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First Mover: Bitcoin Falls as Covid Surges, ECB’s Lagarde Steps Up, US GDP Hits 33%

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Bitcoin was lower for a second day, even as traditional markets showed signs of stabilization following Wednesday’s sell-off. 

Cryptocurrency analysts looked for solace in bitcoin‘s October-to-date return, still at an impressive 22%, during a month when the Standard & Poor’s 500 Index of U.S. stocks has declined by 2.7%.

“The sell-off in equities and gold due to rising Covid infections and restrictive lockdowns had only a limited impact on the digital asset,” Lennard Neo, head of research for the cryptocurrency-focused firm Stack Funds, wrote Thursday in a report

In traditional markets, European stocks rose as traders awaited a decision from the European Central Bank, headed by President Christine Lagarde, on whether further monetary support is needed amid a resurgence in coronavirus cases. 

U.S. equity futures pointed toward a higher open, as a key government report showed that the world’s largest economy grew at a 33% in the third quarter – a somewhat context-less data point that’s likely to do little beyond serving as an easy talking point for President Donald Trump’s reelection campaign

Market Moves

Just as bitcoin bulls were starting to salivate over the cryptocurrency’s powerful rally over the past week toward $14,000, a sell-off in traditional markets has dragged prices back down.

Investors globally were rattled by reports of a resurgence in coronavirus cases. German Chancellor Angela Merkel announced that the country would implement tough new business restrictions, and French President Emmanuel Macron announced plans to impose a national lockdown. 

Such restrictions could crimp economic growth, theoretically a deflationary development, which could reduce demand for bitcoin in the short term as a hedge against higher consumer prices. There’s also the possibility that some investors, seeing further turmoil ahead, decided to bulk up on cash. One of the easiest things to sell is bitcoin, which is still up 84% year-to-date, even after Wednesday’s sell-off.  

“It seems the pressure was too much,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency research firm Quantum Economics, told clients Wednesday. 

As detailed in First Mover on Wednesday, analysts relying on price-chart patterns have identified few points of resistance along bitcoin’s path from the hitherto-rarely-breached $14,000 psychological level to the all-time-high around $20,000, reached in 2017.   

According to Greenspan, “$14,000 is a huge psychological barrier, and I would be delightedly flabbergasted if we were able to pass through it without first seeing a significant pullback.”

options-chart-skew

Probability (left axis) of bitcoin being above $X (bottom axis) at maturity, implied from options market.
Source: Skew.

And as reported Thursday by CoinDesk’s Omkar Godbole, bitcoin options traders are assigning a low probability that the cryptocurrency will end 2020 above $20,000.

The implied chances of prices above that level currently stand around 6%, according to the cryptocurrency data firm Skew. 

“A below-10% probability of record highs by the year end means the market is unconcerned with that outcome,” Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5 told Godbole in a Telegram chat.  

Despite the sincerest wishes of bitcoin bulls, it would take a rally of more than 60% in the next eight weeks for prices to set a new record. It wouldn’t be unprecedented: There have been eight times in the 11-year old cryptocurrency’s recorded history where prices have rallied more than 50% or more in a two-month span. 

It could be that traders are just being realistic. 

“The options market is seemingly not getting carried away with the recent strong price momentum,” Sui Chung, CEO of CF Benchmarks, said in a statement to CoinDesk. “If we extrapolate bitcoin’s price action and volatility of the past 90 days till December expiry, then bitcoin appears set to end the year between $14,000 to $15,000.”

Read More: Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End

Bitcoin Watch

godbole-oct-29

Bitcoin daily price chart showing resistance and support levels.
Source: TradingView

Bitcoin’s price rally has paused, with the top cryptocurrency by market value near $13,100, having reached 16-month highs above $13,800 during Wednesday’s Asian trading hours.

Investors are rotating money out of stocks and into safe havens like the U.S. dollar and treasuries on concerns that Germany and France’s new lockdown restrictions would torpedo Eurozone’s fragile economic recovery.

Not just bitcoin, but almost every asset denominated in U.S. dollars has taken a beating in the past 24 hours or so. Markets saw similar but more violent action in March when recession fears triggered a global dash for cash.

Should the virus figures continue to rise, risk aversion will likely intensify, fueling a more profound decline in the cryptocurrency. However, it’s possible that investors could buy the dips, with rising institutional adoption boosting the cryptocurrency’s long-term prospects.

Besides, stock markets will likely stabilize, helping bitcoin regain poise if the ECB announces more monetary stimulus later Thursday. While the central bank is expected to maintain the status quo, it could lay the groundwork for additional stimulus in December. Earlier this month, Goldman Sachs said that the central bank could boost its pandemic bond-buying program by 400 billion euros ($470 billion) in December to counter deflationary pressures.

From a technical analysis standpoint, the immediate bias will remain bullish as long as prices are held above $12,500. On the higher side, the June 2019 high of $13,880 is the level to beat for the bulls.

– Omkar Godbole 

Token Watch

Bitcoin (BTC): Winklevosses’ Gemini cryptocurrency exchange allows purchasing and trading with euros

Ripple (XRP): San Francisco-based payments firm plans to invest in blockchain money-transfer app MoneyTap, a joint venture with Japan’s SBI Holdings. 

Crypto.com Coin (CRO): Cryptocurrency-focused credit-card lender expands in Latin American market, hires former Visa exec Filomena Ruffa as general manager.

What’s Hot

Fidelity’s digital-asset division expands crypto custody service to Asia (CoinDesk)

Blockchain pioneer Caitlin Long’s Avanti wins approval from Wyoming regulators for new banking charter (CoinDesk

Bank of Canada Governor Macklem says digital currency initiative is progressing beyond proof-of-concept stage toward launchable product (CoinDesk

FTX crypto exchange launches bitcoin pairs for tokenized versions of top stocks Amazon, Apple, Tesla (CoinDesk

Coinbase crypto exchange to launch Visa debit card in U.S. early next year (CoinDesk

Former regulator who oversaw New York State’s BitLicense development and more recently led New York Stock Exchange’s regulatory division will now join crypto-friendly venture-capital firm  Andreesen Horowitz (CoinDesk

Analogs

The latest on the economy and traditional finance

Federal Reserve might be running low on ammunition to juice market and the economy (CNBC)

Jack Dorsey, Twitter CEO who also oversees payments-firm-turned-cryptocurrency-investor Square, grilled by U.S. Senator Ted Cruz over tweet platform’s content controls (WSJ)  

Lenders now telling U.S. mall owners to pay up on past-due mortgage bills (WSJ)   

Chinese Communist Party set to detail 15-year economic growth plan (Bloomberg

Tweet of the Day

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Disclosure

Source: https://www.coindesk.com/first-mover-bitcoin-coronavirus-ecb-lagarde-us-gdp

Blockchain

Audio Streaming Mogul Spotify Considering Cryptocurrency Payments

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Joining the tech and financial services bigwigs in the payments revolution, Spotify too is going the crypto way. The Swedish audio streaming and music services giant just put up a job offer for an Associate Director, Payments Strategy & Innovation. The desired candidate will play a key role in ‘navigating the company’s payments rudder’ through the cryptocurrency ecosystem.

Spotify Looking To Be A ‘Leading Player In The Cryptocurrency Space’

As per an official job opening that Spotify just posted, the company is looking for an Associate Director for their Payments Strategy & Innovation Team. The said individual would report to the Director of the same team. And will be instrumental in Spotify gaining a considerable foothold wrt integration of cryptocurrency payments. According to the description:

We are now looking for an outstanding Associate Director to join our Payments Strategy & Innovation team. This role will report to the Director, Payments Strategy & Innovation and will play a key part in defining and implementing Spotify’s payments strategy as well as leading Spotify’s activity within the Libra stablecoin project and wider digital asset & cryptocurrency space.

The objective is to address the company’s plan of ‘enabling new monetization opportunities’ for music creators. Also, Spotify wants its platform to become accessible to a larger section of potential users.

Spotify intends to inculcate all the latest fintech trends in their payments strategy, including cryptocurrencies. So that users from all sections of the society can access the music streaming platform.

Crypto Agenda Involves Libra As Well

One of the designated roles of the incoming Associate Payments Strategy Director would be to lead ‘Spotify’s day-to-day engagement with the Libra Association.’ This is due to the ongoing alliance of the company with Facebook’s digital currency project.

Along with this, the company is looking to leverage all the blue-chip aspects of the blockchain and cryptocurrency space. This includes stablecoins and Central Bank Digital Currencies (CBDCs). It is to streamline its transition to the most advanced payment methods available in finance at the moment.

The Associate Payments Strategy Director would be required to fulfill the above roadmap by making use of

Spotify’s global footprint to seek out innovation in the payments domain globally as well as emerging regulatory & market trends that could influence Spotify’s approach to payments.

Through all the above, the company actually intends to elevate its ‘reputation as a market leader in payments’, the website said. And give giant payments players like PayPal a run for their money.

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Source: https://cryptopotato.com/audio-streaming-mogul-spotify-considering-cryptocurrency-payments/

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India Reportedly Plans to Tax Crypto Investors As Bitcoin Price and Trading Activities Soar

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Barely ten months after the Indian Supreme Court lifted the RBI’s ban on cryptocurrency transactions, fresh reports from yesterday revealed that the country’s tax authority is now keeping a close watch on crypto traders as Bitcoin’s price continues its bullish trend.

Taxing Crypto Gains

According to local media, the Indian Tax Department is already in possession of data belonging to investors who invested in Bitcoin or cryptocurrencies through banking channels before the RBI’s ban in 2018. 

This development is coming after data shows a tremendous increase in crypto trading activities in India. Since the crypto ban was lifted earlier this year, retail investors between the ages of 25 and 40 have been spending millions of dollars on crypto trading every day. 

Over $25 Million Daily

Two of India’s largest crypto trading platforms, Binance-acquired WazirX and CoinDCX, saw a significant increase in activities over the last six months. According to an earlier report, WazirX recorded a massive 125% increase in user signups in the last two quarters. The exchange also has a daily trading volume of $19-26 million, with more than 85% of the transaction coming from Indian traders. 

Some experts believe it will be difficult for the country to tax crypto because there’s no regulation in place for crypto dealings. They feel a regulatory framework will provide the needed clarity to make taxation easier. While India is yet to release its crypto regulation, an earlier report suggests that the country may regulate crypto as commodities.

Declaring Bitcoin Profits As Capital Gains

Although it is unclear how India plans to implement the tax law, sources familiar with the matter claimed that the country’s taxman is already preparing to collect tax on the gains made from Bitcoin. And notice may be sent out to investors if “something goes out of this.”

Experts believe that the tax authorities may classify crypto gains as business income, and investors may have to pay up to 30% tax on profits made from selling cryptocurrencies. 

However, some tax experts are advising their clients to declare their Bitcoin earnings as capital gains, which is similar to profits generated from shares.

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Source: https://cryptopotato.com/india-reportedly-plans-to-tax-crypto-investors-as-bitcoin-price-and-trading-activities-soar/

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Bitcoin Veterans Dump Long-Term Holdings as Price Nears $20K

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Traders who have held Bitcoin for more than 155 days are selling their stash as its price eyes $20,000, a Glassnode study revealed.

ASOL (Please Don’t Read it Loud)

The on-chain analysis platform cited Average Spent Output Lifespan (ASOL), a barometer to gauge the average age of coins that have been transacted. The metric’s higher readings reflects that long-term holders are realizing their profits by selling their Bitcoin.

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT
Bitcoin ASOL hit a local peak on November 2020. Source: Glassnode
Bitcoin ASOL hit a local peak on November 2020. Source: Glassnode

The chart above showed entry-adjusted ASOL. The metric was rising before November 18, a period that coincided with the Bitcoin price’s rally from $9,800 to as high as $18,800. It showed that more and more long-term traders were selling the cryptocurrency at its local tops.

Glassnode provided complimentary evidences of a dump by measuring the total Bitcoin supply’s profit held by long-term holders, or LTH. The metric peaked on November 17 at 12.3 million BTC when Bitcoin was trading around $17,670. But after that, the cryptocurrency’s price kept on trending upward, but LTH fell by almost 200,000 BTC.

“This,” said Glassnode’s analyst Liesl Eichholz, “supports ASOL’s indication that a meaningful amount of BTC owned by long-term holders was indeed sold around late November, as even though the price has since increased, the LTH supply in profit has decreased.”

Bitcoin Bearish?

With long-term holders exiting the Bitcoin marker with their profits, one could interpreter it as a sign of the market’s underlying weakness. Nevertheless, Glassnode clarified that that the profit-taking behavior was—in fact—bullish.

“The large decreases in total LTH supply seen above make intuitive sense; as these long-term holders realize profits, they leave room for new retail investors to enter the market, which has historically driven bitcoin’s largest bull markets,” explained Ms. Eichholz.

The statements reflected a flurry of recent Bitcoin comebacks after stronger downside corrections. Just recently, the cryptocurrency established an all-time high near $20,000. But the new peak attracted sellers, causing the price to plunge to low as $18,100 (data from Coinbase).

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT
Bitcoin price is looking to close above $20,000. Source: BTCUSD on TradingView.com
Bitcoin price is looking to close above $20,000. Source: BTCUSD on TradingView.com

Bitcoin later bounced back to above $19,500, showing that bulls were in control of the overall market trend.

“If BTC’s price follows this historical trend,” added Mr. Eichholz, “it indicates that we are in for further price increases before the top is reached.”

Source: https://www.newsbtc.com/news/bitcoin/bitcoin-veterans-dump-long-term-holdings-as-price-nears-20kbitcoin-veterans-selling-off-long-term-holdings-as-price-nears-20klong-term-holders/

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