Blockchain and Cryptocurrency News Roundup

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  • June 7, 2021
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07 June 2021.

Here’s a short summary of some of the biggest headlines in Crypto. President of El Salvador says he’s submitting a bill to make Bitcoin legal tender, $6.2M worth of digital yuan is officially piloted in Beijing, Bitcoin drops below $36K as century-old financial model predicts big BTC crash and after Bitcoin mining, China cracks down on crypto influencers on Weibo.

President of El Salvador says he’s submitting a bill to make Bitcoin legal tender

El Salvador is developing a bill to recognize bitcoin as legal tender, according to President Nayib Bukele. In a videotaped announcement shown Saturday, he said he will submit the bill next week.

Zap’s Jack Mallers announced the news at the Bitcoin 2021 conference in Miami. He said his company is working with Bukele to implement a plan.

The bill must still be reviewed by the country’s legislative assembly. But with the populist Bukele’s upstart political party in firm control of that body, approval seemed all but assured Saturday afternoon. 

The bill’s approval would likely make El Salvador the first nation to adopt a bitcoin standard. Its full text was not immediately available.

“As of now, El Salvador is set to be the first bitcoin country,” Mallers said. “And the first country to make bitcoin legal tender and treat it as a world currency and have bitcoin on their reserves.”

But it is not yet clear what being “the first bitcoin country” will mean for the fiscally unstable and oppressively poor Central American nation, where 70% of residents lack a banking account. El Salvador’s gross domestic product was $24.6 billion in 2020, according to Statista.

The 39-year-old Bukele claimed in recorded remarks that his plan will have short-term benefits for thousands of unbanked individuals. He also claimed it will generate jobs.

“And in the medium and long term, we hope that this decision can help us push humanity, at least a tiny bit into the right direction,” Bukele said.

El Salvador’s plan sits in stark contrast to a competing vision of money gaining traction among central banks. About 80% are studying central bank digital currencies (CBDCs) in a global push to make fiat more compatible with the digital economy. 

None, however, have seriously considered implementing that through a cryptocurrency beyond their control.

El Salvador experience

Mallers’ Strike, a payments app built on Bitcoin’s Lightning Network, has been on the ground in El Salvador this year, with Mallers claiming to onboard 20,000 Salvadorans a day during the app’s peak activity in the country.

In an emotional speech, Mallers made it clear that Zap’s mission is to serve those in economies he believes are most affected by central bank monetary inflation.

“We want to make cross-border payments free,” Maller said. “We want to solve the remittance problem for places that need it the most.”

He said Zap will be opening a headquarters in El Salvador in partnership with Blockstream.


$6.2M worth of digital yuan is officially piloted in Beijing

According to the Beijing Local Financial Supervision and Administration Bureau, residents of the Chinese capital can apply for a lottery through two bank applications to share a total of 200,000 red packets. Each resident is limited to one red pocket containing 200 yuan worth of renminbi ($31) as part of the lottery.

In 2014, China was committed to developing the digital renminbi known as Digital Currency Electronic Payment (DCEP) in response to the increasing demand for coin digitization.

China’s Ministry of Commerce said that its CBDC would be trialed in the wealthier cities in China first.

A lottery event was organized in Shenzhen as early as last year, distributing 40.2 million yuan digital currency in total in February this year.

China Prime Minister Li Keqiang early said that the digital renminbi would digitize the circulating banknotes. Li emphasized that the primary target market is in China and not attempt to challenge the dominance of the U.S. dollar. He stated that:

 “For the internationalization of Renminbi, we have said many times that it’s a natural process and our goal is not to replace US dollar or any other international currency,I think our goal is to allow the market to choose and to facilitate international trade and investment.”

However, Ray Dalio, the Bridgewater Associates hedge fund firm founder, questioned that China’s digital yuan would be more competitive than the US digital dollar future.

Regarding digital yuan, the deputy governor of the People’s Bank of China (PBOC), Li Bo, said in April that the central bank would expand the scope of the pilot and even allow foreign tourists to use it for the 2022 Beijing Winter Olympics.

Bitcoin drops below $36K as century-old financial model predicts big BTC crash

A push to $40,000-$42,000 won’t protect Bitcoin from risks of undergoing a major price decline later, suggests a century-old price prediction model created by technical analyst titan Richard Wyckoff.

Overconfident Bitcoin (BTC) bulls would need to battle more than just Elon Musk as a price prediction model — created by technical analyst pioneer Richard Wyckoff more than 100 years ago — also goes against their wild upside predictions.

Dubbed as Wyckoff Method, the model involves a five-phase approach to determine price trends that majorly involve investors’ psychological reaction to an asset’s supply and demand.

Bitcoin’s latest correction in the spot market surfaced following a yearlong rally. Between March 2020 and April 2021, the BTC/USD exchange rate ballooned by as much as 1,582%, logging an all-time high near $65,000.

However, the pair wiped more than 50% of its price rally. The prices crashed, recovered, and they now consolidate sideways without hinting at a specific short-term bias for direction. Therefore, it now appears more like a Wyckoff Distribution model, since the phases follow a yearlong move upward, not downward.

Meanwhile, Bitcoin has been consolidating inside a symmetrical triangle structure following its sharp downside correction after mid-May, hinting that the pattern is — in fact — a bearish pennant. Technically, bearish pennants send the prices lower by as much as the scale of the previous move lower.


After Bitcoin mining, China cracks down on crypto influencers on Weibo

Weibo, a Twitter-like platform in China, has reportedly denied access to several crypto-related accounts. When trying to access them, a message pops up saying these accounts “violate rules and laws,” Bloomberg reported on Sunday.

It is understood that all affected accounts are owned by the so-called opinion leaders and have a large following. 

One such account is operated by a user going under the pseudonym “Woman Dr. bitcoin mini” and was closed on Saturday, according to The Guardian.

“It’s a Judgment Day for crypto KOL (key opinion leaders),” wrote the account.

Bitcoin, the world’s largest cryptocurrency by market cap, soared above $36,800 on Sunday morning but slipped to $36,000 in what appears to be a response to the news. At press time, BTC was changing hands in the region of $36,500. 

This is not the first time that Weibo has taken similar action toward crypto-related accounts. Earlier this year, the social media platform suspended the official accounts of Huobi, OKEx, and Binance–the three most popular crypto exchanges among the Chinese traders. 

Similar incidents happened in previous years, with Binance (again) and Tron accounts hit by the regulatory freeze in November 2019.

“The government makes it clear that no Chinese version of Elon Musk can exist in the Chinese crypto market,” New York University School of Law adjunct professor Winston Ma told The Guardian, referring to the Tesla CEO’s notorious tweets that shook the markets in recent months. 

China steps up crypto crackdown

The wave of closures on Weibo follows last month’s developments, when several high-profile Bitcoin mining operators, including BTC.Top and Huobi Pool, halted activities in mainland China because of the increased pressure from the government.

According to Colin Wu, a journalist in China who covers cryptocurrencies, there could be continued regulatory action in the Bitcoin industry shortly.

One such particular move may be the issuance of China’s judicial interpretation of criminal actions against cryptocurrencies. Expected to be released within the next three months, it would mean that “[over-the-counter] merchants, exchanges that provide matching transactions, mining, and [initial coin offerings] are likely to constitute illegal business crimes in the future.”

According to Wu, the news has caused “real panic” within the Chinese crypto industry since new rules would mean “that almost all those involved in cryptocurrency would be criminally convicted.”

“If you have overseas stable mine resources, congratulations, almost every big miner with lots of bitcoins in China is searching like crazy,” added Wu in a separate tweet.

Though unconfirmed, the news has already stirred speculation of an exodus abroad. 

The VP of business development of Luxor Tech, which offers mining services to clients, told Wired UK that “many, many [miners] will be leaving China, within the next 30 to 60 or 90 days.”


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