News Updates October 18, 2022

1. EU to release draft law clamping down on Bitcoin over energy consumption. 

The growth of Bitcoin (BTC) has been associated with high energy consumption over the years, with the flagship cryptocurrency receiving criticism for its carbon footprint. Consequently, regulators are increasingly proposing new laws seeking to discourage the use of assets like Bitcoin. 

 
Indeed, the European Union is the latest entity to propose a new law that seeks to establish grading measures to encourage the use of environmentally friendly assets operating on protocols like the Proof-of-Stake (PoS), Bloomberg reported on October 18. 

Under the law, the EU seeks to develop an energy efficiency label for assets like Bitcoin as part of containing energy consumption in the sector. Cross-border cooperation 

According to the EU, the draft law will be enhanced through cross-border cooperation while challenging member states to reign in miners’ energy consumption during winter. Notably, the region is gearing up for the winter season without a gas supply from Russia.

“Just as their use has grown significantly, the energy consumption of cryptocurrencies has more. In harnessing the use of cryptocurrencies and other blockchain technologies in energy markets and trading, care must be taken to use only the most energy-efficient versions of the technology,” the draft reads. 

2. Bitcoin Slips as Stocks Rise, Sparking Speculation Over Correlation
BTC’s 30-day correlation with stocks drops to the lowest point since January. The U.S. Federal Reserve’s aggressive interest hikes are “likely priced in,” a researcher says.

Crypto markets were lower in U.S. midday trading, underperforming stocks as the correlation between bitcoin and the Standard & Poor’s 500 Index fell to the lowest point since January.

The CoinDesk Market Index fell by 1.6% over the past 24 hours. Bitcoin (BTC), the largest cryptocurrency by market value, was down 1.7%, changing hands in a range between $19,300 and $19,700. Ether (ETH), the second-largest by market capitalization, followed a similar trajectory, down 2% to about $1,300 as of press time.

The S&P 500 rose 1% on Tuesday, buoyed by earnings news, including a better-than-expected profit report from Goldman Sachs. The Wall Street firm’s shares jumped 3% on the news, according to Reuters.

The recent episodes of price divergence are “making crypto investors wonder if the nascent asset class has decoupled from top indices,” said Iakov Levin, founder and CEO of crypto investment platform Midas Investments.

3. Sharp Bitcoin price move expected as volatility hangs at record lows and sellers are ‘exhausted’
Bitcoin price has been range-bound for 126 days, but analysts say an explosive move is imminent.

Bitcoin’s (BTC $19,330) lack of volatility has been the dominant discussion point among traders for the past two weeks and the current sideways trading within the $18,000 to $25,000 range has been in effect for 126 days. A majority of traders agree that a significant price move is imminent, but exactly what are they basing this thesis on? 

Let’s take a look at three data points that predict a spike in Bitcoin volatility.

Muted volatility and seller exhaustion
According to Glassnode research, the “Bitcoin market is primed for volatility,” with on- and off-chain data flashing multiple signals. The researchers note that 1-week realized volatility has fallen to 28%, a level that is typically followed by a sharp price move.

Exploration of Bitcoin’s aSOPR, a metric which “measures an average realized profit/loss multiple for spent coins on any given day” shows:

“A large divergence is currently forming between price action, and the aSOPR metric. As prices trade sideways or decline, the magnitude of losses that being locked in are diminishing, indicating an exhaustion of sellers within the current price range.”

4. Indian Commerce Giant Flipkart Will Allow Customers to Purchase Items in the Metaverse.

Flipkart, the Walmart-backed Indian e-commerce giant, has launched a pilot to allow its customers to experience making purchases in a metaverse environment. The company announced the launch of its own metaverse, called Flipverse, in which several brands will be able to offer their own shopping experiences.

Flipkart to Launch Flipverse: A Metaverse of Purchases
Flipkart, one of the biggest India-based e-commerce companies, has announced it will pilot its own metaverse purchasing experience. Called Flipverse, this metaverse will allow customers to experience purchasing as if they were physically present in a virtual store through their smartphone.

According to the company, the experience wants to bring gamification and loyalty points to the shopping experience, allowing customers to collect supercoins and digital collectibles from different brands that are already signed on to be part of this pilot program.

To create the new platform, Flipkart established a partnership with eDAO, a Polygon-incubated firm, to prepare the metaverse experience for this month’s launch. The company has already enrolled the participation of several key partners including Puma, Noise, Nivea, Lavie, Tokyo Talkies, Campus, VIP, Ajmal Perfumes, and Himalaya, that will be able to offer their own tailored experiences and stands in Flipkart’s metaverse.

A Flipkart executive stated:

The idea is to have millions of users experience Flipverse and open the doors to the future of shopping. Fifteen years ago, we were the first Indian company to launch Web 2.0-based commerce. And I feel today we are the first company to launch Web 3.0 commerce.

5. UK Law Commission to review international laws on crypto to consider legal reforms
The legal review authority will work to compile law reform proposals for public consultation in the second half of 2023.

The Law Commission of England and Wales will set about reviewing private international legal challenges involving cryptocurrencies through a government-commissioned project.

The review, launched on Oct. 18, will provide clarity on how international law approaches emerging technologies like cryptocurrencies, digital assets and electronic documentation.

The law reform project, dubbed "Digital Assets: Which Law, Which Court?" will outline current international legal rules and their application to digital contexts with the purview of making recommendations for legal reforms to keep United Kingdom laws relevant.

The project is sponsored by the Ministry of Justice and intends to develop reform proposals to be published for public consultation by the second half of 2023.

The announcement highlighted that the proliferation of blockchain technology has generated a number of conflict of law issues, which, in turn, has created legal uncertainty for users, organizations and governments.

6. EU Seeks US Help For Crypto Regulations.

The global digital assets industry is trading under increased volatility due to the absence of Crypto regulations. Amid the call for clearer crypto related laws European Union (EU) financial services chief has urged the US policymakers to form a conclusion over it.

Increased need for crypto regulation

As per a report, Mairead McGuinness, the EU financial services chief has issued a warning over the digital assets citing a threat to financial stability. She mentioned that any crypto regulations inflicted on the market would need to be put in the global order.

McGuinness highlighted that they need to see other nations also who are keen to form laws around the crypto market. However, there are several authorities that are trying to catch up with the EU’s implemented crypto regulations. She added that there different players in the market but with the same objective.

The report suggests that the Irish commissioner met US politicians on Capitol Hill. She had a brief conversation about how to regulate the crypto industry. The commissioner sensed that US policymakers are in the same line with the EU. However, European policymakers are more concerned regarding the crypto regulations and market.