Bitcoin continued its correction toward $30,000, a biblical message was found in its blockchain, the hacked Livecoin exchange announced its closure, and Sberbank filed an application to issue a stablecoin. These and other developments of the week are in the Sunday digest.
Bitcoin price held above $30,000
The price of the first cryptocurrency continued to fall over the week. On January 21, the price of digital gold fell below $33,000.
In the night of January 22, Bitcoin plunged to the level of $28,800, but the psychologically important $30,000 mark was ultimately held by the cryptocurrency.
As of writing, Bitcoin is trading at around $32,000, though analysts foresee further downside.
Data: TradingView.
CEO CryptoQuant Ki Young Ju drew attention to the “Coinbase premium,” which during price rallies exceeded 50, and has now fallen below -122. In his view, this signals selling by large investors. While previously CryptoQuant’s chief was confident that whales would not allow the price to fall below $30,000, given many invested at nearby levels, he now does not rule out a deeper drop.
Coinbase premium just hit -122
Chart: https://t.co/RpcUEnGxB6 https://t.co/osn5c9g0Km pic.twitter.com/sf8yBs68m4
— Ki Young Ju 주기영 (@ki_young_ju) January 22, 2021
Also over the last month, the premium to the Grayscale Bitcoin Trust (GBTC) price has fallen from 38% to below 3% , which could indicate selling by investors of a vehicle popular with institutions for exposure to the flagship cryptocurrency.
Against this backdrop, Guggenheim Partners’ investment director Scott Minerd said that Bitcoin has already peaked this year, and he expects a decline to around $20,000.
JPMorgan also did not rule out declines in the leading cryptocurrency if it cannot hold above the psychological level of $40,000.
Analysts at Glassnode believe that the bullish rally is far from over — the liquid supply of Bitcoin on exchanges has been shrinking for nine months. Only in December 2020 did users withdraw 270,000 BTC from centralized platforms for long-term storage.
“Historically, bullish cycles ended with increasing liquidity. But that has not happened yet,” noted analyst Luke Martin.
The total number of addresses with a balance above 1000 BTC has for the first time surpassed 2400.
Against the backdrop of Bitcoin’s price decline, the price of the second-largest cryptocurrency by market cap, Ethereum, hit an all-time high on Bitstamp. On Tuesday, January 19, ETH traded up to $1,440. The previous on-exchange price record was set in January 2018 at $1,420.
Users are also actively withdrawing Ethereum from exchanges — reserves declined by about 10% over the week, according to CryptoQuant.
Data: CryptoQuant.
On January 17, DOT reached a high of $18.91, and on January 23 Chainlink (LINK) rose to a record high of $25.37, according to CoinGecko.
As with Bitcoin, crypto prices retraced from their highs, but the dominance index of the flagship fell to 62%. The crypto market capitalization stands at $962.4 billion.
Sberbank applies to issue a stablecoin
In early January, Sberbank filed an application with the Bank of Russia to register a blockchain platform with plans to issue the stablecoin Sbercoin pegged to the ruble.
The law effective since January 1, 2021, “On Digital Financial Assets (DFA)” allows registered platforms to issue new types of assets.
“Technically, the bank is ready to work with such an instrument; we tested it internally and saw that this solution works,” said Popov.
The registration process takes 45 days. If approved, the project could launch in the spring. Initially it will be used to issue digital promissory notes.
Among unresolved questions, the bank’s deputy chairman cited the taxation of DFAs.
“We are actively negotiating with the central bank and authorities on regulation and taxation of digital financial assets, and stablecoins in particular. We expect to jointly devise a mechanism that satisfies both business and the state,” said Deputy Chairman Anatoly Popov.
Also, Sberbank plans to launch a single electronic wallet to which bonuses and credit accounts will be linked.
Tax provisions for cryptocurrency holders in Russia to be refined over arbitrary fines
The text of the bill on taxing cryptocurrency operations does not clarify which tax will apply to digital assets, and the proposed fines are unwarranted. This is stated in the conclusion of the Legal Department of the State Duma.
Experts noted that the document excludes digital currency from VAT and income tax. Consequently, they recommended additionally grounding recognition of cryptocurrency as a taxable asset.
The bill imposes fines for citizens and organisations that fail to report timely about their right to dispose of cryptocurrency, turnover and balance, if the annual inflows or outflows exceed the equivalent of 600,000 rubles.
If a taxpayer does not include cryptocurrency inflows in the tax base, the fine will be 40% of the unpaid tax. For failure to provide a report on inflows or outflows of digital currency, a fine of 10% of the greater of the inflows or the balance on the account is proposed. If the information is submitted late, the fine will be 50,000 rubles.
“The explanatory note does not provide justification for the penalties. Arbitrary regulation of such relations is unacceptable. Moreover, the document contemplates different penalties for the same offence — failure to provide the tax authority with a report on transactions with digital currency and its balances,” the conclusion states.
The document grants taxpayers the right to report on the ability to dispose of digital currency (including through third parties), and to file reports on transactions with it and balances on accounts.
“However, given the bill’s essence, the above is not a right but an obligation for the taxpayer,” the experts noted.
The tax service gains authority to request bank statements for individuals’ accounts used for cryptocurrency transactions in cases of suspected violations. However, the bill does not provide clarifications on the procedure by which supervisory authorities may establish signs of such violations.
The document also does not address the taxation of digital financial assets.
In the Bitcoin block #666,666 a biblical message was found
An unknown added a quote from the sixth book of the New Testament to block #666,666 of the Bitcoin network.
“Do not be overcome by evil, but overcome evil with good,” reads the quote from the Epistle to the Romans by the Apostle Paul, chapter 12, verse 21.
This message was embedded in the 666,666th block of #Bitcoin pic.twitter.com/HpnPWrCjyW
— Documenting Bitcoin 📄 (@DocumentBitcoin) January 19, 2021
The sums, equivalent to about $160 in the first cryptocurrency, were sent to two addresses whose first characters contain the words “God” and “Bible” in English.
In ForkLog’s material, AMLBot CEO Vyacheslav Demchuk explained how to leave a message in the Bitcoin blockchain.
Bitcoin instead of emoji: how to leave a message in the Bitcoin blockchain
Livecoin exchange announces shutdown
On January 16, representatives of the cryptocurrency exchange Livecoin, hacked in late December 2020, announced a decision to close the project and disburse the remaining funds.
“Our service suffered significant technical and financial damage. Restoring operations is not possible,” the statement said.
To receive compensation, clients are asked to send their login and registration date on the exchange to verification@livecoin.news. After that, they will be sent further verification instructions.
“Applications are accepted only from the email address with which you registered an account on our service, and only in English and Russian.”
Applications for payouts will be accepted until March 17, 2021. After that date, new applications will not be accepted.
New bitcoin-ETF filing reaches the SEC
In the U.S. Securities and Exchange Commission has received another filing to register a bitcoin-based exchange-traded fund (ETF). It was filed by Valkyrie Digital Assets, according to the agency’s website.
According to the Form S-1 dated January 22, the Delaware-based Valkyrie Investments unit plans to launch a fund that will operate physical bitcoins. Its custodian will be Coinbase Custody.
If approved, Valkyrie plans to list the ETF on the NYSE Arca.
“Our team has previously launched several ETFs, publicly traded funds, and ETPs, including bitcoin-based funds,” said Valkyrie Digital Assets CEO Leah Wald.
BlackRock with $7.8 trillion assets to enter the bitcoin futures market
BlackRock has indicated that two of its funds will trade bitcoin futures. This is according to documents filed with the U.S. Securities and Exchange Commission (SEC).
These are BlackRock Funds V and BlackRock Global Allocation Fund. The latter has $16 million under management, and last year its return on investment (ROI) was 19.72%. About 70% of the fund’s assets were invested in corporate and government securities.
According to the documents, the funds could trade only cash-settled futures on commodity exchanges registered with the CFTC.
BlackRock noted regulatory risks and relatively low liquidity of Bitcoin futures.
BlackRock manages assets of $7.8 trillion.
Bitcoin.org refused to delete white paper at Wright’s request
The self-proclaimed Bitcoin creator Craig Wright demanded that bitcoin.org and bitcoincore.org delete the white paper of the first cryptocurrency, accusing them of copyright infringement.
The owner of bitcoin.org, Cobra, refused to comply, accusing Wright of false statements. bitcoincore.org removed its copy of the document and links to it.
Subsequently, the community launched a campaign to host the Bitcoin white paper on other domains. Participants included well-known companies such as Square, Paradigm, Chaincode Labs, Fidelity, Novi and many others.
ForkLog also endorsed the initiative — the document is now permanently accessible via the link.
US Treasury nominee concerned about crypto-terrorism links, but softens stance
Methods to combat money laundering and terrorist financing with the help of cryptocurrencies must evolve with technology, said US Treasury Secretary nominee Janet Yellen at a Senate hearing.
Yellen expressed concern about the role of digital assets in criminal activity. She pledged to monitor the industry closely after taking the post of Treasury Secretary in the Biden administration.
“I think we need to study ways to reduce the use of cryptocurrencies [in criminal activity] and ensure that money is not laundered through these channels,” said Yellen.
Later, in a written response to questions from the Senate Finance Committee, the former Fed chair presented a more balanced stance. Cryptocurrencies can improve the efficiency of the financial system, but should not be used for criminal activity, she stressed.
“We must consider how to encourage legitimate use of cryptocurrencies while constraining their use for illicit purposes. I intend to work closely with the Federal Reserve and other regulators to implement an effective regulatory framework for all fintech innovations,” Yellen said in a Senate letter.
ForkLog also wrote:
- Russian court overturned the decision to place Binance on the registry of banned sites.
- Biden froze proposed FinCEN rules regulating the crypto industry.
- The darknet marketplace Joker’s Stash earned $1 bln in BTC and announced its closure.
- Developers presented the Berlin hard fork specifications for the Ethereum network.
- Details of Mt.Gox creditors’ payouts emerged online.
What else to read and watch?
- ForkLog looked into the arguments on the benefits and potential privacy threats of Bitcoin’s upcoming Schnorr/Taproot upgrade.
- Read about the intensifying Apple–Facebook privacy battle and whether Google will be drawn in, in the magazine’s article.
- On January 18, ForkLog’s Max Bit featured the reader-voted tech breakthrough of the year and TON Labs co-founder Alexander Filatov. They discussed project nuances, the TON Crystal token and fielded questions from the community.
Subscribe to ForkLog news on Telegram: ForkLog Feed — the full news stream, ForkLog — the most important news and polls.