News updates April 04, 2022
1. Crypto Market Forecast: Week of April 4th 2022:
A curated weekly summary of forward-focused crypto news that matters. This week, Bitcoin trades tepidly while altcoins surge, Opensea confirms its launch on Solana, and the amount of illiquid bitcoin jumps to create a potential supply shock.
It was a week of low volatility in the Bitcoin (BTC) markets, while some altcoins enjoyed significant gains. BTC is up ~1% in the last week. Ethereum (ETH), and Binance-coin (BNB), the 2nd and 4th largest assets on the Brave New Coin market cap table are up ~9% and ~6% respectively. Other large caps, Solana (SOL) and Terra (LUNA), are up ~32% and ~23%, in the last week.
The digital asset markets reacted mildly to the United States releasing solid but middling employment data on April 1st. Data indicated that while the unemployment rate in the country is dropping towards pre-pandemic levels, the economy only added 431,000 new payrolls, less than a composite estimate of 490,000 from Dow Jones but above some lower-end estimates.
The consensus from market observers was that this data was in line with expectations. “All in all, nothing shocking about this report. There was nothing that was really surprising,” Simona Mocuta, chief economist at State Street Global Advisors told CNBC. “Even if this report came in at zero, I would still say this is a very healthy labor market.”
Investors are still digesting the job market data and assessing whether it will lead to a more aggressive monetary policy switch from the Federal Reserve.
With US dollar inflation rising rapidly and the job market looking healthier, the pandemic-era Dovish monetary policy implemented by The Fed is no longer viable. Many have called the Fed’s policy of ultra low-interest rates and high stimulus, the loosest approach in history. If continued, it would likely cause the economy to overheat and push inflation to unmanageable levels.
A switch to higher interest rates and zero stimulus will likely lead to asset prices dropping across the board. Without the support of accommodative policy, some investors may switch to risk-off and this will create volatility across the capital markets.
The Fed will try its hardest to ‘soft land’ the economy and not shock markets by hiking up rates too quickly. Many market observers, however, are uncertain that this will be possible given the historically high inflation rates and other factors such as the global supply chain disruptions caused by the Ukraine conflict.
For digital asset investors, while the prospects of a recession in the USA may be unnerving, there are signs that the asset class may be divergent. Onchain data indicates that the illiquid supply of Bitcoin is close to all-time highs. Despite an uncertain macro environment, long-term BTC holders are digging their heels in and reducing the number of coins available for trading. This supply shock has been creating positive pressure.
In the altcoin market, with projects like Ethereum (ETH), and Solana (SOL) hitting key development milestones and exciting integrations investors are willing to allocate capital towards these projects despite the macro-level uncertainty. Sol’s strong gains in the last 7 days were driven by a confirmation that OpenSea, the largest NFT marketplace in crypto, will launch on the Solana chain.
Crypto news for the week ahead
April 6th-9th - Bitcoin 2022:
One of the largest cryptocurrency conferences ever takes place in Miami. A blockbuster list of speakers at the event includes President Nayib Bukele, Cathie Wood, and Jordan Peterson. Last year at the same conference Bukele and Jack Mallers made major announcements surrounding the adoption of BTC in El Salvador. Similar fireworks are expected at this year’s conference from Bukele and others.
6th April - Federal Open Market Committee's (FOMC) March meeting minutes released:
Following the release of solid but unspectacular job data from the US, all eyes will be on the recording of a Fed meeting that took place between March 15-16 for any hints about how America’s central bank may choose to approach policy in the coming months. This meeting will also reveal the thinking behind the first interest rate rise since 2018 which was implemented in March 2022.
It was a strong week for many large-cap altcoins, continuing a strong month. ETH is up ~8% in the last week backed by healthy fundamentals. On March 28th, the CME Group announced that it would be offering options for micro Ether futures contracts, allowing smaller investors a cost-effective way to gain ETH exposure. Also last week, Google searches for “Ethereum merge” hit a new all-time high.
Bitcoin Price Chart:
For the last week the price of BTC ranged between US$44,000 and US$48,000 suggesting these may be key levels of support and resistance in the short term. Data from Glassnode reports that the capitulation of short-term holders who bought BTC when the price was at all-time-highs in late 2021 may be over. This suggests there will be a drop in selling pressure in the near term.
2. Australian Convenience Store Chain to Start Accepting Cryptocurrencies
Convenience store giant On The Run (OTR) is the largest brick-and-mortar store to start accepting cryptocurrencies in Australia
On The Run (OTR), a major convenience store chain, will soon enable support for payments in Bitcoin and other cryptocurrencies at all of its locations in South Australia, according to a report by The Australian.
Customers will soon be able to pay for fuel at 170 service stations located in the state, which include both rural and metropolitan locations.
3. Traders Drain $4.3 Billion Worth of Bitcoin from Exchanges
A massive amount of Bitcoin is being actively removed from exchanges by traders and investors, according to the most recent Glassnode data. As the project suggests, March became the fourth month in a row when exchanges lost around 100,000 BTC.
4. Colombian Tax Authority Warns About Consequences of Not Declaring Crypto Related Taxes
The Colombian tax authority, DIAN, has reminded taxpayers that they need to start registering cryptocurrencies in their statements starting this year. The director of the DIAN, Lisandro Junco, reminded cryptocurrency users that this kind of asset is taxed as any other asset held by citizens. Colombia has already collected $1 billion in digital economy-related taxes.
5. Kazakhstan Auditors Go After Crypto Miners Accused of Exploiting Tax Benefits
Authorities in Kazakhstan have found several businesses minting digital currencies that took advantage of tax cuts they were allegedly not supposed to benefit from. Auditors said the crypto firms registered as “innovative companies,” to receive millions of dollars in tax preferences.
6. Coinbase to invest in Indian crypto and Web3 amid tax regulation clarity
Coinbase Ventures will conduct an in-person pitching event in Bengaluru to help accelerate India's financial inclusion goals via crypto and Web3 investments.
Coinbase shared a plan to invest $1 million in various Indian cryptocurrency and Web3 initiatives via an in-person pitching event. On Apr. 8, the in-person pitch day will be hosted in Bengaluru in partnership with Buidlers Tribe, which will be further supported by Belief DAO to provide bonus grants up to $25,000.
7. Largest Russian Bank Launches Cryptocurrency Although It Is Little Use For Moving Value Out Of The Country
Amidst much trumpeting from US and European financial leaders, cryptocurrencies are again being maligned, this time as vehicles for Russian evasion of sanctions, despite financial experts explaining the total lack of feasibility for this course of action.
8. European Inflation Skyrockets to Record 7.5% — ECB Chief Lagarde Expects Energy Prices to ‘Stay Higher for Longer’
While inflation continues to roar in the U.S., the inflation rate in the eurozone tapped another high last month reaching 7.5% in March. Energy and food prices have soared throughout the 19 member state economies, and European Central Bank president Christine Lagarde expects energy prices to “stay higher for longer.”
9. Indonesia Set to Impose Income Tax on Crypto Assets from May
Indonesia, the largest economy in Southeast Asia, announced plans to charge value-added tax (VAT) on crypto-asset transactions as well as an income tax on capital gains from such investments at 0.1% each, beginning May 1st.
