FED UP.
A LOOMING RATE RISE RATTLES CRYPTO MARKETS, TAKING THE STEAM OUT OF THE BEAR MARKET RALLY.
I’M JOEL FLYNN
WELCOME TO THE DAILY FORKAST — JULY 26TH, 2022.
WHAT HAPPENS AFTER INTEREST RATES GO UP, AND IS A RECESSION REALLY BAD NEWS FOR CRYPTO
PRICES?
CRYPTO TAXES COULD BE ON THE CARDS IN THE PHILIPPINES.
WHAT WOULD FTX’S BUYOUT OF BITHUMB MEAN FOR SOUTH KOREA?
AND IS SAM BANKMAN-FRIED A SAVIOUR, OR A SCOUNDREL?
THIS IS WHAT’S HAPPENING FROM ASIA TO THE WORLD.
ONE OF THE BIG MARKET MOVING DECISIONS OF THE YEAR IS
GOING TO COME TOMORROW.
AND CRYPTO INVESTORS LOOK A LITTLE BIT NERVOUS.
THE FEDERAL RESERVE IS PROBABLY GOING TO RAISE INTEREST RATES IN THE US BY 0.75 PERCENT.
BITCOIN PRICES HAVE BEEN COMING DOWN AHEAD OF THE DECISION.
THEY WERE TRADING JUST AROUND THE US$21,000 MARK AT 9AM HONG KONG TIME.
ETHEREUM MEANWHILE LOST NINE PERCENT IN THE LAST 24 HOURS, AND IS AROUND US$1,400.
SO LET’S GET MORE ON WHY INVESTORS MIGHT BE NERVOUS ABOUT THE FED WITH TONY SYCAMORE.
HE’S A SENIOR MARKET STRATEGIST FOR APAC AT CITY INDEX…
TONY THANKS FOR TALKING TO US.
WE’VE SEEN A LITTLE BIT OF A RALLY FOR BITCOIN OVER THE LAST FEW WEEKS.
IS THAT RALLY OUT OF STEAM AFTER THIS DECISION WITH BITCOIN AROUND $21,000, AND WHAT COULD
THE FED DO THAT WOULD REALLY MOVE THE NEEDLE FOR CRYPTO INVESTORS??
WELL, WE HAVE 75 BASIS PRICED IN FOR THURSDAY MORNING, AND I THINK THAT WILL MEAN BUSINESS
AS USUAL FOR BITCOIN.
AND WHEN WE LOOK AT WHERE BITCOIN IT IS, IT'S CURRENTLY IN THE MIDDLE OF A BEAR MARKET RALLY
AS YOU MENTIONED, THE RALLY FROM 17,500 UP TOWARDS 22,400, ABOUT 38%.
I THINK THAT IS JUST ABOUT COMPLETE GIVEN THAT WE EXPECT THE FED TO REMAIN HAWKISH.
NOW IN TERMS OF WHAT THE FED COULD DO TO PROPEL BITCOIN HIGHER IF THEY WERE TO DO A DOVISH
PIVOT, I.E., THEY START TO LOOK AT SOME OF THE WEAKER DATA THAT WE'VE SEEN IN JULY AND
THINK WE'VE GONE HARD ENOUGH, FAST ENOUGH, AND THE ODDS OF A RECESSION ARE NOW GOING
TO DO THE REST OF THE WORK FOR US
THAT WOULD BE ENOUGH FOR ME, I THINK, TO GET BITCOIN TO PUSH UP TOWARDS 28,000, BUT I THINK
IT'S TOO EARLY FOR THAT.
I THINK WE SEE THAT PROBABLY IN THE FINAL THREE MONTHS OF THE YEAR, NOT IN THE MIDDLE
OF THE YEAR
WE’VE HAD SOME MIXED SIGNALS ABOUT A RECESSION IN THE US.
JOBS BEING CREATED BUT GDP STILL CONTRACTING.
EUROPE AND CHINA ARE OBVIOUSLY ALSO CONCERNS, AND THERE’S STILL A QUESTION AROUND CONTAGION.
WHAT ARE CRYPTO INVESTORS LOOKING AT AFTER THE FED?
WE'RE POTENTIALLY HEADING INTO A RECESSION, THE ODDS HAVE INCREASED FROM 33% LAST WEEK,
UP TOWARDS 40% THIS WEEK.
I THINK THE RECESSION PROBABILITIES ARE PROBABLY MUCH GREATER IN EUROPE GIVEN THE GAMES THAT
THE RUSSIAN PRESIDENT IS PLAYING WITH GAS SUPPLIES
AND THE FACT THAT GERMANY HAS POWERED ITS ECONOMY THROUGH EXPORTS BASED ON CHEAP ENERGY,
THAT ERA IS NOW OVER AND THAT REALLY IS A BIG PROBLEM FOR EUROPE.
SO YOU'VE GOT PROBLEMS IN EUROPE, YOU'VE GOT PROBLEMS IN CHINA, THE US, AS YOU MENTIONED.
WELL, YES, WE MIGHT SEE THAT TECHNICAL DEFINITION OF A RECESSION FULFILLED LATER THIS WEEK.
TWO NEGATIVE CONSECUTIVE GDP PRINTS IS INDEED A TECHNICAL RECESSION.
HOWEVER, BECAUSE THE LABOR MARKET IN THE US IS SO STRONG,.
IT WILL PROBABLY SEE AUTHORITIES OR THE ORGANIZATION WHICH DECLARES WHETHER WE'VE ENTERED A RECESSION
OR NOT.
I THINK THEY PROBABLY WON'T GO FOR THAT RECESSION DEFINITION.
ALRIGHT TONY THANKS SO MUCH FOR THAT.
THAT WAS TONY SYCAMORE FROM CITY INDEX.
OVER IN THE PHILIPPINES –
PRESIDENT BONGBONG MARCOS JUNIOR DELIVERED HIS FIRST STATE OF THE NATION ADDRESS MONDAY.
AND CRYPTO MAY BE AT THE CENTER OF IT.
HIS PLANS FOR THE NEXT SIX YEARS INCLUDE TAXING DIGITAL SERVICE PROVIDERS.
THAT COULD INCLUDE CRYPTO EXCHANGES.
WHAT WOULD THAT MEAN FOR THE COUNTRY’S DIGITAL ECONOMY?
FORKAST’S JENNY ORTIZ REPORTS FROM ANGONO, IN THE PHILIPPINES
JUST LESS THAN A MONTH AFTER TAKING OFFICE, PHILIPPINE PRESIDENT BONGBONG MARCOS JUNIOR
MADE HIS FIRST REVENUE-GENERATING PROPOSAL IN HIS STATE OF THE NATION ADDRESS:
OUR TAX SYSTEM WILL BE ADJUSTED IN ORDER TO CATCH UP WITH THE RAPID DEVELOPMENTS OF THE
DIGITAL ECONOMY, INCLUDING THE IMPOSITION OF VALUE-ADDED TAX ON DIGITAL SERVICE PROVIDERS.
MARCOS SAID BY TAXING DIGITAL SERVICE PROVIDERS, IT WILL YIELD AN INITIAL 11.7 BILLION PESOS,
OR ROUGHLY 208.6 MILLION U-S DOLLARS, IN REVENUE NEXT YEAR, IF PASSED BY CONGRESS.
THE SOUTHEAST ASIAN NATION’S PRESIDENT ADDED THE REVENUE WILL HELP CUT THE PHILIPPINES’
DEBT TO BELOW 60% OF GROSS DOMESTIC PRODUCT BY 2025 AND NARROW THE BUDGET DEFICIT TO 3%
OF GDP BY 2028.
BUT, MARCOS’ TAX PROPOSAL IS NOT NEW.
IN SEPTEMBER LAST YEAR, THE HOUSE OF REPRESENTATIVES HAS PASSED A BILL SEEKING TO IMPOSE A 12-PERCENT
VALUE ADDED TAX ON DIGITAL SERVICE PROVIDERS, OR DSP.
HOWEVER, THIS FAILED TO HAVE A SENATE BILL COUNTERPART.
IN A BRIEFING ON TUESDAY, FINANCE SECRETARY BENJAMIN DIOKNO SAID THEY WILL WORK CLOSELY
WITH CONGRESS TO FORMULATE AND ENACT APPROPRIATE AND TIMELY POLICY MEASURES.
ATTORNEY SHEINE GIRAO, COFOUNDER OF TETRIX NETWORK, A FILIPINO-MADE BLOCKCHAIN PLATFORM,
TOLD FORKAST THEY WELCOME MARCOS’ PLAN TO TAX DIGITAL SERVICES.
IT'S A STEP FORWARD.
IT'S A LONG TIME COMING FOR US TO PROVIDE PARAMETERS FOR TAXATION AND DIGITAL SERVICE
PROVIDERS, ESPECIALLY SINCE DURING THE ONSET OF THE PANDEMIC, WE HAVE ALREADY HEIGHTENED
THE USAGE OF DIGITAL SERVICES OVER THE INTERNET.
AND A LOT OF THOSE ARE NOT BEING TAXED RIGHT NOW.
AND WHILE WE DO HAVE INCOME TAXES, VALUE-ADDED TAXES ARE IMPOSED UPON THE OWNERS, WHERE THE
GOODS OR SERVICES ARE CONSUMED.
GIRAO EXPLAINED WHAT GOOD IT COULD DO FOR THE GROWING DIGITAL ECONOMY INDUSTRY IN THE
COUNTRY.
IF THE PRESIDENT WOULD BE ABLE TO APPROVE OF THIS BILL, THEN WE WOULD BE ABLE TO HAVE
BETTER GOVERNANCE AS REGARDS (TO) VALUE ADDED TAX.
MORE TO THAT, OF COURSE, IS THE CERTAINTY OF COLLECTION.
THE IMPLEMENTATION IS ALSO ANOTHER THING TO BE CONSIDERED.
BUT, WILL THIS NEW TAX ALSO BE APPLICABLE TO CRYPTO EXCHANGES?
GIRAO SAID THAT THE HOUSE BILL’S DEFINITION OF A DIGITAL SERVICE PROVIDER, OR DSP, IS
TOO BROAD AND ENCOMPASSING AS TO PROBABLY CONSTRUE CRYPTO EXCHANGES TO BE INCLUDED IN
THE CATEGORY.
HOWEVER, SHE SAID THAT CRYPTO EXCHANGES SHOULD HAVE SEPARATE LEGISLATION FOR TAXATION AS
THESE HAVE VARYING TAXING INCIDENTS THAT NEED FURTHER PARAMETERS AND SAFEGUARDS FOR PROPER
IMPLEMENTATION.
IN ANGONO, PHILIPPINES, I’M JENNY ORTIZ.
FORKAST
WILL SAM BANKMAN-FRIED BE ALLOWED INTO SOUTH KOREA’S CRYPTO MARKET?
THAT’S THE QUESTION SURROUNDING FTX’S OFFER TO BUY BITHUMB.
AUTHORITIES ARE KEEPING A CLOSE EYE ON THE SECTOR AFTER THE TERRA LUNA COLLAPSE.
SO WHAT WOULD IT MEAN FOR CRYPTO IN SOUTH KOREA IF THE DEAL GOES AHEAD?
FORKAST’S DANNY PARK TAKES A LOOK:
BITHUMB IS ONE OF SOUTH KOREA’S TOP FIVE CRYPTO EXCHANGES AND ACCORDING TO BLOOMBERG,
DISCUSSIONS WITH FTX OVER A BUYOUT DEAL HAVE ALREADY BEEN IN PROGRESS FOR SEVERAL MONTHS.
ONE EXPERT TOLD FORKAST THAT PROGRESS FROM HERE DEPENDS VERY MUCH ON WHAT ANY DEAL ACTUALLY
INVOLVES:
BITHUMB WAS RESPONSIBLE FOR 17.1% OF THE TOTAL CRYPTO TRADING VOLUME IN SOUTH KOREA LAST
YEAR, WHICH MAKES IT SECOND ONLY TO UPBIT.
SO COULD A DEAL WITH FTX HELP BOOST THE EXCHANGE’S POWER IN THE LOCAL MARKET?
HOWEVER, KIM SAYS THAT DEPENDENT ON THE DETAILS THERE IS A POSSIBILITY THAT BITHUMB COULD
GROW ITS SHARES IN THE LOCAL MARKET AS A RESULT:
SOUTH KOREA IMPLEMENTED STRICT LICENSING REQUIREMENTS FOR EXCHANGES TO FOLLOW LAST SEPTEMBER - THEY
INVOLVE THE NEED FOR REAL NAME VERIFIED ACCOUNTS IN PARTNERSHIP WITH A LOCAL BANK, AS WELL
AS HOLDING AN INFORMATION SECURITY MANAGEMENT SYSTEM CERTIFICATE.
BITHUMB IS ONE OF JUST FIVE EXCHANGES THAT HAVE MANAGED TO COMPLY - WHILE MANY SMALLER
EXCHANGES CLOSED AFTER FINDING THE PROCESS TOO DIFFICULT.
KIM SAYS THAT TALKS ON A DEAL SHOW THE COUNTRY IS GETTING THINGS RIGHT:
WE WILL OF COURSE BE KEEPING WATCH ON WHAT HAPPENS NEXT WITH THE TALKS BETWEEN THE TWO.
I’M DANNY PARK.
FORKAST.
SAM BANKMAN-FRIED: ANGEL OR DEMON?
WELL, THAT’S A CALL THAT VOYAGER DIGITAL CUSTOMERS ARE GOING TO HAVE TO MAKE.
(VOYAGER RESTRUCTURING) THEY’VE BEEN CAUGHT UP IN A TUG OF WAR OVER
THEIR FUNDS.
VOYAGER’S FILED FOR BANKRUPTCY IN THE US.
SBF’S FTX AND ALAMEDA RESEARCH HAVE OFFERED A WAY FOR VOYAGER’S CUSTOMERS TO GET THEIR
MONEY BACK.
THAT INVOLVES OPENING AN FTX ACCOUNT.
VOYAGER HAS HIT OUT AT THE MOVE.
IT’S ACCUSED SBF OF MAKING “A LOW-BALL BID DRESSED UP AS A WHITE KNIGHT,” AND CLAIMING
IT WAS A PUBLICITY STUNT.
SBF HAS HIT BACK AT THAT CLAIM OVERNIGHT ON TWITTER.
HE’S SAID THE OFFER IS THE BEST WAY TO MAKE VOYAGER CUSTOMERS WHOLE AGAIN.
HE’S ALSO SAID VOYAGER’S BANKRUPTCY LAWYERS ARE TRYING TO PUT THEMSELVES FIRST.
MEANWHILE – BINANCE BOSS CHANGPENG ZHAO IS SUING BLOOMBERG BUSINESSWEEK IN HONG KONG.
THE RICHEST MAN IN CRYPTO HAS ACCUSED THE MAGAZINE’S PUBLISHER OF DEFAMATION.
THAT’S OVER AN ARTICLE PUBLISHED LAST MONTH.
THE ORIGINAL TITLE OF THE ARTICLE IN TRADITIONAL CHINESE WAS “CHANGPENG ZHAO’S PONZI SCHEME”.
THAT WAS LATER TWEAKED TO “SECRET CHANGPENG ZHAO”.
THE ENGLISH VERSION RAN AS “CAN CRYPTO’S RICHEST MAN STAND THE COLD?”.
IN JUNE, CZ ACCUSED THE ARTICLE OF BEING UNPROFESSIONAL.
ACCORDING TO LOCAL MEDIA, CZ HAS DEMANDED A RETRACTION AND WANTS COMPENSATION.
A BINANCE SPOKESPERSON TOLD FORKAST THE CASE IS ZHAO’S PERSONAL MATTER, AND THE CRYPTO
EXCHANGE COULDN’T COMMENT.
BLOOMBERG HASN’T RESPONDED TO FORKAST’S REQUEST FOR COMMENT SO FAR.
FOLLOW US ON TWITTER FOR THE LATEST UPDATES [AT]FORKAST-UNDERSCORE-NEWS.
LET ME KNOW YOUR THOUGHTS ABOUT THE BEAR MARKET, REGULATION AND EVERYTHING ELSE THAT’S GOING
ON @JOELFLYNN
THAT’S IT FOR TODAY’S DAILY FORKAST.
I’LL SEE YOU NEXT TIME.