The End of the Penny Era and Bitcoin’s Deflationary Promise
After 232 years, the United States Mint has stopped making pennies, marking a pivotal moment in monetary history. Honestly, this shift underscores how physical currency is becoming irrelevant in our inflationary world, where production costs now exceed face value. The penny’s demise perfectly illustrates fiat currency’s flaws—constant supply increases steadily erode purchasing power. Anyway, this transition away from inefficient money forms reflects broader economic trends favoring practical alternatives. Bitcoin emerges as a powerful solution here, with its fixed supply of 21 million coins preventing value dilution as demand grows. The last penny was minted in Philadelphia, costing about $0.037 to produce—over three times its worth—due to inflation’s toll on fiat money. President Donald Trump directed the Treasury to halt production, and while billions of pennies remain in circulation, their economic impracticality highlights deeper issues with traditional systems.
Inflation has relentlessly weakened fiat currencies like the US dollar, which has lost more than 92% of its value since the Federal Reserve started in 1913. Alexander Leishman, CEO of River, pointed this out, noting that inflation renders the penny obsolete while boosting the relevance of Bitcoin‘s satoshi unit. This deflationary trait makes Bitcoin a solid hedge against currency devaluation, attracting savers who want to protect their wealth from inflationary pressures that undermine traditional savings.
Bitcoin’s Fixed Supply Advantage
Economist Saifedean Ammous explains that tech advances drive deflation by improving efficiency, but fiat currencies miss out because their supplies keep expanding. In a Bitcoin-based economy, prices for goods and services would drop over time, rewarding holders with appreciating value.
- A fixed supply of 21 million coins stops inflation in its tracks
- Technological progress strengthens Bitcoin’s deflationary edge
- It offers protection against currency devaluation risks
Critics like Paul Krugman argue Bitcoin isn’t as user-friendly as the dollar, focusing on transaction ease over long-term value. But the penny’s phase-out shows that usability alone can’t justify inefficiency when costs outweigh benefits.
Government Shutdown Resolution and Regulatory Implications for Crypto
The end of the 43-day US government shutdown, the longest ever, directly affects cryptocurrency regulators. Federal operations are back, with staff returning to key agencies like the SEC and CFTC. This resolution came through a temporary funding bill signed by President Trump, funding things until January 30, 2026. It lets regulatory activities restart, including handling pending spot cryptocurrency ETF applications that were stuck during the shutdown. Historically, such resumptions have sparked market rallies by cutting uncertainty and enabling delayed approvals.
Key Regulatory Developments
With regulators back in action, they can push forward on critical initiatives:
- CFTC’s planned confirmation hearing for Mike Selig
- Treasury Department picking up its review of public comments on the stablecoin-focused GENIUS Act
- A renewed focus on finalizing frameworks for stablecoin regulation
This post-shutdown environment clears the regulatory fog that bred doubt. It could stabilize markets and encourage institutional involvement through clearer rules and product approvals.
Data from the shutdown shows crypto markets kept running despite federal inaction. Retail traders on platforms like Binance dove into high-frequency trading and leveraged bets, fueling volatility. However, institutional moves, such as corporate Bitcoin holdings, held steady, highlighting the resilience of certain sectors.
Institutional and Retail Dynamics in Crypto Market Evolution
Institutional investors have a calming effect on the crypto market with their steady, long-term approaches. Firms like MicroStrategy hold over 632,000 BTC, cementing Bitcoin’s role as a treasury asset. This shows strong institutional faith in its scarcity and value preservation. Spot Bitcoin ETF flows, including net inflows of around 5.9k BTC on September 10, further prove this trust. It helps cushion downturns and set price foundations through consistent demand.
Retail vs Institutional Behavior
Key differences between these investor types:
- Institutions focus on long-term holdings and treasury assets
- Retail investors engage in high-frequency trading and leveraged positions
- Institutional demand often outpaces daily mining output
- Retail activity provides liquidity but amps up short-term swings
In contrast, retail investors frequently add to market volatility with their high-frequency trading and leveraged moves. This leads to sharp price shifts tied to sentiment changes. Metrics like True Retail Longs and Shorts Accounts show sustained demand even during sell-offs, but events like long liquidations topping $1 billion reveal how retail leverage can worsen declines.
Evidence from the government shutdown period indicates institutional actions were mostly unaffected by regulatory pauses, while retail traders faced more uncertainty, resulting in increased leveraged bets and volatility. This gap highlights differing risk appetites and time horizons.
Legislative Progress and Global Regulatory Trends
The US crypto regulatory landscape is slowly changing with new bills and agency actions. Key proposals like the CLARITY Act and Responsible Financial Innovation Act aim to clarify who regulates what between the SEC and CFTC. These efforts reflect bipartisan acknowledgment of crypto’s growing financial role. The GENIUS Act sets up the first federal framework for stablecoins, introducing reserve requirements for stability and new rules for issuers.
Major Legislative Initiatives
| Bill Name | Purpose | Status |
|---|---|---|
| GENIUS Act | Federal stablecoin framework | Under Treasury review |
| CLARITY Act | Classify digital currencies as commodities | Pending Senate passage |
| RFIA | Comprehensive crypto regulation | Proposed legislation |
After the GENIUS Act, the CLARITY Act has passed initial House hurdles and awaits full Senate approval. This bill aims to label digital currencies as commodities under CFTC oversight, potentially reducing regulatory overlaps and giving clearer guidance for participants.
Globally, crypto regulation varies a lot. The European Union’s MiCA regulation prioritizes consumer protection with strict reserve rules, while US approaches like the GENIUS Act foster competition among stablecoin issuers under Treasury and Fed watch.
Market Impact and Future Outlook for Cryptocurrencies
Crypto market responses to events like the shutdown’s end show how this asset class ties into political and economic factors. Bitcoin prices barely moved after the resolution, suggesting traders saw it coming or cared more about other elements. Technical analysis points to key support and resistance levels guiding moves.
Technical Analysis Perspectives
- $112,000 area for short-term support
- Resistance near $117,000 and $124,474
- Weekly close above $114,000 needed to avoid a deeper slide
- Relative Strength Index hinting at possible oversold conditions
Different analytical views exist in the market. Some experts spot oversold signals and rebound chances, while others caution about breakdown risks if supports fail. This variety comes from diverse timeframes and methods.
Post-shutdown, the regulatory scene offers both opportunities and tests for crypto players. Agencies working again means backlogged applications and guidance can advance, potentially unlocking institutional money through approved products like spot Bitcoin ETFs. As crypto expert Michael Chen puts it, “The combination of high retail conviction and institutional buying creates a powerful foundation for price appreciation.”
Federal Reserve Governor Christopher Waller stresses gradual adoption, saying, “We think the forecast doesn’t require unrealistically large or permanent rate dislocations to materialize; instead, it relies on incremental, policy-enabled adoption compounding over time.”
Inflation made the penny useless. Meanwhile, it’s making the sat more relevant every year.
Alexander Leishman
Fiat currencies, in contrast, fail to capture this price deflation because their supply is constantly increasing, resulting in reduced purchasing power over time, which is reflected in the higher prices of goods, assets and services.
Saifedean Ammous
ETF inflows are almost nine times daily mining output.
Andre Dragosch of Bitwise
Market structure legislation provides the foundation for institutional adoption while maintaining necessary safeguards.
Dr. Sarah Johnson
The combination of high retail conviction and institutional buying creates a powerful foundation for price appreciation.
Michael Chen
Bitcoin trades at a discount. Mean price is $120,000. A 1 standard deviation move is $115,000; 2 standard deviations is $110,000. Aggregate orderbook data shows hefty bids in that range.
Ray Salmond
We think the forecast doesn’t require unrealistically large or permanent rate dislocations to materialize; instead, it relies on incremental, policy-enabled adoption compounding over time.
Federal Reserve Governor Christopher Waller
Clear disclosure standards for political figures in crypto are essential to maintain market integrity and public trust.
Sarah Johnson
Unless the market is kneecapped by something unexpected, Bitcoin will likely hit new highs before the end of the year, and that will fuel altcoins.
Pav Hundal
Bitcoin needs a weekly close above $114,000 to avoid deeper correction and reaffirm bullish strength.
Sam Price
