News Updates July 06, 2022

1. Has Bitcoin’s Price Hit Its Bottom as CPI Levels Off Slightly? Recent data from the US Bureau of Labor and Statistics shows that the Consumer Price Index (CPI) has remained relatively consistent over the last 2 months. 

As seen from the line chart above, the US CPI has leveled off somewhat over the last two months after being on an extreme positive slope since June 2020. In this period, the CPI has risen from 0.1 to 8.7. In the last two months, the CPI has only increased by 0.1. With this being the case, is Bitcoin (BTC) finally establishing its bottom as inflation may be leveling off?

Recently, BTC has broken above the $20,000 level according to CoinMarketCap. Its price now stands at around $20,107.97. 

Looking at the daily chart for BTC, the price of BTC has reached a major level on the monthly chart around the $20,000 level. This is after the price of BTC closed the previous months in losses as the CPI continued to rise throughout these months.

As a result of the continued price fall, the 9 Moving Average (MA) has crossed below the 20 Moving Average (MA) for the first time in BTC’s history. This is a bearish flag that suggests that BTC’s price may continue to fall.

With this being the case, the $20,000 level may not be able to hold off the selling pressure seen on the monthly chart for much longer. It would be fair to say that the BTC has established its bottom if the 9 MA and 20 MA lines were positioned differently, with the 9 MA positioned above the 20 MA.

2. Bitcoin (BTC) Perpetual Contract Price Analysis: July 6.

In Bitcoin Perpetual Future (BTC) price analysis on July 6, 2022, we use price patterns, and the Moving Average of BTC to analyze the future movement of the cryptocurrency. 

A perpetual contract is similar to a futures contract, which allows a person to buy or sell an asset at a predetermined date for a specified price. Perpetual contracts are gaining popularity in crypto because they allow traders to hold leveraged positions without the burden of an expiration date. 

Bitcoin (BTC)

Cryptocurrency giant Bitcoin (BTC) operates free of any central control or the oversight of banks or governments. Instead, it relies on peer-to-peer software and cryptography. A public ledger records all Bitcoin transactions and copies are held on servers worldwide. Every transaction is publicly broadcast to the network and shared from node to node. Every ten minutes or so these transactions are collected together by miners into a group called a block and added permanently to the blockchain. 

Bitcoin can be exchanged for cash just like any asset. Moreover, there are numerous cryptocurrency exchanges online where people can do this but transactions can also be carried out in person or over any communications platform, allowing even small businesses to accept Bitcoin. 

When Bitcoin was first launched it was possible almost instantaneously to mine a coin using even a basic computer. Even more, miners also choose which transactions to bundle into a block, so fees of varying amounts are added by the sender as an incentive. 

Bitcoin (BTC) Price Analysis
BTC price analysis on July 6 2022, is explained below with an hourly time frame.

Descending channel patterns are short-term bearish in that stock moves lower within a descending channel, but they often form within longer-term uptrends as continuation patterns. The descending channel pattern is often followed by higher prices, but only after an upside penetration of the upper trend line. The stock will continue channeling downward until it is able to break either the upper or lower trend line. An upside break is bullish, while a downside break is bearish. 

Furthermore, descending channels are useful due to their ability to predict overall changes in trends. As long as prices remain within the descending channel. the downward trend in price can be expected to continue.

Currently, the price of BTC is $20210. If the pattern continues, the price of BTC might reach the resistance level of $21777 and the buy level of BTC is $20372. If the trend reverses, then the price of BTC may fall to $17605, and the sell level of BTC is $18535.

Bitcoin (BTC) Moving Average

Currently, BTC is in a bearish state. However, BTC’s price touches 50 MA (short-term), but it lies below 200 MA. Possibly, BTC can also move above 200 MA (long-term) soon. Once it moves above 50 MA and 200 MA levels, it completely goes to a bullish state. Moreover, there is a high possibility of a Trend reversal.

3. Bitcoin (BTC) Makes Third Attempt at Breaking out Above $20,800

Bitcoin (BTC) has so far made three unsuccessful attempts at breaking out above the $20,600 resistance area. It is currently gearing up to make the fourth one.

BTC has been decreasing underneath a descending resistance line since April 5. More recently, the line caused a rejection on June 7. This led to a low of $17,622 on June 18. 

The price bounced afterwards and created what resembles a double bottom pattern, with the second bottom being slightly higher than the first one. Moreover, the RSI has also made a higher low and moved outside its oversold region. 

The aforementioned descending resistance line is currently at $22,000, and would provide resistance if the upward movement is to continue.

 *Short-term BTC pattern* 

The six-hour chart shows that it is possible that the price has created an inverse head and shoulders, which is considered a bullish pattern. If so, BTC has completed the right shoulder and is currently making an attempt at breaking out above the neckline. The most likely wave count does suggest that a bottom has been reached.

The RSI supports the creation of this pattern, since it has generated bullish divergence (green line) and its trend line is still intact. 

A breakout that travels the entire height of the pattern would take the price all the way to $25,000, also causing a breakout from the aforementioned descending resistance line.

 *Breakout attempt* 

Finally, the two-hour chart shows that BTC has broken out from a descending resistance line and made three unsuccessful attempts at moving above the $20,600 resistance area.

Since resistances get weaker each time they are touched, an eventual breakout from this area is expected. This is also in line with the readings from the six-hour chart.

Furthermore, the RSI has found support above 50, indicating that the short-term trend is bullish.

4. Indian Probe Panel Demands More Documents from CoinDCX, Others.

Despite the plummeting trading volumes, the Indian crypto space has come under strict surveillance from the authorities. The Indian Directorate of Enforcement (ED) is seeking additional documents from cryptocurrency firms in line with the ongoing probe on alleged foreign exchange violations.

According to a recent report by Economic Times, Sumit Gupta, the founder of crypto trading platform CoinDCX, and the executives at other crypto exchanges, including CoinSwitch Kuber, have been summoned by the probe agency.

An official from the directorate said the panel is “examining every detail” of offshore transactions and “transaction history, relationship with foreign exchanges, how much money is going out of India.”

A spokesperson for CoinDCX confirmed that the ED “sent notices to major exchanges in India seeking information and data on how platforms work” and that they have “shared all necessary information to the satisfaction of the department and no subsequent action is pending” at their end.

Since May this year, CoinDCX paused its crypto withdrawal facility without prior communication to its customers and, around the same time, enforced stricter know your customer (KYC) standards.

Multiple agencies have been investigating crypto firms, including the Income Tax department. In June 2021, the ED asked the largest cryptocurrency exchange in India, WazirX, to explain transactions worth 2,790.74 rupees allegedly violating FEMA rules.

5. UK to Introduce Legislation on Stablecoins by August: BoE’s Cunliffe
There’s been at least a bit of delay in the framework thanks to recent resignations from Prime Minister Boris Johnson's government.

The U.K. Treasury – in consultation with other regulatory bodies including the Bank of England (BoE), the Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA) – will introduce legislation on a regulatory system for stablecoins before the August summer break, said Deputy BoE Governor Jon Cunliffe on Wednesday.
Speaking at the Qatar Centre for Global Banking and Finance’s annual conference, Cunliffe said recent events have delayed plans a bit. He’s likely referring to the last 24 hours, when Treasury chief Rishi Sunak and senior Treasury official Jon Glen resigned from their roles in Prime Minister Boris Johnson’s government. Both Sunak and Glen had presented themselves as fans of crypto, announcing months ago their hope the U.K. would become a hub for digital assets.
 
The Treasury, in its April stablecoin consultation, said the government would initially look to regulate that sector of crypto using the 2017 Payment Service Regulations, Financial Services Act and the 2011 Electronic Money Regulations Act. It promised more detailed requirements for stablecoins to be developed with the help of the BoE, FCA and PSR.
Cunliffe also spoke about plans outside of the U.K., saying the committee on payments and market infrastructures (CPMI) – the international panel that Cunliffe chairs – will finalize guidance on global standards for systemic payment systems before the summer break. Among the issues: What assets should back these stablecoins, what should the redemption or claim be and how do you ensure if a stablecoin or money that is being used at a systemic level is safe. The CPMI also plans a report on how the Basel Framework for banking should apply to stablecoins, Cunliffe said.

6. Fed conference hears stablecoins may boost USD as global reserve currency

The underlying tech of a central bank digital currency wasn’t enough to convince some panelists at a Fed conference that it could change the international currency system.

A note published by the United States Federal Reserve at a recently held conference found a majority of exports believe a U.S. dollar central bank digital currency (CBDC) would not drastically change the global currency ecosystem.

Panelists at the conference also agreed that CBDC development outside of the U.S. doesn’t threaten the status of the dollar, but the development of cryptocurrencies could alter the role of the dollar globally, with some saying stablecoins could even boost the U.S. dollar's role as the global dominant reserve currency.

The assessments came from expert panelists at a June 16 and 17 conference hosted by the Federal Reserve on the “International Roles of the U.S. dollar” collated into a note and published by The Fed on Tuesday. The conference was used to gain insight from policymakers, researchers and market experts to understand “potential factors that may alter the dominance of the U.S. dollar in the future,” including new technologies and payment systems.

A discussion on a panel addressing digital assets and if CBDCs would provide advantages for the dollar had panelists agree that the underpinning technology alone wouldn’t “lead to drastic changes in the global currency ecosystem”.

Speakers on the panel included digital currency initiative director at MIT Neha Narula, head of research at the Bank of International Settlements Hyun Song Shin, chief investment strategist at asset management firm Bridgewater Rebecca Patterson and HSBC bank’s head of FX research Paul Mackel.

The panelists agreed that factors such as market and political stability, along with market depth, are more crucial for dominant reserve currencies like the U.S. dollar than the development of a Fed-issued digital dollar.

The development of CBDCs by other countries was also generally agreed by the panel to have a tendency to focus more heavily on that country’s own domestic retail market and, therefore, was considered “not a threat to the U.S. dollar's international status.”

The Federal Reserve noted the amount and scope of CBDCs for making cross-border payments are “still quite limited,” suggesting that these systems don’t yet pose a threat to the dollar, which accounts for a majority of international financial transactions, according to an October 2021 note.

Focusing on cryptocurrencies, panelists said further development of digital assets could change the international role of the dollar, but adoption by institutional investors was throttled by a lacking regulatory framework, leaving the current crypto market to be dominated by speculative retail investors.

Another panel including Fed financial research adviser Asani Sarkar and finance professor Jiakai Chen concluded that part of the demand for crypto, especially Bitcoin (BTC), was driven by a desire to evade domestic capital controls, citing BTC prices in China trading at a premium in comparison to other countries.

Despite this, the Fed says panelists didn’t see crypto as a threat to the global role of the dollar in the short term. Some even suggested in the “medium run” that crypto could reinforce the dollar’s role if “new sets of services structured around these assets are linked to the dollar,” a likely reference to stablecoins, cryptocurrencies pegged to the value of a fiat currency (usually USD).

 *US lawmaker lays out case for a digital dollar*

The advice by panelists may help put a new spin on things for members of the Federal Reserve.

Previously, the Federal Reserve Board of governors said in June that stablecoins not sufficiently backed by liquid assets and proper regulatory standards “create risks to investors and potentially to the financial system” likely referencing the collapse of TerraUSD Classic (USTC).

The comment by the Board came before Federal Reserve chair Jerome Powell stated a CBDC could “potentially help maintain the dollar’s international standing.”

7. European Union Crypto Regulation Sets 1000 EUR Privacy Threshold

European Crypto Regulation Set Privacy Limits At 1,000 EUR.

The long-awaited Markets in Crypto Assets (MiCA) bill has finally seen a successful conclusion to the negotiations that were taking place inside the EU’s Economic and Monetary Affairs Committee.

The MiCA will work toward the implementation of supervisory regulations, consumer protections, and environmental safeguards, as well as the establishment of laws governing how cryptocurrencies and digital assets should be handled.

The new legislative framework, which has been the subject of controversy from its start in 2020, addresses the transparency, disclosure, authorization, and oversight of service provider transactions and tries to establish a uniform approach throughout all 27 member states.

MiCA aspires to improve financial stability and investor safety in Europe by mandating that all bitcoin wallets complete KYC processes, among other regulations.

The European Securities and Markets Authority (ESMA) will be granted the authority to prohibit or limit crypto platforms if it is determined that they do not adequately safeguard investors or endanger market integrity or financial stability.

Transfers between cryptocurrency exchanges and un-hosted wallets owned by individuals will be required to be reported if the amount exceeds 1,000 euros. This is a contentious issue for cryptocurrency enthusiasts, as they frequently trade digital currencies in order to maintain their privacy.

As the Ukraine-Russia crisis rages, the new framework seeks to decrease anonymity in an effort to combat money laundering and sanctions evasion.

However, many EU nations had already implemented laws regulating various areas of the crypto sector prior to the introduction of MiCA. For example, Germany is one of the nations that has been the most aggressive in terms of the regulation of virtual currencies.

Companies that keep crypto assets or assist trade of crypto assets need to apply for special licenses under German banking legislation. This requirement was implemented with the help of the EU’s anti-money laundering regulation from 2022.

The German financial regulator BaFin said that its regulatory framework was mainly comparable to that of MiCA. However, to date, BaFin has only issued licenses to a total of four different FinTech companies and none to conventional banking institutions.

8. Regulatory Scrutiny Increasing as Crypto Becomes Financial Stability Risk – Report

There has been a sharp increase in regulations targeting the crypto space, with regulatory bodies mainly in North America and Europe aiming for everything from non-fungible tokens (NFTs) to stablecoins and ordinary cryptocurrencies, found a global RegTech (regulatory technology) firm

In a new report on the regulatory outlook for the crypto space, CUBE said that there has been a 7,436% increase in crypto-related regulatory messaging in the past four years, compared to pre-2018.

For 2021, the report found a large increase in new regulations using the terms “Virtual & Cryptocurrencies.” 

Regulations focused on other crypto-related topics such as “Bitcoin,” “Digital asset,” “Crypto” and “Non-fungible token (NFT)” also saw significant growth last year, although to a lesser extent than “Virtual & Cryptocurrencies.”

The change in the use of various terms goes to show that “a new iteration” in crypto tends to be developed just as regulators have “come to terms with the latest development,” the report said.

Further, the report acknowledged that the crypto market has already grown to become a critical piece of the global financial system, and that risks from crypto could spill over into traditional markets.

CUBE added that most of the regulatory issuance comes from North America and Europe, accounting for 51% and 32%, respectively, of all new regulations in the space.

In these regions, the US Securities and Exchange Commission (SEC) and the UK Financial Conduct Authority (FCA) have been among the most active in issuing new regulations.

Among the issues that CUBE finds regulators have missed is the sustainability aspect of crypto. According to CUBE CEO Ben Richmond, global regulators need to drive forward regulations that show that crypto can “thrive without undermining” efforts to mitigate climate change.

And although Richmond admitted that there are “aspects of ESG [Environmental, Social, and Governance] and crypto that do work in tandem,” he argued that the failure to address the environmental impact of crypto will lead to “an inevitable clash of two titans that could set the trajectory of the modern financial world back significantly.”

Looking ahead, the report said that regulators face a universal challenge in managing crypto risks at a global level. And although many national regulators, for the time being, appear to be focused on stablecoins as the most urgent area to regulate, there is “uncertainty as to whether any regulatory regime will hold” without increased global cooperation.

In conclusion, the report said that “time is running out before the volatility of crypto bleeds into global financial stability.” As a result, it is likely that regulators – in an attempt to get faster results – will “stretch existing regimes to cater for cryptocurrencies.”