Hello, Market Wrap readers! During the final two weeks of 2021, we’re using this space to recap this year’s most dramatic moments in cryptocurrency markets – and highlight the key lessons from this fast-evolving corner of global finance. Over a series of eight posts starting on Dec. 20 and running through Dec. 30, we’ll recap what shook crypto markets this year. (If you’re looking for today’s prices and news headlines, please scroll down.)

Today, we’ll show additional reasons for widespread selling that occurred in April and May. After bitcoin’s powerful rally to start the year, fueled by fear of fast inflation, some large investors grew concerned about rampant speculation in the almost-anything-goes market and a slowdown in global money supply growth. In fact, some price chart indicators were already suggesting that bitcoin was overvalued. By June, BTC had stabilized at around $30,000, and guess what happened then? Traders bought the dip.

Elon Musk – the billionaire Tesla CEO whose market-moving tweets earlier in the year revealed an on-again, off-again infatuation with bitcoin – sounded a fresh openness to crypto industry dialogue over the Bitcoin blockchain’s electricity usage. Toward the end of May, Musk tweeted that he spoke with bitcoin miners about using renewable energy resources. He wasn’t turning his back on bitcoin completely, which provided some hope for discouraged bulls.

BTC’s price eventually stabilized at about $30,000 in June as extreme selling pressure began to slow. The chart below shows the nearly 50% price drop between April and June. And then, over the course of July and August, bitcoin mostly traded sideways, establishing a new price range as some technical indicators suggested BTC’s price was oversold.

Price movements were far less volatile than they had been in recent months, and it seemed as though many investors still believed in bitcoin’s potential as a long-term store of value. Bitcoin miners claimed to be looking for ways to reduce or mitigate their environmental footprint, and most of the network’s mining power relocated away from crypto-unfriendly China.

A key takeaway was that, despite what suddenly seemed to an unrelenting onslaught of negative headlines for the bitcoin market, the price was holding up remarkably well on a historical basis: The April all-time high of around $65,000 was now looking far away, but so was the 2020 low of around $3,850.

Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio manager at Cannon Advisors, which does not invest in digital assets. Damanick does not own cryptocurrencies.

Melania Trump, the 45th First Lady of the United States, launches a platform for Non Fungible Tokens (NFTs) today, together with “Melania’s Vision,” a digital artwork and audiofile and the first in a series of limited edition NFTs. Part of the proceeds will go towards Mrs. Trump’s efforts to support children in the foster care system.

Mrs. Trump will release NFTs in regular intervals exclusively on MelaniaTrump.com. The first NFT, entitled “Melania’s Vision” will be available to purchase for a limited period between December 16 and December 31, 2021. The project is powered by Parler, a free speech friendly social network.

Non-Fungible Tokens or NFTs are unique and non-interchangeable units of data sored on blockchains, the decentralized ledger technology behind cryptocurrencies like Bitcoin and Ethereum. NFTs are typically used to identify proof of ownership of a digital or physical asset, including pictures, videos, and audio files.

NFTs are often compared to certificates of authenticity, which are used to verify that a work of art or other item is authentic or original, as opposed to a copy or a fake.

“Melania’s Vision” will include a picture (seen below) and an audio message from Mrs. Trump. The NFT will be launched on the Solana blockchain and can be purchased with SOL, the platform’s native cryptocurrency. It will go on sale for 1 SOL (approximately $175 at the time of writing).  Newcomers to cryptocurrency will be able to purchase SOL tokens with their credit cards through MelaniaTrump.com.

The artwork was created by the French artist Marc-Antoine Coulon. A portion of the proceeds from the Melania Trump NFT collection will assist children aging out of the foster care system by giving them access to resources needed to develop skills in the fields of computer science and technology.

Mrs. Trump will release NFTs in regular intervals, including three elements: digital artwork, physical artwork, and a physical  accessory of historic note, which is scheduled to go on auction in January.

“Melania’s Vision,” created by the artist Marc-Antoine Coulon, can be purchased as an NFT on Mrs. Trump’s personal website, MelaniaTrump.com (Picture: Office of Melania Trump)

Because NFTs are built on blockchain technology, they are effectively impossible to censor or control. While centralized NFT exchanges can censor their users, they cannot take away a person’s ownership of an NFT or their ability to trade it.

In an exclusive comment to Breitbart News, the former First Lady said she believes blockchain technology provides a platform in which creators can reach people directly, without the interference of censorious gatekeepers.

“Since leaving the White House, I have envisioned creating a new platform where Freedom of Speech can flourish,” Mrs. Trump told Breitbart News. “My new NFT gallery, MelaniaTrump.com, uses the decentralized nature of Blockchain Technology, and gives a direct connection to people worldwide”

“My love of the arts is showing in my first NFT, Melania’s Vision, which I created with artist, Marc-Antoine Coulon.  A portion of the sales from NFT will be donated to children in the foster community. My Be Best initiative, Fostering the Future, will provide students a range of technology skills to prepare them for the workforce. I am excited to inspire America’s next generation of entrepreneurs.”

By launching NFTs directly through her website, and by encouraging the decentralized technology of the blockchain, Mrs. Trump will be able to avoid a problem long denounced by her husband — the increasingly extreme political biases of establishment institutions, in particular the establishment media.

Mrs. Trump experienced this herself. One of the top models in the world before she became First Lady, Mrs. Trump was frequently featured on the cover of fashion magazines prior to her husband’s victory over Hillary Clinton in 2016.

However, as the establishment press went to war against the Trump presidency, she was effectively boycotted by the established fashion media, with no major fashion magazine featuring her in a cover story throughout her time as First Lady.

The editor-in-chief of Vogue, Anna Wintour, has openly declared that she will never allow Mrs. Trump back on the cover of the magazine, purely because of politics. According to Wintour, “you have to stand up for what you believe in.”

Allum Bokhari is the senior technology correspondent at Breitbart News. He is the author of #DELETED: Big Tech’s Battle to Erase the Trump Movement and Steal The Election.

This recently happened to Kirk, but he says he was lucky because the power plant owner likes him. When the government contacted the power plant about suspicious activity, the owner covered for Kirk. After the call, Kirk shut off the mine for a few days, took some extra steps to mask his network traffic, then powered back on.

This kind of IT hygiene is critical to keeping miners off the radar.

Miners conceal their IP address by using a virtual private network, or VPN, to mask their geographic digital footprint. But Beijing is wise to the use of VPNs as a tool to evade government censorship and has cracked down on their use.

Most underground miners are now turning to mining pools as another way to hide their tracks, joining cryptocurrency miners from around the planet to combine their computing power. Even though many mining pools have announced a suspension of services inside China, multiple sources tell CNBC that some foreign pools are still signing up Chinese miners.

“They hide their hashrate,” explained Kirk. Hashrate is an industry term used to describe the collective computing power of all miners in the bitcoin network.

Typically, when a block of transactions is “mined” and added to the digital ledger of transactions known as the blockchain, the pool that won it signs its name to the block. Multiple sources tell CNBC that now, when Chinese miners contribute their computing power to solving a block, pools opt to not sign their name, which is a departure from past protocol.

“A pool doesn’t have to reveal any data,” continued Kirk. “You’re basically telling the world that my revenue is only half of what I actually have. You don’t brag about it.”

This could help to explain why China’s share of the global bitcoin market went to zero practically overnight, since the bitcoin mining index is based upon data voluntarily shared by mining pools.

Though pools are quiet about working with Chinese miners, they have been very helpful to many of these underground operations behind the scenes, according to multiple sources.

“There are some larger pools who still care. They actually provide a lot of technical support to help you, in case your own people don’t have the technical ability to set it up,” Kirk said.

Long tells CNBC that many of these foreign pools provide them with technology that disguises what they’re doing.

“They are encrypting their packets as it leaves the data center, so it just looks like ordinary web traffic,” Long said.

As Kirk describes it, one pool that he works with helped him to set up a server that made his mine look as though it had fewer “connection points.” When one IP address has thousands of connection points, each of which is submitting massive amounts of data, that looks suspicious to authorities, especially in a rural area like Sichuan. But Kirk says that pools help miners get around that.

“After they do their magic, you’re only going to see five machines, which then does not look suspicious, because any household can have that,” Kirk said.

The future of bitcoin is anyone’s guess, but one academic has warned that the world’s most popular cryptocurrency could fade out in the near future.

The Twitter and Block co-founder is a supporter of crypto, but not so keen on how Web 3 is being funded.

Three virtual estates neighboring a Snoop Dogg game space in the metaverse have been sold for a collective $1.23 million, with the most expensive space selling for $453,000.

According to Yahoo!, the purchases were made using SAND tokens, the cryptocurrency native to The Sandbox gaming platform. Snoop joined the platform in September with the launch of “Snoop’s Mansion,” an interactive game which allows fans to share experiences and content with each other, attend live performances, and access exclusive NFTs.

Snoop’s partnership with Sandbox also offers “priceless experiences” to the exclusive 1,000 users who are able to obtain a “Snoop Private Party Pass,” Coin Rivet reports.

Purchasing “LAND” on the Sandbox platform allows any user to create, play and monetize their own virtual content as well. And just as in the real world, being celebrity-adjacent increases the value of virtual properties.

The higher-than-usual price tags on these recent LAND sales seem warranted by the fact that all three properties are much larger than typical plots purchased on The Sandbox. Each of the three estates consist of a 3×3 square of LAND, or 9 individual plots that could potentially be broken up and resold.

The price of the SAND token has surged significantly over the past few weeks. Following a low price of $0.70 in late October, its current value is $5.67. This comes after a week during which most cryptocurrencies have seen a drop, as the markets respond to news of the latest COVID-19 variant.

On Nov. 25, the native Sandbox currency reached an all-time peak price of $8.29.

The price surge for this token has been driven by The Sandbox’s competitive brand and celebrity partnerships. On Nov. 1, The Sandbox tweeted that it has over 165 partners who will “contribute to creating a diverse, multi-cultural place,” with hopes of encouraging users to constantly return to and explore their ever-expanding metaverse.

Just ahead of the Thanksgiving-week price surge, Adidas hinted at creating an “Adiverse” on the platform.

It cannot be overstated how experimental this monetary outlay is, especially as it begins to wind down. Known as “quantitative easing,” or QE, the bond buying program has more than doubled the Fed’s balance sheet (now valued above $8.6 trillion). It has had broad effects on the labor market, asset prices and the dollars in your pocket.

Inflation is running hotter than at any point over the past 30 years, and consumer prices have climbed 4.4% in aggregate, double the 2% target the Fed has long targeted. Conflicting signals point to both a super-tight and super-loose labor market simultaneously. The quits rate, number of job openings, and salary and benefits paddings are all atypically high (pointing to a tight labor market). Yet, there are 5 million fewer people working than in February 2020.

Considering the extent to which market watchers hang onto Fed-speak, Powell deserves credit for his consistent messaging. His magic voice is essentially the one thing completely under his control. Although the taper signals an end to easy money, markets weren’t spooked yesterday: the S&P 500, Dow Jones Industrial Average, Nasdaq 100 and Russell 2000 all closed trading at all-time highs.

Powell has been consistent on letting the economy “run hot,” and has made good on giving markets advance warning of policy changes. His colleagues at the Fed were unanimous in parking the benchmark interest rate between zero to 0.25% (though that, too, is subject to change, “depending”). Where Powell has changed perspective is only in a matter of degree – instead of saying elevated inflation is “transitory,” or a matter of specific coronavirus-related bottlenecks, he said mitigating factors were – shipping constraints aren’t forever.

Bitcoin, as an alternative monetary base layer, stands apart from this human drama. A grand experiment born from the 2008 recession that was supercharged by the pandemic, most policy decisions for Bitcoin have already been made and hardcoded. It is hard where the dollar is soft. Subject to reason, where the dollar is man.

But it’s also fully integrated into the global economy and the bitcoin currency’s price is also subject to Fed decisions. Bitcoin has benefited over the past several months of QE from the belief that it is an inflation hedge. Smart money – the Ray Dalios of the world – bought into it and profited.

Then again, there’s also a belief that the Fed has already let inflation run too far and has limited means to cap it. In the short term, if Powell is to remain true to his word and finish buying bonds before raising rates, the agency doesn’t have a tool to pull in inflation until at least Q2 2022. A hyperinflationary environment, or even just fears of that happening, could drive money into bitcoin.

“On the other hand, the effects of the largest QE in history may lead to the largest inflation in history, regardless of the Fed attempting to scale back. If this happens, we expect demand, and prices, for bitcoin to rise to new all-time highs,” Joe DiPasquale, CEO of the cryptocurrency hedge fund BitBull Capital, told CoinDesk yesterday.

It’s worth noting as well that Powell’s term as Fed chairman is ending in February 2022 (though his term as a Fed governor ends in 2028), and the Biden administration hasn’t given a clear signal as to whether he’ll stay on at the job. While Fed officials were in lock-step to begin phasing out asset purchases, many have contradictory views about how to manage (and even measure) inflation.

Weekly returns were mixed as some altcoins outperformed. Meanwhile, macro headwinds could cause investors to reduce exposure to speculative assets next year.

“Fundamentally, bitcoin is not a good substitute for transactional currency,” Musk told Time Magazine after being named Time’s 2021 Person of the Year.

The swings in cryptocurrencies come amid a volatile period for financial markets. Spiking inflation is forcing central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted assets.