It’s that time again. Expect an onslaught of text messages from your nocoiner friends and some of your long-forgotten colleagues who thought you were crazy.

Bitcoin recently broke record highs, and everybody is bullish. Sentiment data shows that investors are as bullish as they have ever been! Retail investors are not the only ones who are bullish. Institutional investors have also been piling in. A $5.7 billion fund is considering investing up to 10% of its assets into the Grayscale Bitcoin Trust.

With all the bullish sentiment and demand-side inflows, Bitcoin may be setting up for vastly higher valuations. However, price increases similar to 2017 would have a much greater impact than simply boosting BTC holders’ wealth. In our latest analysis, we considered how a repeat of 2017 would change the industry.

Read more: What is the Future of Bitcoin?

Market Movements – Bitcoin Breaks Record Highs

Bitcoin price chart and BitMEX perpetual derivatives premium

After breaking record highs, Bitcoin recorded a pullback of roughly 9% high-to-low. The derivatives market has played a greater role in price appreciation in the second half of November, making price more susceptible to retracements.

The increased role of derivatives can be observed from BitMEX perp futures contracts trading at a premium to the spot market. At the beginning of November, healthy spot market demand was the dominant driver of the price appreciation as perpetual derivatives traded at a discount to the spot market.

This began to change around the 5th of November when prices traded close to $16k. The premium in the perpetual derivatives market became more pronounced in the latter days of November as bullish sentiment rose. Bitcoin has been gradually recovering from its drop and is currently around 2.8% below record highs.

Industry Developments – Bitcoin Regulation Updates, Taproot Support, and New MicroBT Rig?

The US Office of the Comptroller of the Currency (OCC) proposes a new regulation that would change banking access for cryptocurrency companies. The law would require large banks – those with over $100 billion in assets – to restrict their services based on objective and quantitative criteria. In recent years, banks have been restricting services to firms operating in potentially contentious industries. Those in the cryptocurrency industry have struggled to access banking services. This regulation would force large banks to treat cryptocurrency customers as they would any other industry. The law is currently open for public comment until January 4th.

Coinbase CEO Brian Armstrong voices concerns that a new US regulation regarding self-hosted cryptocurrency wallets may be introduced. Brian cautioned that rumors are circulating that the US Treasury Secretary Steve Mnuchin may rush to introduce the regulation by the end of the year. The law would require KYC to be carried by those transacting with the self-custody wallets. Brian foresees such a regulation creating a “walled garden” between US crypto financial services and the rest of the world. The privilege to operate a self-custody has been paramount to cryptocurrency users. Such a regulation would echo the concerns of Bitcoin developer Matt Corallo who noted that the government is forcing Bitcoin to split into “KYC Bitcoin” and “illegal Bitcoin”.

Next-generation mining rig anticipated from MicroBT. Rumors have surfaced that Whatsminer will be releasing a next-generation mining rig early next year. The rumors originally surfaced from the Twitter account Wu Blockchain . Wu Blockchain reported that the M50S is currently in trial production. The specifications noted were a hashrate output of 200 TH/s and an energy efficiency of 28 J/TH. The report was corroborated by Kristy-Leigh Minehan, who noted that 28 J/TH is possible using Samsung 8 nm chips but that a hashrate output of 180 TH seems more likely.

Over 61% of hashrate connected to mining pools signals support the Taproot upgrade. Poolin VP Alejandro De La Torre launched a website to highlight mining pool support for a Bitcoin software upgrade that would implement Taproot. Poolin, F2Pool, and Slushpool are among the mining pools that have voiced their support to implement Taproot. The upgrade activation method remains uncertain, with different mining pools advocating different activation methods.

HASHR8 Podcast – CoinGecko COO Bobby Ong

The co-founder and COO of CoinGecko Bobby Ong joins the HASHR8 podcast. Bobby discusses the need for actionable information in the cryptocurrency market and how CoinGecko is filling that need. Bobby also shares his views on Ethereum versus Bitcoin.

Listen here: Providing Actionable Information to Cryptocurrency Investors with Bobby Ong