Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue: Bitcoin hinders El Salvador’s credit talks with the IMF, the Paraguayan Senate issues a statement supporting bitcoin miners, and Venezuela unveils a crypto-linked corruption scheme. Bitcoin Reportedly Hurts El Salvador Credit Opportunities With […]
Bitcoin News
Bitcoin Heads Towards $35,000 as Biden Stimulus Hurts US Dollar
Bitcoin resumed its uptrend ahead of the New York session Monday as traders weighed their risk-on opportunities against the US President Joe Biden’s stimulus plans and its potential bearish impact on the US dollar.
The flagship cryptocurrency reclaimed ,500 after rising by as much as 6.83 percent, while its market capitalization pushed past 6 billion. Its move upward came after a depressive Friday and weekend session, wherein the price fell to as low as ,372 at one point in time.
Bitcoin rises amid the US dollar's weakening woes. Source: BTCUSD on TradingView.com
Elsewhere in the crypto market, Ethereum exploded by more than 21 percent to claim a new record high above ,470. Other tokens, including Litecoin, Bitcoin Cash, and Binance Coin, also surged within the range of 5-6 percent.
Overall, the cryptocurrency market added billion to its reserves in the previous 24 hours.
Bitcoin Meets Stimulus
Bitcoin’s gains occurred after Mr. Biden signed two executive orders, one of which would increase spending on the federal food assistance program and streamline the delivery of stimulus checks. The US president has plans to provide at least .9 trillion worth of relief funds amid the fallout caused by the coronavirus pandemic.
The mood lessened the demand for the safe-haven US dollar, whose strength against the world’s top foreign currencies fell by 0.2 percent overnight. Meanwhile, the net speculative short position on the greenback also grew to its highest in the last decade in the week ending on January 19.
US dollar index pulls back after testing resistance near 90. Source DXY on TradingView.com
That further stressed that the market sentiment for the dollar is bearish. It pushed Bitcoin’s popular anti-fiat narrative among speculators thanks to their negative correlation with one another since the coronavirus crash in March.
“Expect max fiscal and monetary stimulus until the current unemployment rate of 6.7 percent drops back to 4 percent—still a long way to go,” said Dan Tapiro, the co-founder of DTAP Capital. “Bitcoin and Gold supported.”
Fed Meeting
Signs of further upsides for Bitcoin also appear in the form of the Federal Reserve’s meeting on Wednesday. In there, the US central bank chairman, Jerome Powell, expects to say that he has no plans to backtrack the Fed’s open-ended bond-buying program and ultralow interest rates.
“The process of tapering QE is likely to be a gradual process which could last throughout 2022, and then be potentially followed by the first rate-hikes later in 2023,” MUFG currency analyst Lee Hardman wrote.
“In these circumstances, we continue to believe that it is premature to expect the US dollar to rebound now in anticipation of policy tightening ahead, and still see scope for further weakness this year,” he added.
The prospects of a prolonged bearish US dollar also raised Bitcoin’s ability to hold ,000 as its long-term support level. Major institutions like Grayscale Investments increase their Bitcoin reserves around the same level.
“There is little doubt that the institutional flow impulse into bitcoin is what distinguishes 2020 from 2017. And there is no better metric to capture this institutional impulse than the flow trajectory of the Grayscale Bitcoin Trust in Figure 6.” ~ JPM pic.twitter.com/66ibPoTFEp
— Frank Chaparro (@fintechfrank) January 25, 2021
Bitcoin was eyeing an extended upside run above ,000 as of this press time.
Cardano Founder: Scamming is an Industrywide Problem That Hurts us All
IOHK CEO Charles Hoskinson took the time to address concerns over crypto scam activity that has tainted Cardano’s reputation. In particular, he drew attention to a video showing scammers using Cardano’s logo to pitch to Chinese farmers.
According to @boxmining, a group called the “Asian Dragons,” who are known for delivering aggressive multi-level marketing (MLM) campaigns, gave the presentation.
Cardano’s Reputation Gets Unfairly Tainted by MLM Fraudsters
In response, Hoskinson vented his frustration and anger at the audacity of the scammers, who were bold enough to use his face and logos to substantiate their fraud.
“You work five years on something, you put your heart and soul into it, you just have a giant event with 10,000 people attend, and you see floating around Telegram, Twitter, many channels, some video, some scammers in China using my face, our company’s logo, the Cardano Foundation’s logo who have absolutely no affiliation with us.”
With that, the IOHK CEO stated that the fraudsters usually get paid cash and then disappear with no exchange in tokens or value of any sort.
“I have no recourse for that. I can’t sue them, I have no idea where they’re at, what’s going on. This happens all the time. Same with Vitalik for Ethereum. Same for Brad and XRP.”
Much to his annoyance, Hoskinson explained that there is little he or anyone else can do to counter this type of illegal activity. What’s more, since the video went viral, the fallout has had people wrongfully accusing Cardano of being complicit in defrauding the farmers.
“We have seen tonnes and tonnes of tweets, personally sent to me, sent to the Foundation, in our official Telegram groups of a particular video, over and over again, saying “why are you defrauding Chinese farmers?””
Source: twitter.com
Hoskinson stated that crypto scams happen every day, especially in relation to coins that are “flavor of the month.” Although victims lose money, legitimate firms, such as Cardano, also lose out by diverting time and resources to deal with the fallout.
“Think about the mess that leaves, because when those people figure out that they’ve been defrauded they don’t go to the scammers, they come to us, and complain to us, and say why did you do this? And then we have to unravel this whole thing.”
Scamming is an Industrywide Problem in Cryptocurrency
On that note, Hoskinson made the point that victims of cryptocurrency fraud often become jaded with cryptocurrency as a whole.
In these cases, what happened to them sullies their entire view of the cryptocurrency space. For that reason, Hoskinson believes crypto fraud hurts everyone in the cryptocurrency space, not just the victim who lost money.
“They don’t just hate wherever they got scammed, they say Bitcoin is a scam, Ether is a scam, that whole crypto thing is a scam. This hurts every single person in our industry when this happens.”
The Founder & CEO of Mercato Blockchain Corporation, Ilias Louis Hatzis, agrees with Hoskinson’s sentiment. He sees crypto fraud as a massive stumbling block to mass adoption.
But part of the issue comes down to fraudsters being ahead of regulators in terms of understanding the tech and exploiting authorities that are slow to act.
“Some regulators do not understand the technology well enough to put in place suitable regulation laws. It has taken the US almost 10 years to take a stance through the IRS and SEC.”
Taking this into account, legitimizing cryptocurrency in the eyes of the masses will take more than relying on authorities to play their part.