After the sentencing of Sam Bankman-Fried to nearly 25 years in prison for his role in FTX’s financial mismanagement, attention shifts to his former associates. The cryptocurrency world eyes the upcoming Bitcoin halving, expected between April 18 to April 22, 2024. Blackrock’s Ishares Bitcoin Trust (IBIT) sees its holdings skyrocket past 252,011 BTC. Ethena announces […]
Bitcoin News
‘Bond King’ Bill Gross Predicts Q4 Recession: Loan Delinquencies and Regional Banks in the Crosshairs
Bill Gross, revered as Wall Street’s ‘Bond King,’ foresees a recession clouding the U.S. economy by the year’s final quarter. He pinpoints the burgeoning issue of overdue car payments and the financial strains beleaguering regional banks as catalysts for the impending economic slump.
Bill Gross Foresees Economic Clouds on the Horizon
On Tuesday, October 24, 2023, stock markets have risen, somewhat healing from the previous week’s bruises. Despite this uptick, market conditions remain tumultuous, with the 10-year U.S. Treasury bond yield hovering at 4.84%. Inflation has nudged slightly upward in the last two months, prompting anticipation of a 0.25% interest rate escalation in the forthcoming Federal Open Market Committee (FOMC) meeting.
On the social media network X (formally Twitter), the bond connoisseur Bill Gross publicly shared his projection of a deceleration in the U.S. economy’s momentum come the fourth quarter. “Regional bank carnage and recent rise in auto delinquencies to long-term historical highs indicate U.S. economy slowing significantly,” Gross said. “Recession in 4th quarter,” the investor added.
Auto loan tardiness has surged of late, with other financial slip-ups such as consumer loans and credit card lapses reaching peaks not seen in over ten years. Just last month, an alarming 6% of sub-prime car loan patrons lagged behind by a full 60 days. The unsettling trend of vehicle confiscations began to rise in January and hasn’t looked back since. Intriguingly, while auto loans and other consumer debts reveal escalating delinquency, single-family mortgage payment misses haven’t shown the same consistent uptrend in 2023, though they’ve inched upward.
A closer look at the data paints a mosaic of delinquency trends, oscillating based on the mortgage type and the specific timeframe in focus. The Mortgage Bankers Association (MBA) has pointed out a noticeable uptick in delinquencies for commercial real estate and multi-family sectors in 2023’s second quarter. Amidst this backdrop of rising defaults and a stubbornly high federal funds rate, 2023 has been particularly brutal for regional banks. The scenario grew direr after the abrupt downfall of Silicon Valley Bank (SVB) in March.
In Gross’s commentary on X, he emphatically noted, “I’m seriously considering regional banks again,” following up with the investment advice: “On bonds. Invest in the curve.” The year has seen regional banks not only underperforming but also plummeting even deeper than their lows during the SVB debacle. The financial institution Huntington Bank felt the pressure, shuttering dozens branches across the Midwest.
These regional financiers, are heavily tied to commercial real estate (CRE) and are grappling with the rising defaults. This, coupled with consecutive Federal rate boosts, has nudged their unrealized losses perilously close to the edge.
What do you think about Gross’s prediction? Do you expect a recession in the fourth quarter? Share your insights and opinions about this subject in the comments section below.
Crypto Staking in the Crosshairs: IRS Unveils New Tax Guidance
The U.S. Internal Revenue Service (IRS) has issued a decree stating that American citizens drawing income from cryptocurrency staking services must categorize the value of those digital assets as gross income, the moment they officially take possession of the staking reward.
IRS Clarifies Cryptocurrency Staking Income, Leaves Questions Unanswered
Under fresh tax directives from the IRS, staking rewards in cryptocurrency become taxable income within the United States immediately upon their acquisition by the taxpayer. The instant an owner is granted units of digital assets as incentives for validation, the fair market value of these rewards is to be incorporated into the taxpayer’s gross income during the taxable year in which the individual secures the staking rewards.
“The fair market value is determined as of the date and time the taxpayer gains dominion and control over the validation rewards,” the IRS discloses. The revenue directive was penned by Alina Lewandowski of the Office of Associate Chief Counsel, and notably, the IRS’s guidance omits any mention of exceptions regarding the inclusion of staking rewards in gross income.
The IRS’s fresh tax rules regarding staking have ignited lively debates across social media platforms, with many contending that the ruling leaves gaps and unanswered questions. Tax specialist Jason Schwartz expressed that the guidance prompts “several serious questions.” Specifically, the new IRS directives remain silent on issues such as slashing penalties and whether or not they may be counted as losses.
Additionally, the guidance conspicuously avoids discussing withholding for foreigners, leading Schwartz to pose the inquiry:
Does delegating to a U.S. node result in withholding for a foreigner?
Schwartz delved into the distinction between traditional staking and liquid staking, stating, “Most taxpayers take the view that U.S. tax law doesn’t ‘look through’ nonrebasing LSTs like rETH and wstETH.” He continued: “If they’re right, U.S. taxpayers who buy LSTs can turn current ordinary income into deferred capital gains. Is that the right policy result?” the tax expert inquired.
The latest revelation from the IRS coincides with a period when U.S. regulators are intensifying their efforts against staking services on a wide scale. Additionally, the IRS recently secured a victory against Kraken, compelling the cryptocurrency exchange to furnish the tax agency with transaction details on accounts that engaged in trades worth ,000 or more during the tax years spanning 2016 to 2020.
What do you think about the latest tax guidance issued by the IRS? Share your thoughts and opinions about this subject in the comments section below.
Bitcoin Price Analysis: BTC Lift Off, Cross-Hairs at $4,500
- Bitcoin Price recover, bulls bounce back
- Market leaders set positives in Blockchain and crypto
- There is a jump in market participation level. Volumes swell in the 4HR time frame
After Jan 20 drops, BTC is finding support at around ,500—the lower limit of our support zone. As a result, there is a likelihood that Bitcoin prices will rally in coming days.
Bitcoin Price Analysis
Fundamentals
Jerry Yang has been a longtime fan of blockchain and cryptocurrencies. So, his recent comment at the Nikkei Innovation Asia Forum held in Singapore is nothing new. At the Forum, he said blockchain is a perfect fit for banks and trading.
Yang is particularly impressed by the type of infrastructure in progress saying it shall have a long-term implication. However, this is not the first time he has endorsed this nascent technology.
In a CNBC interview back in late 2017, the Yahoo Co-founder said he was a firm believer in cryptocurrencies and the efficiencies it tags goes a long way in benefiting the society not only from transactions point of view but from it does create a transparent system.
As we know, banks’ operations are often opaque, and it is common to hear of large settlement after being held accountable for facilitating money laundering or defrauding customers.
Candlestick Arrangements
At spot rates, BTC prices are stable and positively hovering above the lower limit of our support zone at ,500. From candlestick arrangement, this is bullish, and if anything, developments, especially in the 4HR chart, is exceptionally optimistic meaning aggressive traders can initiate positions at spot rates.
Behind this optimism is a bullish pin bar—clearer in the 4HR chart—bouncing off Jan 20 lows at the back of above average volumes—5k versus 2k. Increasing demand in lower time frames means there is a similar pattern in the daily chart, lifting investor confidence.
All the same, we shall interpret this as positive, but before we recommend risk-averse traders to buy, BTC prices first need to rally above ,800 or Jan 14 highs. Only then will traders execute with first targets at ,500 with liquidation level at around ,500-700.
Technical Indicators
There is a rejection of lower lows and backing this resurgence is increasing demand for BTC as aforementioned. The double bar bull reversal pattern in the 4HR chart is at the back of high trading volumes—5k versus 2k. Because of this, risk-off traders can buy at spot rates, but it is ideal if there is confirmation as a spike in market participation drive prices above ,800.
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