News Updates July 13, 2022
1. Bitcoin tanks on highest CPI data since 1981 as BTC price dips under $19K
U.S. inflation comes in a full 0.3% higher than expected, causing a dollar strength spike and the euro to fall below parity with USD.
Bitcoin (BTC) fell $800 in minutes on July 13 as the latest United States Consumer Price Index (CPI) data came in far ahead of estimates.
*Dollar smashes new 20-year highs on hot CPI*
Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it dived under $19,000 minutes after the June CPI print, which put U.S. inflation at 9.1%.
Expectations had favored 8.8% CPI year-on-year, this still being the highest reading since the start of the 1980s.
With inflation all but guaranteeing further rate hikes from the Federal Reserve, the mood among risk assets — including crypto — swiftly turned sour.
"Peak inflation is here with CPI coming in at 9.1%," Cointelegraph contributor Michaël van de Poppe reacted, adding that $19,500 should have held for BTC/USD to avoid "cascading south some more."
The knock-on effect of the CPI numbers was also seen in the U.S. dollar. After the release, the U.S. dollar index (DXY) spiked to new twenty-year highs, forcing the euro below parity as a result.
2. Bitcoin wipes $15 billion from market cap in 10 mins as U.S. inflation data runs hot.
On July 12, the price of Bitcoin (BTC) stabilized into a steady holding pattern ahead of the release of U.S. inflation data, which ultimately injected further downwards volatility.
Indeed, news that inflation in the United States exceeded 9.1%, the highest level since November 1981, according to the new CPI report for June, only caused a further downward trend in Bitcoin and the cryptocurrency market.
Currently, Bitcoin is trading at $19,180, down 3.45% on the day and a further 4.70% in the last week, with a total market worth of $366 billion, according to CoinMarketCap data. Notably, the flagship digital asset lost $15 billion from its market capitalization in the space of around ten mins as it fell from $379.91 billion to $364.55 billion upon news emerged with the negative CPI report for June.
3. UK Lawmakers Start Inquiry Into Crypto Use
Parliament's Treasury Committee is requesting evidence on matters such as the possibility of digital currencies replacing fiat money and the effect of crypto on social inclusion. The U.K Treasury Committee is beginning an inquiry into crypto-related risks and opportunities and the appropriate response from the government and regulatory bodies.
The committee is requesting evidence on matters such as the possibility of digital currencies replacing fiat money, the effect of crypto on social inclusion and whether the government and regulators are equipped to "grasp the opportunities" presented by crypto assets.
The Treasury Committee is a cross-party panel of lawmakers whose job it is to scrutinize the policy of the Treasury, Revenue and Customs and other public bodies, including the Bank of England and the Financial Conduct Authority.
Those wishing to submit evidence have until Sept. 12.
The inquiry is one of several similar efforts in the country. The government last week set up an inquiry examining the taxation of decentralized finance (DeFi) activities such as crypto asset loans and staking.
The Treasury also intends to introduce legislation on a regulatory system for stablecoins later this month, according to Deputy Bank of England Governor Jon Cunliffe.
4. International Standard Setters Publish Guidance on Stablecoin Regulations
The two groups recommend that stablecoins be treated the same as other assets that perform a transfer function.
The Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published their final guidance on regulating stablecoins Wednesday.
The guidance is a step toward implementing a “same risk, same regulation” legal framework for stablecoins, which are cryptocurrencies whose value is usually pegged to a national currency.
The CPMI is the BIS forum for international payments and settlements. IOSCO is an organization of the world’s securities regulators.
If a stablecoin performs a transfer function and regulators think it important to financial systems, it should observe the Principles for Financial Market Infrastructures (PFMI) just as a different instrument performing that function would have to, the BIS said in a statement. The principles are the international standards for financial market infrastructures. Countries would decide for themselves whether they want to put them in place, it said.
The collapse of Terra’s stablecoin UST in May stirred regulators across the world to call for further regulation. CPMI Chairman Jon Cunliffe, who is also a deputy governor of the Bank of England, encouraged regulation of the sector in a speech earlier this week.
Meanwhile, the European Systemic Risk Board, which oversees the European Union’s financial system, also said it plans to make proposals on how global standards can be set for crypto assets that could pose a threat to the financial system.
5. Kazakhstan President Signs Law Increasing Tax Burden for Crypto Miners
President of Kazakhstan Kassym-Jomart Tokayev has signed into law a bill amending the country’s Tax Code to impose higher tax rates on crypto miners. The levy will depend on the amount and average price of electricity utilized in the extraction of digital currencies like bitcoin.
*Cryptocurrency Miners in Kazakhstan to Pay Higher Taxes*
President Tokayev of Kazakhstan has signed a new piece of legislation introducing changes to the nation’s law “On Taxes and Other Mandatory Payments to the Budget” and supplementary law enhancing the implementation of the Tax Code. The amendments introduce differentiated tax rates for cryptocurrency mining.
The exact levies will be determined based on the average price of the electricity consumed to mint coins during a certain tax period. They start as low as 1 Kazakhstani tenge (approx. $0.002 at the time of writing) per kilowatt-hour (kWh), when a miner paid 25 tenge or more ($0.053) per kWh, and can reach 10 tenge, if the electricity tariff was in the range of 5 – 10 tenge ($0.011 – $0.021).
Crypto farms using electrical energy generated from renewable sources will pay the lowest tax rate at 1 tenge per kWh, regardless of its cost. That surcharge was enforced on Jan. 1, 2022, after the Central Asian country saw a growing power deficit throughout last year. The shortages were blamed on the influx of crypto miners that followed China’s decision to crack down on the industry in May 2021.
*New Tax Rates to Reduce Load on Nation’s Power Grid, Government Says*
Kazakhstan tried to limit cryptocurrency mining, too, imposing restrictions on electricity supply during the cold winter months and shutting down coin minting facilities across its regions. The measures forced some companies to relocate to other mining hotspots or move a significant portion of their equipment out of the country.
In February, President Tokayev ordered relevant authorities to identify all cryptocurrency miners operating in Kazakhstan and raise their taxes. In April, state auditors went after mining businesses that allegedly exploited tax benefits they were not supposed to benefit from.
That month, the government in Nur-Sultan announced it’s preparing to increase the tax burden for miners and one of the initial proposals was to tie the new rate to the value of the minted cryptocurrency. According to official statements, the new tax rules are expected to level the load on the power grid and discourage the consumption of domestically produced electricity for mining.
6. Here's the 'Final Guidance' on 'Stablecoin Arrangements' by BIS and IOSCO
The Bank for International Settlements (BIS) wants to create a set of standards for the stablecoin industry that will cover payments, clearings, and settlements.
In a report released today and shared with Cryptonews.com, the BIS’ Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions (IOSCO) outlined their “final guidance” on “stablecoin arrangements.”
Token issuers also need to ensure they have an ownership and operational structure that “allow for clear and direct lines of responsibility and accountability,” the bodies wrote.
The report’s authors also emphasized the need for transparency in this regard, and a governance structure that “allows for timely human intervention as and when needed.”
The authors underlined the importance of risk management, stating that stablecoin operators should “regularly review” all “material risks” inherent to dealing with related parties in their ecosystems. These could include “important financial market infrastructures,” as well as “settlement banks, liquidity providers, validating node operators and other node operators, or service providers.”
7. What Will Bitcoin do During Economic Turbulence?
Mt Gox refunding creditors and on-chain analysis present a mixed picture of bitcoin's immediate outlook.
Longer-term bitcoin is a historically strengthening asset, but how it will perform in turbulent conditions.
Where does bitcoin go from here, is a question currently being asked with regard to its precipitous drop, the possibility of a bear market bottom forming, or alternatively, another leg down still to come. Looking further ahead, there are questions about its outlook for the next several months and years, given the precarious macro possibilities, and unknowns around what bitcoin, as new tech, currency, or a misunderstood asset, might actually be used for.
Ominous Factors
In the immediate future, there are a multitude of ominous factors suggesting that bitcoin could dip further. News of Treasury yield curve inversion suggests recession is a possibility in the US, and further rate hikes from the Fed are expected this month, creating a bleak economic outlook for the near term.
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It was reported that bitcoin miners are capitulating and selling coins, and there is the continuing fallout and all-round shakiness resulting from the collapse of over-leveraged crypto entities such as Three Arrows Capital, Celsius and Voyager, and going back to the Terra network implosion.
8. What’s The Next Support Level For EVMOS?
Due to an airdrop and a few recent upgrades to its development, the cosmos-based interoperable chain Evmos (EVMOS) has recently made headlines. Built on the Cosmos blockchain, Evmos is a proof-of-stake (PoS) technology. In essence, it’s also a significant interoperability move for the Cosmos network. It is intended to work with different Ethereum Virtual Machine (EVM) ecosystems.
The Evmos V6 update was successful. It recently underwent a major improvement that increased speed and decreased gas costs. Additionally, it has been through a continuing airdrop-claim process, which is very helpful. Now, they have decreased congestion, imposed the minimum gas fee, enhanced stability, and established 2-second block intervals. Let’s take a look at the EVMOS price
The EVMOS price is currently around $2.13. It has climbed by more than 80% since it was at its lowest price of $1.12. On the four-hour chart, the price of EVMOS has been on a bullish trend, although it was rejected at a key resistance level at $2.23.
The EVMOS may continue to climb in the near future despite Cosmos’ long-term bearish tendency. If this happens, $2.23 and $2.4 will be the next important resistance levels to pay attention to. The positive outlook will be invalidated if the EVMOS price falls below the $2 support level.
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