Is Bitcoin headed towards US$10,000.
That is the question on everyone's lips as inflation threatens markets further.
I'm Joel Flynn.
Welcome to The Daily Forkast.
July 12, 2022.
US inflation data is due tomorrow and it's got analysts and investors worried about crypto
prices.
Voyager's promised to pay people back.
It just doesn't know how yet.
Celsius continues its fight to get access to $650 million, and global regulators are
talking once more about how to keep crypto in check.
This is what's happening today from Asia to the world.
Join thousands of NFT traders who already start their day on CryptoSlam.
Could Bitcoin head even lower than analysts are increasingly calling out lower BTC prices
crypto's biggest currency has just erased all of last week's gains.
It was down 4% overnight in Asia, trading below US$20,000 Tuesday morning Asia time.
Ethereum fell even harder.
It dropped 6%, changing hands at less than $100.
The big risk, of course, this week comes from economic data in the United States.
Inflation numbers there are due tomorrow.
If CPI prices look too big, then the Federal Reserve could raise interest rates.
That, of course, would make the cost of business, which is already rising quickly even higher.
Some analysts have said that could help push Bitcoin prices lower.
Surveys out this week suggest US$10,000 could ultimately be the bottom for this bear market.
Others, though, have said economic fundamentals haven't changed.
His Benjamin Stani from Matrixport.
We had a strong job numbers out of the US and of last week and so if anything that probably
charts the course of the Fed in terms of being more hawkish and more rate hikes in future.
So we would expect that liquidity overall is going to be tight.
And within the crypto ecosystem we continue to see players emerging that had liquidity
issues from the Luna and Three Arrows; Celsius fallout.
And so I would think that the upside in the near term seems to be very capped.
The positive thing, though, is that we've prevented we've avoided another leg down on
a fire sale of assets as most of these players.
All right.
Let's get more from Benjamin Stani from Matrixport.
Benjamin, thanks again for joining us.
Live markets seem a little bit more stable over the last couple of weeks.
Volatility, perhaps a little bit quieter.
Bitcoin had seemed to find some degree of support around the US$20,000 level.
There is some suggestion it could go lower, though.
What do you see as the macro risk for crypto going forward?
We had a strong job numbers out of the US and the last week and so if anything that
probably changes the course of the Fed in terms of being more hawkish and more rate
hikes in future.
So we would expect that liquidity overall is going to be tight.
And within the crypto ecosystem we continue to see players emerging that had liquidity
issues from the Luna and Three Arrows, Celsius fallout.
And so I would think that the upside in the near term seems to be very capped.
The positive thing, though, is that we've prevented we've avoided another leg down on
the fire sale of assets as most of these players that are coming out now, halting withdrawals
and denouncing liquidity issues, they are actually going into bankruptcy.
And so there's a structured unwind of these assets which gives the industry more time
and doesn't result into a death spiral of fire sales asset, basically.
Yeah.
Any rebound in crypto prices, of course, now unlikely to include a lot of Indian investors
trade volumes.
We know they're down substantially last week following a new tax on the sector.
What do you make of that?
What is your opinion on how India is dealing with crypto?
Yeah, but we've seen a number of new regulations coming out of India and I think India, like
most other places, a regulatory framework is not really in place yet.
In fact, in India it was a back and forth for a couple of years and obviously these
uncertainties, they are not ideal and they bring a bit of challenges for crypto companies.
Despite that, we've seen a number of successful projects actually out of India and we've seen
the adoption of crypto in India being extremely high.
India's ranking, according to latest statistics, is one of the top adopted countries for crypto.
Now what we've seen the first step was the beginning of the year where there's was a
bit of a double edged sword where the government announced a 30% capital gains tax.
It did, however, already result in a major drop in volumes in India.
This policy came into effect in April and now with the 1st of July, we've got another
negative policy coming in, which is basically putting a 1% levy on all transactions in crypto.
And together with that, we now see volumes at major Indian exchanges, down more than
90% versus last year.
And we're also starting to see more actively major Indian players to float the idea of
relocating to jurisdictions that are more crypto friendly, particularly Dubai.
In terms of regulation, we seem to be seeing a greater degree of coordination between central
banks, the monetary authority of Singapore, the Bank of England and the Reserve Bank of
India all supposedly talking.
The US, of course, we know, is cooperating with South Korea, looking into Terra Luna.
Is this a good thing that we are seeing these international authorities working together?
Probably harmonized regulation is a good thing for our industry because it allows players
to internationalize and crypto as a global market.
So having the same set of rules applied globally is actually a good thing, I would say.
Now what we've seen is though that there's a lot of jurisdictional arbitrage and a big
players have been able to get favorable jurisdictional and legislation and licenses from countries
where they announced that they're shifting their headquarters over.
Singapore is an interesting one.
Singapore has been very crypto friendly and now we probably expecting a bit more scrutiny
after the Three Arrows blow up.
Basically the fund was mainly domiciled in Singapore and MAS already announced that they
are investigating into them.
The ultimate goal there is consumer protection and they made it clear that they're going
to go really hard on bad behaving actors.
In Korea, we've had the blowup of Terra, which was rooted in the country there, and the quant
is already under investigation from Korean prosecutors.
The SEC had already served Do Kwon in November last year.
And so there's there's obviously room for for cooperation with Korea and the US.
And I honestly believe that there's going to be more of of these corporations with company
governance globally.
All right, Benjamin, what are the opportunities what are the challenges, then, of how global
authorities are catching up with taxation and regulation of crypto?
So I think think the big opportunities obviously like for our industry to create a level playing
field where.
You don't have companies just competing on jurisdictional advantage, but actually on
best practices and innovation.
Obviously, jurisdictional competition is also something that is actually helping our industry
itself because it allows us to.
It allows governments to actually attract talent for crypto.
And so, therefore, it puts pressure in not just overregulating and banning the industry
outright, because that way you are losing out competitively versus other players.
So it's just a fine line between making sure that you have consumer protection in place,
you prevent these fraudulent actors, but at the same time, you're not shutting the door
to innovators and builders.
All right.
Thanks a lot for that.
Benjamin Stani from Matrixport.
Regulation is also high on the agenda for the Financial Stability Board.
In a statement yesterday, the international financial watchdog said it is working on a
robust framework for crypto.
It said it's worried about recent market turmoil, especially what's been happening with stablecoins.
Forkast's Timmy Shen reports.
Commission reports the FSB's recommendations for approaching regulation, supervision and
oversight on stablecoins are set to be presented to G20 ministers and central banks in October.
The watchdog says stablecoins need to be captured by such regulation if they are to be adopted
as a widely used means of payment or play an important role in the financial system.
It goes on to say that any stablecoin which could be used in multiple jurisdictions could
pose a threat to financial stability and that transparency is vital.
Speaking during Forkast recent future of Stablecoins event, Caroline Pham of the US Commodity Futures
Trading Commission made a very similar point.
But it is important to have that transparency, not only transparency into transactions but
also transparency into these different, frankly, financial institutions, these crypto firms.
And what are their financial resource requirements?
What leverage do they have?
What minimum capital are they holding?
What are their risk management policies and procedures?
I think all of that is very important for people who are using their products to understand.
The FSB also recommends strengthening international cooperation and coordination on such matters,
something which Pham also agrees on.
I think we have to come together when we're looking at a global issue.
It's nothing that I think any one particular authority can solve for themselves in just
a silo.
It has to be done together through open dialog and open discourse.
So with that, I think one of the things that's very important to address is to make sure
that there's a level playing field for global markets and global businesses.
A level playing field ensures that everybody is playing by the same rules and that the
protections are applying and that there's no loophole or no way to go in and game the
system.
At the same event, legal expert Jason P. Gottlieb of Morrison Cohen notes it's another of the
FSB's concerns: investor protection.
Because I think only cooperatively between industry and regulators can we get to workable
rules that will protect the industry at the same time that we are protecting investors
in the industry.
Meanwhile, ex-Fed risk specialist Michael Shing, who is now with fintech company Xrex,
told Forkast that compliance is currently a difficult task for the industry, as laws
and regulations are not perfectly clear and new rules are still being deliberated.
Shing agrees that it's fundamental for stablecoins to fulfill high regulatory standards.
He says while they are a type of cryptocurrency, people do not see them as a speculative asset
and that investors look to stablecoins as a safe store of value and reliable medium
of exchange.
I'm Timmy Shen, Forkast.
Meanwhile, the Bank for International Settlements has its sights set on CBDCs.
In a joint report, the Central Bank for Central Banks says fundamental decisions need to be
made on official digital currencies.
Forkast's Lachlan Keller has more.
According to the 61 page report, central banks need to ensure multinational interoperability
and widespread access even to non-citizens.
A CBDC is a digital currency issued by a central bank which uses crypto technology to lower
costs and enable more seamless cross-border transactions, according to the Atlantic Council.
Over 90 countries have active CBDC projects ranging from the research stage through to
full implementation.
However, the report recommends the involvement of central banks, which aren't yet actively
exploring CBDCs in the planning process, saying international collaboration is paramount.
Given that CBDC is new to all.
It provides a clean slate opportunity to coordinate and incorporate cross-border functions from
the start to avoid unintended barriers later.
The report says there are three ways of achieving that interoperability compatibility interlinking
or using a single system.
It recommends compatibility as being the easiest and cheapest in the short term, but says interlinking
or a single system could yield greater returns in the long run.
However, it concludes that there is no one size fits all approach and says the report
is simply a tool for helping central banks assess how a CBDC could suit their particular
needs.
I'm Lachlan Keller, Forkast.
Alright, that's it for today's Daily Forkast.
We have got the latest updates on Twitter.
Make sure you follow us there @Forkast_News.
But until next time, I'm Forkast's Joel Flynn.
I'll see you then.