On Friday (December 20), Bitcoin plummeted to $96,000 before rebounding. Short sellers took control of the situation in the short term. BlackRock, a Wall Street asset management giant that manages $10 trillion globally, issued a rare disclaimer, saying that it could not guarantee that the total supply of Bitcoin would remain unchanged at 21 million, sparking controversy in the community. After the Federal Reserve's rate cut meeting released hawkish signals, Mt.Gox, the former largest crypto exchange, dumped $102.5 million worth of Bitcoin.
BlackRock: There is no guarantee that the total supply of Bitcoin will remain unchanged at 21 million
CoinTelegraph pointed out that after BlackRock released a 3-minute Bitcoin explanation video and added a disclaimer saying that there is no guarantee that the 21 million Bitcoin supply cap will not change, the debate over whether the total supply limit of Bitcoin is truly fixed has resurfaced.
Bitcoin’s fixed supply is one of its strongest claims as a store of value, and removing the supply cap would affect how investors view the cryptocurrency.
In a Dec. 17 video, BlackRock explained that Bitcoin has a fixed supply of 21 million, adding that “hard-coded rules control supply and purchasing power and help avoid potential abuse by printing more currency.” However, it also attached a disclaimer: “There is no guarantee that the 21 million supply cap of Bitcoin will not change.”
Since then, Michael Saylor, chairman of MicroStrategy, the largest listed Bitcoin whale, has retweeted the video, leading some critics to believe that Bitcoin is not scarce in theory.
Joel Valenzuel, Dashpay’s director of marketing and business development, claimed: “It was always part of the plan when the supply cap was increased, and in 2024 people have the audacity to say Bitcoin wasn’t hijacked.”
Antiprosynthesis, an anonymous Ethereum developer, added: “BlackRock knows more about Bitcoin than Bitcoin holders do.”
Super Testnet, the Bitcoin developer behind BitVM, noted that whether Bitcoin’s supply cap can be changed depends on how people define “Bitcoin.” Some say that this could theoretically be changed if several community members — from node operators and core developers to miners and investors — reach a consensus on a hard fork by moving to a new chain.
Developers may first propose a proposal to spark community discussion to understand consensus before implementing the rule change into Bitcoin Core. This will result in a hard fork, and community members will need to decide which new set of rules they want to transition to. If the vast majority of node operators and miners begin to support the new fork and win more market share and hash rate, they will then operate under a "new" Bitcoin network with an unlimited supply.
However, the Super Testnet said that although this is possible, the resulting new chain will not be "Bitcoin". It emphasized that the 2019 (Bitcoin white paper) by "Father of Bitcoin" Satoshi Nakamoto stated: "The inflation cap is defining for Bitcoin. If this is eliminated, what you have is no longer Bitcoin, and you might as well ask how to turn Bitcoin into PayPal."
The former largest crypto exchange dumped $102.5 million
Arkham Intelligence, an on-chain intelligence company, posted on Thursday that Mt. Gox transferred $102.5 million worth of Bitcoin after the Federal Reserve's rate cut meeting. The post also pointed out that this huge amount of Bitcoin was divided into three separate transactions and sent to three different addresses, with each transaction worth $30.18 million.
But Arkham noted that the remaining bitcoins are still in the custody of Mt. Gox. These transactions by the defunct cryptocurrency exchange appear to have had a significant impact on the cryptocurrency market. Mt. Gox needed to distribute billions of dollars worth of bitcoins to its creditors, which severely affected the price of bitcoin and the entire cryptocurrency market.
The current market sentiment seems extremely pessimistic, with traders and investors panicking over billions of dollars in liquidations. According to on-chain analytics firm Coinglass, the recent market crash resulted in the liquidation of $1.18 billion worth of long and short positions.
Most of the liquidations came from long positions, with traders holding $900 million worth of long positions being liquidated. In contrast, the cryptocurrency market saw only $160 million in short liquidations in the past 24 hours.
Bitcoin Technical Analysis
According to the report, Bitcoin is facing strong negative pressure, attacking the support line of the bullish channel and trying to stay below it.
This prompts caution in the upcoming trades as a confirmed breakout will halt the bullish wave and push the price towards a bearish correction with the first target at $95,195.
