Just over two weeks have passed since the fourth Bitcoin halving took place. During this period, the network’s hashprice dropped from over 0 per petahash to below at the beginning of May. It has since increased to per petahash. Despite the modest rebound, the network’s total hashrate has experienced a decrease, with a […]
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New UK Law Empowering Authorities to Seize and Destroy Crypto Assets Takes Effect Today
A new law enabling the National Crime Agency and police to seize, freeze, and destroy crypto assets is now in effect in the UK. Under this law, police can seize crypto from suspects without needing to make an arrest first. Additionally, victims have the right to request the release of funds held in crypto accounts […]
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The Grayscale Effect: The Bitcoin Price Has A New Prime Trading Hour
The crypto trading landscape is witnessing a paradigm shift with the recent introduction of spot Bitcoin ETFs in the United States, catalyzing a new wave of trading dynamics. Bloomberg analyst James Seyffart revealed that the total trading volume of the US spot Bitcoin ETFs over a span of the first three days approached the billion mark.
This substantial volume was predominantly led by Grayscale’s GBTC, with a three-day trading volume amounting to .174 billion, followed by BlackRock’s IBIT at .997 billion, and Fidelity’s FBTC at .479 billion, cumulating to an aggregate trading volume of approximately .771 billion.
Update on the #Bitcoin ETF Cointucky Derby. The ETFs have traded almost billion total over 3 days. Will have updated flows and assets later tonight or tomorrow morning. pic.twitter.com/OnpCshjYJP
— James Seyffart (@JSeyff) January 16, 2024
Despite these impressive figures, Bitcoin’s price performance has not mirrored the trading volume’s growth, a phenomenon analysts attribute to a strategic pivot among Grayscale’s clientele. Investors are increasingly transitioning their capital from Grayscale’s GBTC, with its 1.5% annual fee, to more cost-effective spot BTC ETFs, some offering fees as low as 0.25%.
This shift, however, is not seamless due to the cash-redemption process prescribed by the Securities and Exchange Commission (SEC). Consequently, investors find themselves navigating a temporal gap, redeeming cash and reallocating it to other spot BTC ETFs, typically a few days later.
Understanding The Grayscale Effect On Bitcoin Price
This operational characteristic of Grayscale’s GBTC, which does not facilitate same-day cash redemptions for BTC and operates on a T+2 or T+1 settlement basis, has given rise to a discernible trading pattern. Alex Thorn, Head of Research at Galaxy, provided insight into this phenomenon, stating:
We’re seeing significant Bitcoin trading volume now during US hours, particularly between 3-4pm NY now during the ETF fix, escalating into what has lately been a predictable Grayscale dump into the close. The game is evolving.
Echoing this sentiment, Daan Crypto Trades observed a consistent pattern in Grayscale’s operations, highlighting, “Grayscale is sending X amount of Bitcoin to Coinbase ~1 hour before the market opens every trading day. Will be a good indicator to gauge how bad the outflows of GBTC are I think. 4K BTC was sent Friday. 9K BTC was sent [Monday].”
Further substantiating these observations, Maartunn from CryptoQuant remarked on the tangible outflow of Bitcoin from Grayscale’s fund, particularly to Coinbase, stating, “Data doesn’t lie, as seen once again. Shortly after the inflow of Bitcoin from Grayscale to Coinbase, the Coinbase Premium Gap, previously positive, turned negative for the first time this year, indicating strong selling pressure from Coinbase.”
He emphasized the correlation between these events and the increased trading volume on Coinbase, especially during the trading hours of the American stock market.
Crypto analyst James Van Straten further detailed the pattern of Grayscale redemptions to Coinbase Prime, noting, “We’re starting to see a pattern of Grayscale redemptions to Coinbase Prime just before the market opens. 9k Bitcoin (7M) sent to Coinbase Prime all before 2:30 (GMT) on Jan 16. On Jan. 12, 4k Bitcoin before the market opened.”
As these patterns continue to manifest and evolve, the Grayscale effect is evidently reshaping the prime trading hour for Bitcoin, introducing a new layer of complexity and strategy in the crypto trading arena. Importantly, the Grayscale selling pressure will not last forever, but as long as it exists, it could continue to put some pressure on the Bitcoin price.
Until then, following the Grayscale flows could be crucial for determining BTC price trends. Grayscale still holds circa 587,000 to 617,000 Bitcoin, depending on the data provider.
At press time, BTC traded at ,754.
New Crypto Tax Law Takes Effect in US: Transactions of $10,000 or More Must Be Reported to IRS Within 15 Days
A new tax reporting law has entered into force in the U.S. Starting on Jan. 1, all Americans receiving ,000 or more in crypto in the course of their trade or business must file a report with the Internal Revenue Service (IRS) within 15 days. “If you don’t file a report within 15 days of receiving the transaction, you could be found guilty of a felony offense,” Coin Center warned.
New Crypto Tax Law Takes Effect on Jan. 1
Effective Jan. 1, 2024, the Infrastructure Investment and Jobs Act, which passed in November 2021, requires “anyone who receives ,000 or more in cryptocurrency in the course of their trade or business to make a report to the IRS about that transaction,” crypto policy advocate Coin Center explained in a blog post on Tuesday.
“The report must include, among other things, the name, address, and social security number of the person from whom the funds were received, the amount received, and the date and nature of the transaction,” Coin Center executive director Jerry Brito detailed, adding:
This law became effective on January 1st and all Americans are now subject to it … If you don’t file a report within 15 days of receiving the transaction, you could be found guilty of a felony offense.
Coin Center is a leading non-profit research and advocacy center focused on the public policy issues facing cryptocurrency. The organization filed a lawsuit against the Treasury Department in June 2022 challenging the constitutionality of this new crypto law. However, Brito emphasized that “the case is still in the courts,” cautioning: “Unfortunately for the time being there is an obligation to comply — but it’s unclear how one can comply.”
The executive director outlined some potential challenges in complying with the new regulations. “For example, if a miner or validator receives block rewards in excess of ,000, whose name, address, and social security number do they report?” he began. “If you engage in an on-chain decentralized exchange of crypto for crypto and you therefore receive ,000 in cryptocurrency, who do you report? And by what standard should you measure whether an amount of a particular cryptocurrency is equivalent to more than ,000?”
He also questioned when someone makes a donation, such as in bitcoin (BTC) or ether (ETH), anonymously to a public address, who would the recipient list as the donor? “These are all questions the Treasury Department has yet to answer,” the executive director stressed.
Noting that the Internal Revenue Service (IRS) “has not issued any guidance answering these and other questions,” Brito further pointed out that there is also currently no form provided by the Treasury Department to report crypto transactions.
“The Secretary requires ‘cash’ to be reported using Form 8300, but has not explained how cryptocurrency, which is now a form of ‘cash’ under the law, should be reported on this form,” he described, adding: “Form 8300 is today sent to FinCEN [Financial Crimes Enforcement Network] as well as the IRS. Unlike with physical cash transactions, FinCEN has no authority to collect reports concerning cryptocurrency transactions, so one cannot be required to send Form 8300 there.”
Brito also clarified that the law applies to individuals as well as businesses. He explained in an X post on Tuesday:
The obligation applies to *individuals* if they receive k+ in the course of their trade or business, not just ‘businesses.’ So, if I’m a miner (even as an individual) I’m covered. Also, if I’m a day trader (even as an individual) I’m covered.
Moreover, he noted: “If I’m an NFT [non-fungible token] artist it would also cover me even if I don’t have an incorporated business, etc.”
While reiterating, “Again, it is not just ‘businesses’ that must comply but individuals too if they receive the funds in the course of their trade or business,” the Coin Center executive director opined: “That all said, what constitutes ‘trade or business’? Well, it’s not exactly clear from Treasury guidance to date. No clear bright line rule that I can find.”
What do you think about this new tax reporting rule requiring Americans receiving ,000 or more in crypto to report transactions to the IRS within 15 days? Let us know in the comments section below.
Elon Musk’s Ripple Effect: Cogwise Predicts a $95 Million Revenue Loss for X and Its Impact on the Stock Price
This Sponsored Story is written by Cogwise.
As the fallout from Elon Musk’s bold statement continues to reverberate across the business landscape, one crucial question looms: How will the predicted million revenue loss for X translate into tangible effects on its stock price? Cogwise’s insightful forecasting extends beyond revenue predictions, delving into the intricate web connecting financial performance and market dynamics. Join us as we navigate the potential consequences, exploring the implications of this substantial revenue downturn on the stock price of X.
Cogwise’s Forecast: A Predicted Loss of Million
Known for his unfiltered and unconventional communication style, Elon Musk has once again made headlines, this time for his bold stance against advertising. Cogwise, a platform renowned for its predictive capabilities, is now being looked to for insights into the potential financial fallout.
Cogwise’s predictive prowess provides a unique vantage point for analyzing the complex interplay between a substantial revenue loss and its repercussions on the stock market. As investors scrutinize financial statements and industry shifts, the correlation between a company’s revenue health and its stock performance becomes increasingly evident.
Cogwise, utilizing advanced algorithms and predictive models, has run analyses to gauge the potential impact of Elon Musk’s statement on Twitter’s revenue. The predictions suggest a significant downturn, with a forecasted loss of approximately million in advertising revenue. The anticipated decrease stems from the speculated withdrawal of advertisers who may be influenced by Musk’s outspoken disdain for traditional advertising methods.
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How Cogwise AI Redefines the Landscape of Trading
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‘Cantillon Effect’ Can Be Countered by Having ‘Bitcoin Only’ Companies Present at the Negotiating Table — Swan Bitcoin MD
The crypto industry can stop the so-called Cantillon Effect from occurring by establishing large enough “Bitcoin only” companies that will sit on the negotiating table with the U.S. Federal Reserve and major financial institutions, Swan Bitcoin’s Terrance Yang has said. According to Yang, the U.S. Department of Justice’s settlement with Binance has increased the likelihood of such an institution joining the negotiation table.
The Cantillon Effect
Terrance Yang, the managing director (MD) of the bitcoin exchange platform Swan Bitcoin, has defended the proposal to create enough “Bitcoin-only” companies saying this is the only way the crypto industry will be fairly represented at the negotiating table. According to Yang, the U.S. Department of Justice (DOJ)’s recent settlement with Binance has increased the chances of such an institution joining the negotiation table.
As was recently explained by Swan Bitcoin co-founder and CTO Yan Pritzker, the crypto industry needs to fight back against opponents who seem to have ratcheted up the pressure in recent years. Ordinarily, this can be achieved by having “a large selection of banks willing to do business with Bitcoin companies.” Nevertheless, in his Nov. 11 post on X (formerly Twitter), Pritzker suggested making companies in the crypto space “big enough to be relevant negotiators.”
Some critics argue that creating such powerful entities could have negative consequences for the industry in the long run. However, in his written answers sent to Bitcoin.com News, Yang doubles down on why Swan believes this to be the solution.
“For decades now the [U.S.] Federal Reserve Bank and all major banks and institutions have been the key negotiators at the table. We recently published a detailed study of why this needs to change and how [the] Federal Reserve drives the Cantillon Effect which in turn impacts inflation and fiscal debt,” Yang said.
Bad Actors Have an ‘Incentive to Feed and Spread False Narratives’
According to Yang, it is such Bitcoin-only companies that can fill the “void” which has grown each time authorities have gone after large crypto exchanges like Binance and Coinbase.
Concerning the perception certain players are not doing enough to counter false crypto narratives often peddled by critics like U.S. Senator Elizabeth Warren, Yang suggested this may be because they “have an incentive to feed and spread false narratives.”
Therefore, as the industry works on how to respond to the attacks which have seen the space shrink, Yang said only those with good standing should “write their Congressional representative, and speak out on social media.” In addition, such unblemished individuals and entities should “stop doing business with ‘bad actors’ that are facing lawsuits and are in trouble.”
While it is generally agreed that the recent actions by the U.S. regulators will prompt crypto firms to ponder leaving the United States, Yang is adamant that “bitcoin will [still] thrive in the U.S.”
What are your thoughts on this story? Let us know what you think in the comments section below.
Brazilian CVM Resolution Comes Into Effect, Allowing Funds to Allocate Part of Their Portfolios Into Crypto
The Brazilian Securities and Exchange Commission (CVM) has opened the doors for investment funds to invest in cryptocurrency. Resolution 175, drafted last year and coming into effect on October 2, defines the rules these institutions must follow to invest in crypto, with analysts predicting a rise in interest in the sector.
Brazilian CVM Resolution 175 Comes Into Effect
Resolution 175, introduced by the Brazilian Securities and Exchange Commission (CVM) last year, came into effect on October 2, officially opening the possibilities for investment funds to invest directly in crypto in Brazil. Brazilian analysts declared they believe the resolution will bring institutions to pursue more opportunities in the cryptocurrency sector.
Now, investment funds can invest up to 10% of their portfolio in digital assets. However, there are some limits put forth by the CVM, as these institutions are only allowed to purchase cryptocurrencies from exchanges approved by the country’s central bank or international regulatory bodies.
According to Caio Sanas, partner at Caio Sanas Lawyers, this reduces the options for investment funds. Sanas explained that besides the U.S.-based cryptocurrency exchange Coinbase, there are not many companies capable of fulfilling the CVM requirements with the liquidity needed to supply Brazilian institutions with the crypto demanded.
However, the resolution is seen to recognize and legitimize the interest of institutions in cryptocurrency assets. Henrique Lisboa, a capital markets partner at VBSO Advogados, stressed that the CVM “recognized the interest of investors and managers in exploring the opportunities of the crypto-economy” with this regulation.
Limits to Protect the Market
The limitation on the number of exchanges available also results in a limit on the number of crypto assets available for purchase, indirectly conditioning investment funds to only invest in cryptocurrencies listed by these exchanges. Sanas further explained that the 10% investing limit was necessary to protect investors from market falls like the one experienced when FTX went bankrupt last year.
Sanas stated:
If the funds had invested the 10% allowed in FTX crypto assets, what would have happened? The resolution advanced with the necessary precautions for a financial or capital market. It is the CVM’s role to defend investors.
Furthermore, he explained that funds had only effectively allocated from 1% to 3% in digital assets, as the current market conditions have not contributed to a larger movement from these market actors into crypto.
What do you think about Brazilian investment funds allocating part of their portfolio to cryptocurrency assets? Tell us in the comments section below.
Solana Outperforms 2 Top Altcoins – Its Ripple Effect On Prices
Solana (SOL) has emerged as a standout performer in the recent crypto market rally, catching the attention of investors and analysts alike. The entire cryptocurrency market has been on a bullish streak, with most digital assets turning green on the charts. However, Solana has managed to stand out by achieving an unprecedented increase in its price.
At the time of writing, SOL was trading at .54 on CoinGecko and boasted a market capitalization near billion. While the coin did register a 1.6% loss in the past 24 hours, its seven-day surge of 22% indicated its resilience and potential for further growth.
In fact, this remarkable price uptrend enabled Solana to surpass both Dogecoin (DOGE) and Cardano (ADA), securing its position as the seventh-largest cryptocurrency by market capitalization.
BREAKING: $SOL FLIPS $DOGE AND $ADA IN MARKET CAP pic.twitter.com/RXKCBQinIJ
— DEGEN NEWS (@DegenerateNews) September 30, 2023
Solana’s Growth Drivers
One key factor behind Solana’s surge was its impressive 100%+ increase in 24-hour trading volume, providing robust support for its price appreciation. Additionally, Solana’s performance within the decentralized finance sector also experienced notable growth during this period.
The positive sentiment surrounding Solana was further evidenced by data from LunarCrush, which indicated a nearly 47% surge in SOL’s social engagement over the last seven days. Investors and enthusiasts were increasingly drawn to the coin as its price continued to rise.
Gearing Up For A Bull Market
Pseudonymous analyst Inmortal, active on the social media platform X, expressed optimism about Solana’s potential. Inmortal believes that Solana presents a significant opportunity for long-term investors to accumulate the cryptocurrency at a point of maximum potential.
In two years you will realize that everything was as simple as buying $SOL below and wait.
But you were too scared because FTX was going to dump their coins.
— Inmortal (@inmortalcrypto) September 20, 2023
According to Inmortal, those who accumulate SOL at its current price point are likely to be handsomely rewarded in the coming years. In a statement, Inmortal said, “In two years, you will realize that everything was as simple as buying SOL below and waiting. But you were too scared because FTX was going to dump their coins.”
Concerns had arisen when court documents revealed that FTX owns approximately .16 billion worth of SOL. This led many traders to speculate that Solana’s price might face downward pressure if FTX were to liquidate its holdings.
However, notable investor Chris Burniske pointed out that only a fraction of FTX’s SOL holdings are actually liquid, stating, “Only ~13% of FTX’s SOL holdings are liquid… Keep a cool head, folks.”
As Solana continues to gain traction in the crypto market, investors are closely watching its performance, with many betting on the coin’s long-term potential and the possibility of significant rewards for those who enter the market now.
The recent surge in Solana’s price and its positive developments in the DeFi space have solidified its position as a cryptocurrency to watch.
(This site’s content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).
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What Is EIP-4844? A Look at Proto-Danksharding and Its Effect On Rollup Fees
Ethereum Improvement Proposal 4844 (EIP-4844), also known as Proto-Danksharding, introduces a set of changes that seek to lay the logic and “scaffolding” for scaling Ethereum through sharding but without adding sharding itself. Its implementation aims to reduce the transaction fees of rollups like Arbitrum, Optimism, and Base, which are considered a central part of Ethereum’s scaling, at least in the short term.
EIP-4844: Proto-Dank Sharding
Ethereum Improvement Proposal 4844 (EIP-4844), AKA Proto-Danksharding, is a recent proposal that aims to scale Ethereum’s L2 structure, allowing rollups to take advantage of a new fee market for embedded data.
Called Proto-Danksharding for the names of two of its authors, Dankrad Feist and Diederik Loerakker (AKA Protolambda), this improvement proposal is presented as a stopgap solution to scale Ethereum through rollups while sharding, Ethereum’s layer 1 scaling strategy, gets implemented. The changes in EIP-4844 would be compatible with the upcoming sharding solution, allowing for a seamless sharding implementation when it’s ready.
This is because part of the sharding tasks (for a full sharding specification) are already being developed in EIP-4844, but without allowing different validators to process and validate several data shards.
What Does It Change?
Proto-Danksharding proposes a new type of transaction, called “blob-carrying transaction,” which has added data that cannot be accessed by the Ethereum Virtual Machine (EVM).
The implementation of this new type of transaction would allow more data to be added to each transaction, with up to ~0.75 MB being added to the chain with every bloc processed. The fees these transactions will pay are cheaper than other transactions because blobs can be pruned after two weeks, a period that, according to EIP-4844.com, is “long enough for all actors of an L2 to retrieve it, short enough to keep disk use manageable.”
In contrast, standard ethereum transactions feature data that will be available forever on the blockchain.
Also, blob transactions will have their own gas market, and will be priced independently from other transactions in what’s currently called “blob gas.”
Effect On Rollups
While rollups like Arbitrum, Optimism, and Base have transaction fees way lower than Ethereum L1 fees, implementing Proto-Danksharding would reduce rollup transaction fees even more. Instead of putting data in standard transactions, rollups would post data to the Ethereum blockchain using blobs, taking advantage of lower transaction fees.
While the data posted to the main chain will not be available forever, authors state this is a feature because “rollups need data to be available once, long enough to ensure honest actors can construct the rollup state, but not forever.”
Terence Tsao, a developer of Prysmatic Labs, estimated that rollup fees could be 100x lower just by introducing this new transaction scheme. OP Labs, the organization behind the Optimism protocol, expects costs for rollup L1 transactions to be reduced by at least 20x, anticipating these will take advantage of blobspace to reduce transaction costs for their users.
What do you think about EIP-4844 and its effect on Ethereum scaling? Tell us in the comments section below.
US Congress Members Clash on the Potential Effect of Proposed Tax Rules on the Crypto Industry
Members of the U.S. Congress have expressed concerns about the possible problems that implementing the newly proposed crypto tax reporting requirements could create in the entire industry. Patrick McHenry, Cynthia Lummis, and others reacted differently to the potential effects of these proposals on decentralized finance platforms and stablecoins.
U.S. Congress Members Concerned Over New Tax Obligations for Defi Exchanges and Stablecoins
Several U.S. Congress members have expressed concerns over the newly proposed crypto-related tax reporting rule revealed recently by the U.S. Treasury Department and the Internal Revenue Service (IRS) and its possible effect on several elements of the cryptocurrency industry.
In a recent post on social media, Wyoming Senator Cynthia Lummis stated that while she was encouraged by the exclusion of significant parts of the crypto machinery, including miners, stakers, validators, and wallet providers, others were still included in the proposal.
Lummis, who has stressed the crypto industry is being pushed offshore before, declared:
I’m encouraged to see the U.S. Treasury finally issue its rules regarding tax reporting requirements for crypto brokers … however, I have serious concerns about the rule’s potential impact on decentralized crypto asset exchanges & its treatment of U.S. dollar-backed stablecoins.
The recently presented proposal would require cryptocurrency brokers to divulge information about their customers, giving the IRS names, addresses, and gross proceedings related to each customer transaction.
Also, the proposal’s definition of “broker” would require some decentralized finance exchanges to report the same information. This has been criticized by industry actors, who say that it makes compliance difficult.
Lummis encouraged anyone impacted by this rule to submit comments to the Department of the Treasury and the IRS during the public comment period, which will be open for two months.
More Reactions
Other members of Congress have also criticized the proposal, stating that it could disrupt the activities of the cryptocurrency industry in the U.S.
Patrick McHenry, Chairman of the House Financial Services Committee, said on August 25 that this rulemaking proposal constituted an “ongoing attack on the digital asset ecosystem” from the Biden administration.
McHenry stated:
The Biden Administration must end its effort to kill the digital asset ecosystem in the U.S. and work with Congress to finally deliver clear rules of the road for this industry.
Nonetheless, Senator Elizabeth Warren has supported this proposal, explaining that “a strong rule is essential to prevent wealthy tax cheats from hiding income in digital assets, and one should be implemented by the end of the year.”
What do you think about the reaction of Congress to the crypto tax proposal? Tell us in the comments section below.