News Updates December 21 & 22, 2022
1. Brazilian President Signs Bill Regulating Use Of Bitcoin As Payment
Brazilian President Jair Bolsonaro on Thursday morning signed a bill into law that establishes a complete regulatory framework for the trading and use of bitcoin in the country, according to the federal government’s official journal (DOU).
President Bolsonaro enacted the bill approved by Congress without any modifications. As previously reported, the new rules recognize bitcoin as a digital representation of value that can be used as a means of payment and as an investment asset in the South American nation.
A virtual asset is "a digital representation of value that can be negotiated or transferred electronically and used for payments or as an investment," per the bill’s text.
The new law, which goes into effect 180 days after today’s signature, does not make bitcoin or any cryptocurrency a legal tender in the country. Notwithstanding, the legitimacy conferred upon BTC’s use case as payment is meaningful, and has the potential to spur greater activity in the country. The extent to which that happens, however, is dependent on the actions of the regulator in charge.
The executive branch will select the government bodies that will oversee the market. The expectation is that the Central Bank of Brazil (BCB) will be in charge when bitcoin is used as payment, while the country’s securities and exchange commission (CVM) will be the watchdog when it is used as an investment asset. Both the BCB and the CVM, along with the federal tax authority (RFB), helped lawmakers craft the overhaul legislation.
If the BCB gets confirmed as the sector’s watchdog, the outlook isn’t the best. While the regulator can’t override the aforementioned definition of a virtual asset determined by the law, there is little reason to believe that the BCB will go out of its way to push greater adoption of bitcoin as payment. Its President Roberto Campos Neto has said multiple times that he doesn’t see cryptocurrencies as a great alternative to fiat payments, citing mainly volatility. More importantly, the BCB is working to release its own digital currency, the Real Digital, which is currently planned to go live by 2024.
But the greater regulatory clarity given by the legislation encourages businesses to explore the burgeoning payment method more closely. This, in turn, can translate into more widespread adoption of bitcoin as a medium of exchange in Brazil, irrespective of whether an active endorsement by the BCB comes or not.
2. Justin Sun Announces Huobi Visa Card As Part Of Globalization Strategy
Crypto exchange Huobi announces partnership with Visa to introduce a card that helps boost crypto adoption globally.
Tron founder Justin Sun on Thursday said crypto exchange Huobi Global has partnered with financial services giant Visa to launch the Huobi Visa Card. The goal of the partnership is to establish a more efficient and convenient channel between fiat and crypto. Moreover, boost the adoption of crypto across the globe.
Huobi Partners With Visa
In an official announcement on December 22, Huobi revealed that it has partnered with Visa for launching the Huobi Visa card to promote the virtual asset industry.
Initially, the Huobi Visa Card will be offered in the European market. The card will be rollout in other regions subsequently. Justin Sun asserts the Huobi Visa card launch is a significant milestone for the company as well as for the crypto community. He tweeted:
“In the future, Every Huobi user will automatically obtain a citizen of the Dominica universe, and visa card enjoying the freedom of identity, financial freedom. Travel around the world with one card in hand!”
The launch will contribute to the promotion of virtual assets globally. Moreover, provide access to virtual asset services to everyone and increase global financial inclusion.
3. Bitcoin Hard-Stuck Below $17K But Market Sentiment Healing (BTC Price Analysis)
Bitcoin is grappling with a crucial resistance level at roughly $17K, which also aligns with the 100-day moving average. A breakout from here will potentially initiate an uptrend in the short term.
Technical Analysis
The Daily Chart
The price has been trapped inside a descending wedge pattern for several months and is consolidating with significantly lower volatility. Meanwhile, the 100-day moving average has served as a powerful barrier at around $17K.
The current action demonstrates a concerning lack of activity in Bitcoin’s market, which can be explained by recent events, which resulted in a lack of demand.
Considering the current market sentiment, it appears that one of the more probable outlooks for Bitcoin is to continue consolidating between the two substantial levels of $15K and $19K until a breakout occurs.
In the 4-hour timeframe, the price has finally dropped below the ascending flag pattern. As is evident in the chart, the 0.5 level of Fibonacci retracement has acted as a great resistance and pushed the price towards the $15K support.
BTC seems likely to retest the flag’s lower boundary and complete the pullback pattern before the next downward rally.
Furthermore, the RSI indicator is currently standing at almost 50, indicating equilibrium has currently been reached.
Onchain Analysis
All on-chain valuation indicators conclude that Bitcoin is significantly undervalued. However, it is essential for whales to start accumulating again in order for the cryptocurrency to bottom out successfully.
Whales have continued to reduce spending, which is now at the lowest level since before Terra and Luna’s failure. The short-term local resistance for Bitcoin is the 1m-3m holder realized price, which is currently at $18.4k. In fact, this level has acted as a barrier during the market’s recent low-momentum rally.
Finally, based on the following graph, compared to the COVID and China-ban crashes, the funding rates metric seems to have rebounded much faster. It illustrates that the market sentiment is healing.
4. 5 cryptocurrencies to keep an eye on in 2023
Analysts expect the bear market to loosen its grip in 2023. Here are five cryptocurrencies to keep an eye on.
It has been a tumultuous year for the crypto investors who have witnessed the total crypto market capitalization tumble from about $2.2 trillion at the beginning of 2022 to about $850 billion in December. The sharp erosion in valuation was caused due to several high-profile bankruptcies in 2022.
The entire Terra ecosystem imploded with the collapse of its LUNA token and TerraUSD (UST) stablecoin. The failure of Three Arrows Capital followed this black swan event, and the final blow came as FTX underwent a bank run and imploded. These back-to-back events triggered a liquidity and credit crunch and appear to have caused the most damage to the crypto industry.
A prolonged bear market tends to test investors’ patience, but it offers one of the best opportunities to buy fundamentally sound cryptocurrencies at lower levels. Smart investors who can go against the herd and invest during periods of panic tend to benefit the most when the trend eventually turns.
While a bear market is a great time to build a portfolio, traders tend to make the mistake of buying the coins that have fallen the most in the hope that they will recover to their previous glory. Most times that does not happen because every bull market has a new set of leaders. Generally, the ones that are resilient during the fall or recover quickly from the bottom tend to lead on the way up.
Let’s look at five cryptocurrencies that are showing promise for 2023
BTC/USDT
The broader cryptocurrency market is unlikely to start a new bull phase until Bitcoin
BTC 16,604
stages a turnaround. Although Bitcoin has been in a strong downtrend for the past several months, the relative strength index (RSI) is forming a positive divergence, indicating that the bearish momentum may be weakening.
ETH/USDT
Ether
ETH 1,190
has been in a strong downtrend, but a minor positive is that it is finding support near the psychological level of $1,000. The repeated rallies to the 20-week EMA ($1,428) also indicate sporadic buying by the bulls.
MATIC/USDT
Several major cryptocurrencies are trading or have been threatening to break below their June low, but Polygon
MATIC 0.7759
has been an outperformer as it is trying to form a base well above its yearly low.
TON/USDT
Toncoin (TON) has been gradually pulling higher since the June low of $0.74. Traders put in a higher low at $1.18 in October, which is a sign of strength.
QNT/USDT
Quant (QNT) soared from $40 in June to $228 in October. This sharp rally in the midst of the bear phase indicates strong demand from traders. Although the price has given back a large part of its gains, buyers are trying to form a higher low near $87.
