC’s minutes and CPI ahead this week, the market will likely refrain from taking risks, which in turn will likely put pressure on bitcoin,” said Yuya Hasegawa, crypto market analyst at Bitban.


            Rolling 90-business-day return correlation between BTC and stock indexes. Image note: Returns of bitcoin are represented by the Fidelity Bitcoin Index, U.S. equities by the S&P 500 Index, and U.S. growth equities by the NASDAQ Composite Index. All returns are in base currency (US$) and gross of fees. (Source: Fidelity Investments).

            Macroeconomic factors continued to play an important role in driving the prices of cryptocurrencies, as well as other risk assets. Throughout the third quarter, the correlation of bitcoin with major stock indexes remained high, at over 60%.

            For added context, a correlation above 50% is considered moderately strong and above 70% is very strong, while correlations between 30% and -30% are very weak. A value of 100% or 1 means that movements between bitcoin and the broader markets are perfectly synchronized.

            With rising interest rates, investors wanting to de-risk their portfolios have weighed on bitcoin’s price as reflected in a rather underwhelming yearly performance of negative 37% as of January 31, 2023.

            Some examples provided by Fidelity Investments of bitcoin’s price following macroeconomic announcements in 2022:

            • July 27: BTC increased by over 8% following the announcement by the Federal Reserve that it was raising interest rates by 75 basis points.
            • August 10: July U.S. CPI inflation came in below expectations at 8.5% (compared with 8.7% expected). BTC climbed 4% in the hours following the release of the CPI before slowing later in the day.
            • August 19: BTC plunged nearly 10%, falling in sync with traditional markets amid renewed fears that the Fed and other central banks will have to get more aggressive in fighting inflation. The decline started with unexpectedly high inflation data in Germany.
            • August 26: BTC dropped after Fed Chair Jerome Powell doubled down on restrictive monetary policy at the Fed’s Jackson Hole economic symposium.
            • September 13: BTC fell on the release of August U.S. CPI data, which showed an unexpectedly high 8.3% increase in prices (compared to 8.1% expected).

            With its widespread adoption, it is clear that bitcoin is no longer on the fringe of the financial system. Tensions between Russia and the West over the Ukraine war could continue to roil markets, from energy prices to foreign exchange. Bitcoin’s tighter correlation with broad markets means it will not be immune.

            Conotoxia Senior Market Analyst Daniel Kostecki gave his opinion on this correlation to CoinDesk last year.

            “It is what is happening in the arena of international relations that seems to be the main driver of the markets for both stocks and cryptocurrencies,” he said.

            2023 Bump

            As of January 31, 2023, the YTD of bitcoin is up approximately 39%, while the S&P 500 and Nasdaq Composite are up 5.9% and up 10.8% respectively.

            Analysts say that there is a multitude of factors behind bitcoin’s new rise in 2023, including the probability that interest rates will be lowered in the coming months, easing of short-term inflation, as well as massive purchases by large buyers, otherwise known as “whales.”

            The U.S. dollar has also lowered, with the greenback down 8.5% in the last three months in terms of its strength against a basket of other notable currencies, such as the Euro, Pound and Yen.

            If this is the case, bitcoin continues to show a coupling with macroeconomic indicators, despite showing less correlation with stock markets.

            As bitcoin’s adoption continues to increase along with the development of applications built on top of the blockchain it is likely we would see a decoupling between the cryptocurrency and stock markets in the future.

            “We expect them to not be as highly correlated going forward,” Ben McMillan, CIO of IDX Digital Assets said. “But I do think a positive correlation between bitcoin and risk assets, in particular things like technology stocks, is here to stay.”

            That said, bitcoin is still a relatively new asset class when compared to its counterparts, like bonds, stocks and gold. Its relationship with them and macroeconomics will be closely watched.

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