Bitcoin Becomes Legal Tender | Crypto Startups Are Feeling Flush

BITCOIN STARTS TO CLAW ITS WAY BACK TO $40,000

On the back of El Salvador becoming the first country in the world to accept bitcoin as legal tender, the crypto market started to inch back upwards, led by bitcoin, which put $40,000 back in its sights. The Central American country gave Bitcoin its new status after its Congress voted overwhelmingly to approve a law classifying Bitcoin as legal tender on Wednesday. President Nayib Bukele hopes the measure will boost foreign investment, improve financial inclusion and generate jobs. Adding to the bullish news is the fact that hedge funds at the Chicago Mercantile Exchange are rolling their short Bitcoin bets into other markets that they deem more lucrative in the short term, suggesting that the crypto market is steadying and getting ready to resume its upward trajectory.

But it is too early to claim that the bearish trading in recent weeks is over. Analysts at Wall Street giant JPMorgan have warned the “backwardation” over recent weeks points to a coming “bear market,” warning the bitcoin price crash from above $50,000 per bitcoin in May is an “unusual development and a reflection of how weak bitcoin demand is at the moment from institutional investors.” Additionally, it is important to understand a few key qualifiers about El Salvador’s decision when considering whether it is a signal of more countries accepting bitcoin as legal tender. For instance, it does not have its own currency, but relies on the U.S. dollar. Therefore, it is not replacing its own currency with bitcoin. It also remains to be seen if the local population chooses to hodl or will be willing to spend bitcoin.

VENTURE CAPITALISTS MAKE IT RAIN

This week saw two crypto companies raise a combined $694 million dollars. Hardware wallet maker Ledger completed a $380 million series C funding round, the third largest in crypto and blockchain history. Physical hardware wallets, unlike smartphone applications, are dedicated devices used to store digital assets. Ledger has sold more than 3 million hardware wallets in 190 countries to date, and it has more than 1.5 million monthly users on Ledger Live, a mobile companion to the Ledger hardware wallet that allows users to manage and store their assets. Additionally, leading Ethereum competitor Solana raised $314 million in a private token sale. The millions raised by Solana Labs will be used to create a venture investing arm, a trading desk dedicated to the Solana ecosystem, and support the development of new decentralized applications with the goal of drawing more people onto the blockchain and eventually reaching 1 billion users.

DO BITCOIN AND RETIREMENT GO TOGETHER?

Not so according to David John, a senior policy advisor at AARP Policy Institute and the deputy director of the retirement security project at Brookings. In an exclusive interview with Forbes, John said that “Crypto itself is fascinating, and intriguing as it starts to develop, but it’s still in its early phases. And it is definitely not appropriate for retirement investing... The fact is that for retirement investing, you want growth, and you want a limited amount of volatility. The older you get, the less you want your portfolio to gyrate up and down, because it makes it very hard to plan your retirement income.” The discussion was held in response to Coinbase partnering with small-time 401(k) plan provider ForUsAll to offer employees crypto exposure through their retirement plans.

FINTECH 50 SPOTLIGHT

Sometimes called an Amazon Web Services for crypto, Alchemy’s user interface lets non-coders write and read info on a blockchain. Alchemy provides the service for free to some clients, but charges $49 a month and up to others. Users include traditional organizations like PwC and UNICEF and crypto players like Dapper Labs, creator of the Flow blockchain.

ELSEWHERE

Jack Dorsey Suggests Twitter Likely to Integrate Lightning Network [CoinDesk]

IMF: El Salvador's bitcoin legal tender move raises 'macroeconomic, financial and legal issues' [TheBlock]

Elon Musk Will Have ‘No Role’ in Bitcoin Mining Council [Decrypt]

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