Blockchain and Cryptocurrency News Roundup

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  • November 30, 2020
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30 November 2020.

Dive into a short summary of some of the biggest headlines in Crypto this week. A quick Bitcoin price recovery looks in doubt as whales move coins onto exchanges, OECD will launch international crypto tax standards in 2021 says tax director, XRP price rallies 91% in a month due to 3 fundamental factors & $275bn+ Hedge Fund Guggenheim considers $500 million Bitcoin investment. 

A quick Bitcoin price recovery looks in doubt as whales move coins onto exchanges

Bitcoin may have a tough time charting a V-shaped recovery to recent highs in the short term, with on-chain activity showing increased selling pressure in the market. Blockchain analytics firm CryptoQuant’s exchange inflow indicator – which measures the 144-block (roughly 24-hour) average of mean bitcoin deposits across major cryptocurrency exchanges – has risen to 2.5 bitcoin, the highest level since March 20. In other words, the average size of inward-bound transactions to trading platforms has risen to eight-month highs. “The data shows whales [large traders] are transferring their coins to exchanges,” CryptoQuant CEO Ki-Young Ju told CoinDesk. “The cryptocurrency usually trades in a sideways-to-negative manner when whales become active on exchanges.” Bitcoin is trading near $16,820 at press time, representing a 2% drop on a 24-hour basis. The cryptocurrency saw rejection above $17,400 early on Friday. The possibility of prices falling to or below Thursday’s low of $16,327 cannot be ruled out with average inflows now moving above 2 bitcoin – into CryptoQuant’s “danger zone.” A reading above 2.00 on the indicator has consistently paved the way for notable price drops this year. The indicator rose above that level at least a week before the 40% drop seen on March 12. Similarly, the sharp sell-off seen in November 2018 was preceded by a sharp rise in the metric. Technical chart studies indicate low odds of an immediate bounce to levels above $19,000.

Thursday’s price drop was backed by the highest sell volume (red bar) since June 1. As such, the pullback looks to have legs. Short-term momentum indicators such as the 5- and 10-day moving averages are now looking south. Support is seen at $15,798 – the 38.2% Fibonacci retracement of the rally from September low to November high.


OECD will launch international crypto tax standards in 2021 says tax director

KThe director of the OECD’s Centre for Tax Policy and Administration has revealed that the Organization for Economic Co-operation and Development (OECD) will release an international tax reporting standard for crypto assets in 2021. Pascal Saint-Amans, the director of the OECD’s tax center has reported that the OECD, a group of 37 nations working towards global economic co-operation, will introduce an international reporting standard for cryptocurrency tax declaration by the end of next year. According to an article in Law360 on Nov 26, the OECD tax director said that the coming crypto tax standard would be the equivalent of a ‘common reporting standard (CRS)’ and is being developed by the OECD to tackle tax evasion and fraud. Amans said that the likely development of the common reporting standard for crypto tax is due to the member countries’ desire to find consensus on crypto regulation. He said, “The timeline to deliver is probably ’21, sometime in ’21, because there is an appetite by all countries now.” The news of the potential OECD crypto tax CRS comes shortly after the European Commission (EC) began its overhaul of its tax evasion laws regarding cryptocurrency and digital assets. The EC published its proposal on Nov 23 and the commission is awaiting public feedback with a Dec. 21 deadline—the new crypto tax laws expected by the third quarter of 2021. Amans believes the OECD will be able to establish its tax standard before Europe and the OECD director sees an opportunity for the EU to align their own new legislation with the OECD’s 37 member nations. While two major regulatory bodies working on regulations in silos could potentially result in contrasting policy positions between the OECD and the EC—a point of concern in regulation that was highlighted in the European Parliament’s briefing entitled, Digital Taxation: State of Play and Way Forward. The director of the OECD’s Centre for Tax Policy and Administration, Amans has asserted that this contradiction in policy is unlikely and that the OECD’s own proposal would likely complement the EU crypto regulations. An EC spokesperson asserted in the report that they are working with the OECD to avoid any inconsistencies in policy as much as possible but the “specific situation of the EU and its member states needs to be taken into account” throughout the process.

XRP price rallies 91% in a month due to 3 fundamental factors

XRP price rallied 91% in the past month and data shows these three fundamental factors may be behind the break above the current multi-year range. In the past month, the price of XRP rallied 91% as the digital asset at last found some spark and is now playing catch up with Bitcoin (BTC) and Ether (ETH).  The likely catalysts for the XRP rally are the rise in unique addresses, buybacks from Ripple and the possibility of a new product release. On-chain data can be useful for depicting the overall sentiment around a cryptocurrency, as it accurately reflects the activity taking place on the blockchain. In the case of XRP, addresses interacting with XRP spiked in late November. The trend intensified when the cryptocurrency rose 27% in one day on Nov. 22. Analysts at Santiment, an on-chain analysis firm, said the single-day increase in active addresses was the largest since May 1. They wrote: “Ripple’s price skyrocketed +27% today, and the amount of unique addresses transacting on the $XRP network in a single day (24,408) was the highest output since May 1st.” Active addresses can increase in tandem with the price for several reasons. First, the number of addresses accumulating XRP could increase its value spikes. Second, there could be a general spike in user activity on the blockchain. During the third quarter of 2020, Ripple bought $45.5 million worth of XRP in a repurchasing program. The company described the initiative as a move to support healthy markets.

The sales summary listed on the Q3 2020 report detailed total purchases of $45.5 million. In previous quarters, Ripple did not repurchase XRP. The report reads: “As indicated in the Q2 2020 XRP Markets Report, Ripple is purchasing — and may continue to purchase — XRP to support healthy markets.” A buyback can cause the buyer demand for an asset to increase, whether it is stocks, commodities or cryptocurrencies. Even though $45.5 million might not be a large enough figure to significantly impact the value of XRP in the cryptocurrency exchange market, it could have buoyed the market sentiment around the asset. In early November, Ripple Labs filed a trademark for a product called Paystring with the United States Patent and Trademark Office. The trademark application describes Paystring as a product within the electronic financial services category for receiving and sending remittances. It states: “PAYSTRING trademark registration is intended to cover the categories of electronic financial services, namely, monetary services for receiving and disbursing remittances and monetary gifts in fiat currencies and virtual currencies over a computer network and for exchanging fiat currencies and virtual currencies over a computer network.” The confluence of the excitement surrounding a new product release, XRP buybacks and the rising address shown in on-chain data could be the primary factors behind XRP’s recent rally to a 16-month high. Consequently, XRP has been able to break out of two multi-year ranges on the high time frame charts. Most notably, the weekly chart shows a clear breakout to a price level it has not seen since November 2018.


$275bn+ Hedge Fund Guggenheim considers $500 million Bitcoin investment

Global investment firm Guggenheim Partners is considering investing hundreds of millions of dollars in a Bitcoin trust. The firm on Friday made a filing to the US Securities and Exchange Commission saying that it would reserve the right for its $5.3 billion Macro Opportunities Fund to put 10% of its net asset value in the cryptocurrency via the Grayscale Bitcoin Trust. This means Guggenheim could invest up to $500 million of investors’ cash in the cryptocurrency. “The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”), a privately offered investment vehicle that invests in Bitcoin,” the note said. GBTC allows investors to trade shares in trusts holding large pools of Bitcoin. As the world’s largest crypto hedge fund, it allows investors to trade these shares on the stock market. This way, investors don’t actually have to deal with holding the asset—they just hold shares that represent investments in Bitcoin. Guggenheim’s Macro Opportunities Fund is one of Guggenheim Partners’ funds, handling $5.3 billion worth of investors’ cash. The firm’s possible future investment means that they think Bitcoin could be a safe bet for their clients. But the note to the SEC did mention the risks involved in investing in cryptocurrencies. “In addition to the general risks of investing in other investment vehicles, described further below, the value of the Fund’s indirect investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which can be highly volatile,” the note added. “Cryptocurrency is a new technological innovation with a limited history; it is a highly speculative asset and future regulatory actions or policies may limit, perhaps to a materially adverse extent, the value of the Fund’s indirect investment in cryptocurrency and the ability to exchange a cryptocurrency or utilize it for payments.” The New York-based firm is the latest Wall Street institution to show interest in Bitcoin. Traditional finance bigwigs, tech companies and institutional investors have all shown interest in investing in the cryptocurrency this year. 


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