weekly roundup – Market Rundown | 2023 Fiscal Year Revenue Proposal | Could Trading Cards be the Next NFT?
Here’s our roundup of the top stories from the past seven days in crypto.
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MARKET RUNDOWN FROM OUR TEAM
March proved to be another strong month for employment data with the headline number inline and unemployment ticking lower. The tight labour market has reaffirmed the hawks’ calls for a 50bps hike in May by the FED. Of the remaining 6 meetings for the year, it is now expected that there will be eight 25bps hikes. The data for us, just added weight to the argument that the USD will continue to outperform for now. The rates market continues its move unabated with the 2 year yield trading above the 30 year yield for the first time since 2007, joining inversions on other parts of the curve.
In crypto markets we are seeing a bit of consolidation as BTC tops out but ETH and SOL continue to outperform. BTC has stopped exactly where it should have last week and it does have some tough levels to break through. First up will be the 200 DMA at around $48400 and then the psychological level of $50,000. Whilst BTC has seen some selling, ETH has bounced back very well breaking $3500. Alts such as SOL and AAVE have had a good few days rallying over 9% and 20% respectively. The latter continuing to benefit from its platform v3 upgrade earlier this month.
Whilst there seems to be a bit more renewed interest by participants to put some risk on in the crypto space, we are keeping one eye on equities. Ultimately if equities do come under severe pressure, we do believe crypto will struggle to rally. The correlation between stocks and crypto continues to strengthen.
Despite news that Chinese regulators removed a key hurdle that impeded full US access to audits of Chinese companies listed on Wall Street, stocks have come under a little bit of pressure first thing this morning. With reports of atrocities we do not wish to explicitly type out surfacing, traders are weighing the prospect of stiffer sanctions on Russia. Inversions of parts of the yield curve and with manufacturing data slowing down, equities are running out of steam a little.
We are still happy to be long ETH/JPY. With a war going on and inflation where it is at, nothing will be a straight line move and we will use dips to add to the position.
DIGITAL ASSET SPECIFIC RULES INCLUDED IN THE 2023 FISCAL YEAR REVENUE PROPOSAL
Last week, the 2023 Fiscal Year Revenue Proposalwas issued by the US Department of Justice, outlining a number of key proposals that will have a direct impact on crypto traders and investors, if adopted.
Three policies in particular would have an immediate effect on crypto taxpayers. These include proposals to make cryptocurrency-based loans tax-free in the same way as loans based on stocks and securities provided that a set criteria is met, the extension of Section 475(f) tax election to active digital asset traders, and the introduction of reporting requirements aimed at strengthening international reciprocity.
According to treasury estimates, these digital assets specific rules will raise approximately $11 billion in tax revenue between 2023 and 2032.
THE EUROPEAN CENTRAL BANK DEBATES CBDC PRIVACY ISSUES
As a new digital euro is debated and designed, experts have warned that safeguarding privacy is becoming harder to ensure.
Despite a lack of formal policy decisions as to whether the euro should be issued in a new, digital format, there is clearly significant interest behind the concept. Thus, the issue of privacy, and the question as to whether sensitive data about spending habits and a consumer’s lifestyle and ideology can be protected, has become an important topic of conversation.
However, more recent ECB research suggests that privacy is being weighed against other competing issues such as security and universal acceptance.
INDIA’S NEW CRYPTO TAX RAISES INDUSTRY CONCERNS THAT IT WILL ‘STIFLE GROWTH’
India has introduced a controversial 30% tax on cryptocurrency profits, in addition to the 1% TDS that India’s citizens will also be forced to pay as of 1st July 2022.
The taxes have elicited concerns from the industry as to whether a number of company’s will choose to relocate offshore as growth is stifled.
“The onerous tax provisions are a challenge for the crypto industry. A flat 30% tax rate will certainly stifle growth and we have already seen many crypto companies leaving India” stated Sumit Gupta, CEO of India’s first crypto unicorn CoinDCX.
The report estimates that the Metaverse economy could be worth as much as $13 trillion by 2030, after 2021 saw huge advances and interest in the virtual world.
“The definition of what counts as money in the Open Metaverse is also likely to be very different from what counts as money in the real world today…We expect the Metaverse of the future would encompass existing forms of money and also a set of digitally-native primitives, tied to non-fungible tokens (NFTs) and other tokens, that were out-of-scope for a pre-blockchain virtual world” states the report.
ON THE RUN TO ACCEPT CRYPTOCURRENCIES AT 170 OUTLETS
Australian convenience store and gas station giant, On The Run (OTR), is working with Crypto.com to allow customers to pay for products in over 30 cryptocurrencies at 170 outlets across South Australia and Victoria.
Once finalised in July, it will become the largest business in Australia to accept in-store cryptocurrency payments.
“The growth and mainstream acceptance of cryptocurrency adoption in Australia and the rest of the world has been phenomenal, and has offered us a clear opportunity to tap into the momentum of this fast-growing space for the benefit of our customers” stated Yasser Shahin, executive chairman of OTR’s parent company, the Peregrine Corporation.
TURKISH PROSECUTOR ASKS FOR 40,000-YEAR JAIL SENTENCES FOR CRYPTO OFFICIALS
Jail sentences as long as 40,564 years have been asked for in respect of 21 officials of the Istanbul-based cryptocurrency exchange, Thodex. This comes about a year after the company was shut down and the CEO, Farud Fatih Ozer, disappeared.
Ozer is wanted on a red notice, according to Interpol, but Turkish police have been unable to find him. The indictment accuses the 21 officials of fraud, money laundering, and creating a criminal organisation.
SENATOR WARREN SAYS ITS TIME FOR THE US TO CREATE A CBDC
Speaking on “Meet the Press Reports”, Senator Elizabeth Warren stated that it is now time for the US to create its own CBDC.
This comes just one month after Senator Warren announced a new bill, The Digital Assets Sanctions Compliance Enhancement Act, to block cryptocurrency companies from working with sanctioned companies.
“So a lot that banks do wrong, if you think, ‘We could improve that in a digital world,’ the answer is, ‘Sure you could.’ But in that case, let’s do a central bank digital currency…Yes, I think it’s time for us to move in that direction.” stated Warren.
Martin Leo Rivers from Forbes assesses bitcoin’s carbon footprint.
“It’s entirely normal for society to be confounded and skeptical at the advent of a technological revolution. People struggle to understand how and why their old ways of doing things are becoming obsolete. They worry about the changes that will bear down on their future selves. Any attempt to write objectively about bitcoin must, therefore, be led by the facts: accurate, unambiguous ones.”
KRAKEN IMPLEMENTS BITCOIN’S LIGHTNING NETWORK AFTER DELAYED LAUNCH
Cryptocurrency exchange, Kraken, has implemented The Lightning Network, a scalability solution built on top of the Bitcoin blockchain, to allow clients to quickly send and receive BTC with virtually no fees.
“In addition to enabling instant and inexpensive deposits and withdrawals, Kraken is providing core network services that enable the Lightning network to route payments…Overall, we hope our integration signals our support of Lightning to the broader industry” stated a company spokesperson at Kraken.
COINBASE TO HELP ACCELERATE INDIA’S FINANCIAL INCLUSION GOALS THROUGH INVESTMENT
Coinbase CEO Brian Armstrong revealed in a blog post that Coinbase Ventures, an investment arm of American crypto exchange Coinbase, plans to help accelerate India’s economic and financial inclusion by investing $1 million into India’s software talent with the crypto and Web3 technologies.
Coinbase has previously invested $150 million in Indian crypto and Web3 companies and plans to onboard 1,000 employees in Coinbase’s Indian tech hub.
“India is a magical place, and I believe crypto has a big future here. We’re excited to help build that future, and this event is an important step” stated Armstrong.
STOCKX FOUNDER IS BETTING THAT TRADING CARDS ARE THE NEXT NFT
In 2019, the global ‘sports trading card’ market was valued at over $13 billion. Other non-sport related trading cards, such as Star Wars and Pokémon, have seen sales increases of more than 500% in the last year, according to eBay.
This may indicate why Josh Luber, founder of sneaker marketplace StockX, recently launched a new trading card company, Zerocool.
“There are a lot of similarities between NFTs and trading cards. These are financial assets that are supply-and-demand-driven, they have market-based pricing unlike consumer packaged goods, and they have long-term value as a collectible and an asset” stated Luber.
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