1. Market Wrap: Bitcoin Underperforms Ether; Crypto Tax Ahead?
Bitcoin dipped below $40K as traders digest proposed crypto taxes.
Cryptocurrencies were mostly higher on Monday as bullish sentiment continues into August. Bitcoin underperformed other major cryptocurrencies and is down about 3% over the past 24 hours compared to a 2% rise in ether over the same period.
Buyers remain active despite ongoing regulatory crackdowns in China. On Sunday, the People’s Bank of China (PBoC) said it will keep applying high regulatory pressure on crypto trading, mostly due to concerns about financial risk.
Traders are also digesting the 58-page “Digital Asset Market Structure and Investor Protection Act, proposed by Rep. Don Beyer’s (D-Va.), seeking to create an exhaustive regulatory regime for digital assets. The U.S. Senate is also advancing a $1 trillion infrastructure bill with a crypto tax provision, which could be a source of market anxiety.
For now, a breakdown on intraday charts “suggests that bitcoin may fall back to the mid-range at around $36,000, or lower, before the rally continues,” wrote Marcus Sotiriou, trader at the U.K.-based digital asset broker GlobalBlock, said.
Bitcoin (BTC) $39,164.5, -5.06%
Ether (ETH) $2,604.8, -2.05%
S&P 500: 4387.15, -0.18%
Gold: $1812.9, +1.44%
10-year Treasury yield closed 1.173%, compared with 1.236% on Friday.
Meme stock rotation
Over the past month, popular “meme stocks” have sold off as bitcoin rallied. This inverse relationship was noted in The Daily Shot newsletter a few months ago, and indicates a pattern of buying and selling across high yielding traditional and crypto markets.
It is possible that traders will flock to meme stocks if bitcoin pulls back from overbought levels.
2. GOP Lawmaker: Janet Yellen’s Treasury Likely Behind Surprise Crypto Bill
Rep. Tom Emmer of Minnesota also criticizes the updated bipartisan infrastructure bill aiming to raise $28 billion via crypto taxes.
How did a Democratic congressman with no prior public stance on cryptocurrency suddenly propose a comprehensive bill to regulate it without help from lawmakers who have been working on the topic for years?
One Republican reckons someone in the Biden Administration must have put his colleague up to the task.
Rep. Tom Emmer (R-Minn.) speculated Monday that Rep. Don Beyer (D-VA) proposed the sweeping bill on digital assets at the request of the Treasury Department.
3. Former Monero Maintainer ‘Fluffypony’ Arrested and to Be Extradited for Non-Crypto Crimes
Riccardo Spagni, who was arrested in Tennessee, will be extradited to South Africa to face fraud charges.
Riccardo Spagni, the former maintainer for privacy coin Monero, was arrested in Nashville, Tenn. on July 20 and will be extradited to South Africa to face fraud charges for crimes unrelated to crypto.
Spagni, known online as “Fluffypony,” is accused of stealing approximately $100,000 from his former employer, Cape Cookies, by generating false invoices from fictional entities and routing payment to his personal bank accounts between 2009–2011.
Spagni was previously charged with fraud and related charges in a regional court in Cape Town, but pleaded not guilty and failed to appear in court. According to court documents, South African authorities could not find Spagni at his home address in South Africa, and after speaking with Spagni’s friends and family, found that Spagni had fled South Africa.
4. Ether Prints Record Winning Streak as London Hard Fork Looms
Ether has notched a 12-day winning streak, the longest ever.
Ether looks to extend its record daily winning streak in the runup to a planned upgrade on Ethereum’s blockchain that could significantly reduce the cryptocurrency’s supply growth.
The second-largest cryptocurrency by market cap was trading 1.6% higher on the day near $2,600 at press time, having rallied 43% over an unbroken string of 12 straight daily price gains, according to Coinbase data.
“Ether has notched a 12-day winning streak, the longest ever,” blockchain analytics firm IntoTheBlock tweeted early today, citing $2,598 and $2,753 as key resistance levels on the path toward $3,000.
Aside from bitcoin’s price recovery from $30,000, ether may have received a boost from Ethereum’s upcoming 11th backward-incompatible upgrade, or hard fork, slated to happen on Aug. 4.
5. Banished Chinese Bitcoin Miners Look to the West, and Far Beyond
China’s crackdown on crypto mining has sent local miners on a global hunt for places to host their machines. Despite reports of North America luring miners, so far there is no clear winner.
Factors like lead times to build out hosting sites, energy and labor costs, tax regimes, climate and political and business environments are among many local issues that make it difficult for miners to map out a specific route of migration, industry pros said.
While North America is one major destination, Central Asia, Latin America and Europe may be even more serious contenders in the future. Some in the crypto industry will likely welcome this development because it indicates a more decentralized distribution of hash power around the world and potentially assuages fears of Chinese miners having an outsized influence on the Bitcoin network.
Around 25% of the hashrate that came offline because of China’s crackdown since March will eventually end up in North America, with another 25% going to central Asian countries such as Kazakhstan, Mongolia and parts of Russia, according to estimates by Nick Hansen, CEO of Seattle-based crypto mining firm Luxor.
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August 3, 2021