News updates May 04, 2022

1. Bitcoin Seen Dropping To $32K – But Not This Month – As Analyst Sees It Hitting $48K

The price of Bitcoin (BTC) has failed to break through the $40,000 barrier, indicating that confidence in the cryptocurrency market remains sluggish.

BTC has been declining for more than a month. If it falls below $38K, it could fall all the way to $32K. While the crypto market is now bearish, another crash is improbable, at least until the FOMC meeting concludes.

Traders’ enthusiasm in the cryptocurrency market continues to erode as a result of the market’s prolonged fall and geopolitical uncertainty. Veteran trader Peter Brandt anticipates a test of the Bitcoin (BTC) price below $32,000.

Brandt stated in a tweet that Bitcoin has completed a bearish course, plunging below the $38K level in the last 24 hours. He anticipates a $32,000 test in the near future. However, his estimate of $28,000 is more concerning for Bitcoin.

Additionally, on-chain data does not bode well for bitcoin, as profit transactions have surged. This indicates that profit booking may be occurring at higher levels.

 *Analysts Remain Upbeat On Bitcoin, Despite Jitters*

Despite persistent concerns about the cryptocurrency market’s significant correlation with equities, analysts remain bullish on crypto.

According to market expert and Placeholder VC partner Chris Burniske, Bitcoin and Ethereum have dominated the stock market for years and will continue to do so.

Burniske said in a tweet that the cryptocurrency market had “held up quite well” in comparison to high-growth stocks. While BTC and ETH have lost roughly 40% from their all-time highs, several high-growth stocks have fallen between 60% and 80%.

According to on-chain data from analytics platform Santiment, traders’ confidence in BTC reclaiming its $40k level appears to be ebbing. The BTC and ETH Ratio of Profit/Loss Transactions data suggests a staggering 12.5 to 1 ratio of profit transactions to loss transactions.

Thus, the likelihood of BTC sliding below $32K appears to be high as trust continues to dwindle and whale purchases stay low.

 *BTC At $48K This May*

Meanwhile, while no asset’s future performance can be predicted, Alex Kuptsikevich, senior market analyst at FxPro, forecasts Bitcoin will trade between $32,000 and $48,000 by the end of this month.

“May is regarded a relative success for BTC in terms of seasonality. Bitcoin has concluded the month up seven times and down four times during the last 11 years,” Kuptsikevich .

Kuptsikevich stated that he made this projection based on the cryptocurrency’s average gain of 27% and average loss of 16% in May, for a total gain of roughly 11%.

As of Tuesday evening, Bitcoin was trading at approximately $38,528 per coin, CoinGecko data show.

2. Here’s How Bitcoin (BTC) Will React to Highly-Anticipated Fed Rate Hike, According to Top Crypto Analyst

A widely followed crypto strategist is predicting how Bitcoin (BTC) will behave in response to the Federal Reserve announcing a fresh round of rate hikes.

Pseudonymous analyst Pentoshi tells his 540,600 Twitter followers that he sees Bitcoin rallying with tech stocks once the markets digest the news coming from the Federal Open Market Committee (FOMC) meeting.

So many stocks at or around their March 2020 lows AFTER the Covid crash. Spotify, Netflix, Zoom, Paypal, and many more. Post FOMC rally for equities and BTC short term as many are at key pivot points looking to be setting up in my opinion.”

The Federal Reserve is expected to raise interest rates by 50 basis points after the May 4th meeting in an effort to curb inflation, according to CNBC.

Popular crypto trader Light agrees with Pentoshi’s prediction that BTC will likely surge after the FOMC meeting as he says the announcement will be a buy-the-news event.

Candlestick watchers, line drawers, and other similar cave dwellers will once again be baffled after thinking they are trading BTCUSD and finding out the truth. Think VIX comes off post-FOMC. Thin liquidity and options will do the rest. Sell the rumor buy the news, again…

This is setting up again to be a buy the news event in almost any Fed outcome.”

Looking at the key levels to watch for Bitcoin in the coming days, Pentoshi says that a move above its immediate resistance at $39,700 will trigger a rally to $42,000.

“BTC will be monitoring $39,700 for the bias point. Above that = squeeze to $42,000. Staying agile, less sidelines from my end.”

3. India to Impose New 20% Tax on Cryptocurrencies Sparking Investor Fear:

India is seeking new ways to tax citizens by levying charges on crypto income derived outside of the country.

The tax department is mulling over the option to impose additional taxes on cryptocurrency and interest-yielding DeFi transactions. 

According to the Economic Times, the tax department is considering imposing a 20% tax deducted at source on such transactions. In particular, the new deductions will apply in instances where one party is not a resident in India or has not submitted their permanent account number (PAN) card details.

 *More than 15 million turn to DeFi*

Indians have turned to DeFi in recent years to reap the benefits of settling transactions, borrowing with ease, and depositing and lending funds in exchange for earning yields. 

Over 15 million have turned to DeFi products and offerings as a way to hedge their wealth and save on taxes

For the tax department tracking of these transactions is very crucial. The government could slap a 5% additional tax in the form of equalization levy or on any transaction where one of the persons is not based in India,” said Girish Vanwari, the founder of Transaction Square, a tax advisory firm.

“In the case of non-residents, the withholding on interest is at 20% plus applicable surcharge and cess as per the income-tax act or the treaty, whichever is more beneficial, and 10% plus applicable surcharge and cess for residents,” said Amit Maheshwari, senior partner at AKM Global.

 *India tax plans draw criticism*

India has drawn criticism with a plan to impose a 30% rate on income from cryptocurrency investments, plus a 1% tax deductible at source (TDS) on trades above a certain amount. The proposals are scheduled to come into effect on June 1.

Manhar Garegrat of CoinDCX notes that the 1% TDS will mean that “there will be no liquidity left in the markets” because trades will not be executed efficiently on the platform.

The way the tax has been worked out will lead to people moving out of the country,” says Dinesh Kanabar, CEO of Dhruva Advisors. Apart from the flight of capital out of the country, the taxations have been criticized as “going against the fair market prices for those instruments and can push trading underground.”

4. Pakistan Forms Committees to Decide Whether Crypto Should Be Legalized or Banned:

The Pakistani government has formed three committees to decide whether to establish a legal framework for cryptocurrency or ban it. The committees will review all aspects of the cryptocurrency business and come up with recommendations on the country’s crypto policy

 *Committees Constituted to Decide on the Legal Status of Cryptocurrency in Pakistan* 

Pakistan’s federal government has constituted three sub-committees to decide the future of cryptocurrency and related businesses in the country, the Express Tribune reported Tuesday citing documents it has seen.

The sub-committees were formed during a meeting chaired by Finance Secretary Hamed Yaqoob Sheikh to decide whether to legalize or ban cryptocurrency business. They will review all aspects of the cryptocurrency business and come up with recommendations on the country’s crypto policy. Their proposals will be sent to a committee headed by the finance secretary.

The first sub-committee was formed under the chairmanship of the Pakistani law secretary. Members of this sub-committee include the State Bank of Pakistan (SBP), the Federal Investigation Agency (FIA), and the Pakistan Telecommunication Authority (PTA).

This committee will evaluate whether cryptocurrency can be banned under the current laws. It will also recommend a method that can be used to ban crypto while maintaining a balance between welfare and technological advancement.

The other two sub-committees were set up under the chairmanship of SBP Deputy Governor Saima Kamal. Members of these sub-committees include representatives of the Ministry of Information Technology, the Securities and Exchange Commission of Pakistan, and the PTA.

Their recommendations will be based on imposing an immediate ban on cryptocurrency and its repercussions in the future. They will also discuss whether Pakistan would lag behind other countries in the technological advancement race if cryptocurrency is banned in the country.

The State Bank of Pakistan has long taken an anti-crypto stance. SBP Governor Reza Baqir said in March that “around the world, there is a lot of misuses [of cryptocurrency], including human rights violations, trafficking of people, money laundering, and many other things.” He noted in February that the potential risks that are associated with cryptocurrencies “far outweigh the benefits.”

In January, the Federal Investigation Agency (FIA) reportedly asked the Pakistan Telecommunication Authority to ban more than 1,600 crypto websites.

5. Ex-Fed vice-chair Quarles has lost none of his fervor in opposing US CBDC:

The former Federal Reserve official once again expressed his opposition to a United States central bank digital currency in a Tuesday podcast.

Former United States Federal Reserve vice-chair for supervision Randal Quarles discussed central bank digital currencies (CBDC) and the chances of the U.S. adopting such technology in an interview on the “Banking With Interest” podcast Tuesday. Quarles, who is known for his opposition to a CBDC, expressed his skepticism about the so-called digital dollar and predicted the U.S. will not introduce it.

Quarles, who served at the Fed from 2017 to 2021, said a close analysis of CBDCs would show that their advantages are “extremely marginal, if they exist at all.” He did not see the potential for CBDCs in promoting financial inclusion, commenting: 

Using a CBDC to exclude the role of the bank would be “pathological,” he added.

Quarles said opinions on CBDCs differ within the Fed, but he lamented the attitude of following in other nations’ footsteps just for the sake of it. He did not think a bill authorizing a CBDC could pass Congress, as the public would react unfavorably to the idea once it received broader attention. Nonetheless, he noted, “a coterie of politicians […] Many of them conservative Republicans, who you might expect would be concerned about this issue, but they’re more concerned we’re falling behind China.”

Quarles was bullish on stablecoins for international transactions, saying “we tend to win” when U.S. private sector innovation competes with state-run entities, such as the e-yuan. A CBDC would make stablecoins less attractive, he reasoned, asking:

  *Fitting the bill: US Congress eyes e-cash as an alternative to CBDC** 

When asked if he had any advice for his proposed successor as Fed vice-chair, former Ripple adviser Michael Barr, Quarles said, “Make your decisions as technocratic as possible,” in preparation for explaining to political supporters why they will not get everything they want.

6. Cuban residents turn to crypto in the face of U.S. sanctions and collapsing currency:

After the Banco Central de Cuba (BCC), the nation’s central bank announced at the end of April that it would issue licenses for virtual asset service providers (VASPs), more has been made of the use of cryptocurrency in the island nation.

A recent estimate suggests that more than 100,000 Cubans are now using cryptocurrencies, with the number of residents embracing them growing at an exponential rate, due in large part to the introduction of mobile internet three years ago, according to a report by NBC on May 3.

Some cafe owners even accept payments in store for two of the most well-known digital assets, Bitcoin and Ethereum, as most Cubans cannot utilize internationally accepted credit or debit cards such as Visa or Mastercard because of U.S. sanctions.

Cryptocurrency entrepreneur Erich Garcia said: 

 *Cuba experiences a crypto boom*

With the embargo on Cuba stronger than ever, multinational banks who do business with the country, such as JPMorgan and Deutsche Bank, have been subjected to significant penalties.

As a result, even when the Cuban government has the funds to purchase things such as food and medications, making payments becomes a hassle; thus, the central bank will now issue licenses for making payments.

7. South Korean KakaoBank is Considering Partnerships With Crypto Exchanges. KakaoBank, a South Korean digital bank, stated that it evaluates cooperation with a local cryptocurrency exchange during its quarterly business performance conference.
Yun Ho-young, CEO of KakaoBank said, 
"Because [crypto] is regarded as a key asset among clients, we're looking into how we can give virtual assets in the form of services or as a business in a positive light." 
To comply with anti-money laundering requirements, cryptocurrency exchanges require banking partners to furnish real-name deposit and withdrawal accounts to offer cash-to-crypto services. According to local sources, Kakao is considering partnering with Coinone, which the digital Bank has rejected.
KakaoBank's Competing Neobank
After partnering with the nation's largest cryptocurrency exchange Upbit, KakaoBank's competing neobank K Bank recorded its first annual surplus in 2021 and tripled its number of members since 2020. With 18 million customers, KakaoBank is South Korea's largest digital bank. In Q1 2022, the Bank posted its highest-ever operating income of 88.4 billion KRW (US$70.14 million), a 63.8 per cent increase year over year.

8. Proposed digital euro designs lack privacy options, ECB presentation shows
Transactions via the EU’s prospective CBDC could be transparent to intermediaries, as any non-crypto digital transactions are. 

Next to the fears of government overreach that the European Union’s ambitious digital euro project stirred, the main concern of the public is the prospective currency’s privacy framework. It appears that this worry might not be overblown after all, as the European Central Bank’s (ECB) latest presentation hints that user anonymity is not a desirable design option.

On Tuesday, crypto venture adviser and European digital asset regulation whistleblower Patrick Hansen drew public attention to the ECB’s presentation titled “Digital Euro Privacy options.” The document is relatively short and contains nine slides that lay out the possible options for user privacy in the EU’s Central Bank Digital Currency (CBDC), also known as the digital euro.