News Updates June 29, 2022

1. Bitcoin Drops Below $20,000 Again, What's Next? 

Bitcoin has lost the battle against bears and plunged below $20,000 once again, destroying the hopes and beliefs of investors who thought that the new rally had already started and that Bitcoin is now going to run toward the previous ATH.

In today's trading session, Bitcoin briefly dropped below $20,000 but then returned above $20,000 and is now consolidating at the support level. Unfortunately, there is not much of a volume on the trading pair, suggesting that investors and traders are not yet ready to support another rally, not short the digital gold.

Positive scenario
The sudden return of buying power on the market is unlikely to happen without significant drivers on the traditional financial market, which means that Bitcoin will rally only with the help of retail investors and whales.

While Bitcoin is aiming at the further plunge to the local support level of $18,800, the market should not be worried too much as a small double top chart pattern may become a foundation for another rally.

Negative scenario
With the drop below the $18,800 support level, we might see a spike in selling pressure caused by traders who grabbed some cheap BTC around the mentioned price, as they would most likely prefer breaking even on their position or selling at a slight loss.

2. MicroStrategy Adds $10M Worth of Bitcoin, Defying Bearish Fears. 

Publicly-traded business intelligence company MicroStrategy has purchased an additional 480 bitcoins (worth $10 million). The latest purchase brings the company’s total holdings to 129,699 BTC (worth around $2.6 billion at today’s prices).

MicroStrategy has spent a total of $3.98 billion on its bitcoin investment, averaging $30,664 per BTC. The cryptocurrency currently hovers around the $20,000 mark, representing a nearly $1.4 billion unrealized loss for the company.

3. John Deaton Attacks SEC Chairman Gary Gensler’s Takes on Bitcoin. 

John Deaton, founder and host of CryptoLaw, recently made an appearance on FOX Business to discuss cryptocurrencies. Deaton provided some commentary on SEC Chairman Gary Gensler’s definition of Bitcoin as a commodity, rather than a security.

According to Deaton, Gensler was quoted as saying that Bitcoin is the only cryptocurrency that he is ready to categorically reject as being a security. Deaton, however, considers this completely incorrect. He added that ‘not a professional bureaucratic hack but a Court’ makes the decision as to whether or not anything is a security.

Deaton believes that the reason Gensler is saying that is because the SEC Chair prefers for there to be vagueness in regulatory uncertainties because it allows him prosecutorial options for him to engage in regulations by enforcement. This is what Deaton believes the reason for Gensler’s statement to be.

He went on to claim that Gensler likes to govern with uncertainty, thus he does not want to spell out explicit criteria/guidelines that would make it simpler for businesses and entrepreneurs to comply with them.

4.  400+ Crypto Advertisements Violate Guidelines in India — 'Some Influencers Talk About Crypto Without Understanding It'

 *419 Ads in Violation — Most Complaints Concern Influencers*

The Advertising Standards Council of India (ASCI) has reportedly revealed that it received 453 complaints relating to crypto ads between January and May.

The council added that out of all complaints, 419 cryptocurrency advertisements required modifications, the Economic Times reported Monday, noting that most complaints concern influencers.

She explained that the council will continue to focus on adequate disclosures and risk disclaimers for payment-based promotions. The standards body is currently focusing on raising awareness with crypto exchanges.

“Some of these influencer ads don’t even talk about the risks, which is not right and against our guidelines. Technically, they are ads with no disclosures or disclaimers, which is mandatory,” Kapoor detailed, elaborating:

There are two sets of guidelines applicable to most crypto ads in India. One covers the promotion and advertisement of cryptocurrencies, crypto exchanges, and non-fungible tokens (NFTs). It was issued by the ASCI in February and went into effect in April.

The other set of guidelines, which entered into force in June last year, regulates the advertising and marketing activities of influencers.

Since the ASCI is a self-regulatory organization and its guidelines are not legally binding in India, when there is a breach of guidelines, it publishes the names of those in violation and escalates the case to relevant government regulators.

In May, the Securities and Exchange Board of India (SEBI) proposed banning public figures, including celebrities and sportsmen, from advertising and endorsing crypto products and services. The securities watchdog also proposed that public figures be held liable for any legal violations when promoting crypto products.

5. Argentina customs investigating alleged scheme involving mining hardware: Ámbito

Argentina's customs authority is reportedly investigating an alleged scheme involving a Florida-registered company said to have overvalued 2,223 crypto mining machines imported into the country.

According to a report in the local economic publication Ámbito, authorities have seized the imported machines including Whatsminer M30S models, among others. The machines reportedly entered the country at Buenos Aires' Ezeiza International Airport, and were destined for a special tax zone in La Plata, Argentina without having obtained the required approvals. 

According to the news report, customs authorities found that the machines were declared as having an average price of $10,000. However, their investigation determined that the machines' real value is between $5,770 and $7,420, while their market value is slightly higher at between $6,316 and $7,700.

Therefore, Ámbito reported that the importer would have overvalued the machines by about $5 million, with the caveat that the final number requires calculating each machine's mining power.

The company involved in importing the mining machines is an LLC based in Florida, Ámbito reported. The machines were imported from China, the article said, but invoiced by that U.S. entity. Authorities are reportedly investigating the links between one of the people working at the LLC as well as another individual.

We must take care of dollars for production and job creation, not for financial speculation," Argentina's director general of customs Guillermo Michel was quoted as saying in the news article.

Authorities filed a complaint against the involved parties on June 23, the news article said.

6.  That's 'Sir' Crypto Dad: French order knights former CFTC chair Chris Giancarlo

The first of his name, king of the punks and the first regulators, protector of the seven tokens, the keeper of the great CBDC, the breaker of blockchains and father of crypto

The French government has given former United States Commodity Futures Trading Commission chair Chris Giancarlo, also known as "Crypto Dad," the equivalent of a knighthood.

In a Tuesday tweet from Giancarlo, the former CFTC head said France’s National Order of Merit awarded him a Chevalier — the equivalent of a knighthood — in a ceremony at the French ambassador's residence in Washington D.C. Those attending included current and former CFTC commissioners Rostin Behnam, Brian Quintenz, Christy Goldsmith Romero, Kristin Johnson, Caroline Pham, as well as Hester Peirce of the Securities and Exchange

The order announced Giancarlo’s appointment in May. Phillippe Etienne, France's ambassador to the United States, said the award was due, in part, to the former CFTC chair’s “understanding of financial markets and the potentials of crypto finance.”

“[This award] recognizes the creation of well-regulated crypto trading markets and strengthening of overseas regulatory ties with the help of many fine public servants during my time of government service,” said Giancarlo at the time.

Giancarlo worked as the chair of the CFTC for five years before leaving in April 2019. During his time with the government agency, he oversaw the launch of regulated Bitcoin (BTC) futures and was alleged to have had a “do no harm” approach to blockchain regulation, earning him the nickname Crypto Dad.

Since leaving the CFTC, Giancarlo has gone on to join blockchain investment firm CoinFund as a strategic adviser, the board of directors for blockchain startup Digital Asset, and briefly, the board of crypto lending firm BlockFi. He currently works as a senior counsel at the law firm Willkie Farr & Gallagher.

 *Emmanuel Macron on crypto: 'I don't believe in a self-regulated financial sector'*

Other individuals who have previously been knighted by their respective governments have joined the crypto space in various ways. Sir Richard Starkey, also known as Beatles member Ringo Starr, launched his own line of nonfungible tokens on June 13. Star Trek star William Shatner, who tokenized a series of trading cards in 2020, was inducted into the Order of Canada in 2019 — though many have said the honor is not equivalent to a knighthood.

7. Russian lawmakers approve tax breaks for cryptocurrency issuers: Reuters

A draft law that would exempt issuers of cryptocurrencies and digital assets from value-added tax (VAT) was approved by the Russian parliament on Tuesday.

According to a Reuters report, the law would not only exempt issuers from paying VAT but also establish a new tax rate of 13% for Russian companies and 15% for foreign ones on taxed incomes from digital assets. It was approved by the State Duma members in both the second and third readings today.

This proposed legislation — which must be approved by both the upper house and President Vladimir Putin before becoming law — represents a change in thinking for the country that has previously heavily criticized digital assets.

Earlier this year, the Russian central bank advocated for a blanket ban on crypto, citing its potential for increasing the financial instability of Russian citizens. However, as the country has found itself increasingly financially isolated due to its invasion of Ukraine, it has softened its stance in the face of sanctions from the West which saw several banks banned from the SWIFT payments network. 

In March, Russia's largest bank, Sberbank, announced it would soon start issuing and exchanging digital assets after getting the green light from the Russian central bank. This followed a February move to give blockchain platform Atomyze Russia, the first license to exchange digital assets.

8. Bitcoin Miners Bail out as Energy Prices Soar and Profitability Plunges

More and more Bitcoin miners are throwing in the towel amid soaring energy prices and plunging profitability. This has had a knock-on effect on hash rates and difficulty, which are also starting to fall.

As Bitcoin mining becomes less profitable, more and more rigs are being powered down, resulting in a fall in hash rate and difficulty.

In a report on the State of the Network, analytics firm CoinMetrics delved into the mining sector in what has been a highly volatile quarter for crypto markets.

It cited rising energy costs as a primary reason for the Bitcoin miner exodus. Combined with the slump in BTC prices, the double whammy means more miners are powering down.

Even with the most cutting-edge mining hardware such as Bitmain’s Antminer S19, each machine costs as much as $1.50 more per day to operate now vs. a year ago,” it noted.

Industrial-scale mining companies with tens of thousands of these machines will be feeling the pinch.

 *Bitcoin plunging profitability*

Mining profitability, measured in dollars per day per terahash per second, started falling when markets did, just after their Nov peak. Since then, mining profitability has slumped 82% from $0.45/day per TH/s to $0.08/day per TH/s, according to Bitinfocharts. It is currently at its lowest levels since Oct 2020, just before the last bull run when BTC was priced at around $11,000.

The powering down of mining rigs has impacted Bitcoin’s hash rate, which is a measure of network computing power and an overall proxy for network health and security. From recent highs of around 250 EH/s, average hash rates have fallen by about 11% to roughly 223 EH/s making mining quite competitive still.

Difficulty, which is an automatically adjusted network-determined parameter, has also started to fall. Although the declines from peak levels are just 5.4%, it is a lagging reaction to lower hash rates due to fewer miners.

This week, Compass Mining lost one of its facilities due to non-payment of power bills. Companies with huge debts for machinery, such as Marathon Digital, are also likely to suffer. Industrial electricity rates in some states, such as Georgia and Oklahoma, have increased by more than 20% over the past year, reported CoinMetrics.

 *Ethereum mining exodus*

A similar situation is happening with Ethereum miners, which is good news for PC gamers. Ethereum can be mined with high-end graphics processors, but with similar factors affecting them, miners have been dismantling their rigs.

As a result, used graphics cards are starting to flood secondary markets as prices and demand dwindles. Good news for gamers, bad news for crypto miners.