Market Instability Revives BTC Idea as Inflation Hedge

Audy Castañeda
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Market Instability Revives BTC Idea as Inflation Hedge

Sterling-to-Bitcoin trading volumes surged following former British Prime Minister Liz Truss’s mini-budget announcement last month.

Increasing economic instability, especially in the UK, has seen investors turn to Bitcoin as a hedge against inflation.

Former British Prime Minister Liz Truss unveiled her economic agenda of sweeping tax cuts on Friday, September 23. This sent UK bond yields skyrocketing, markets roiled, and investors flocked back to Bitcoin.

The following Monday, exchanges saw a record surge in British pound-to-Bitcoin transactions, amounting to 846 million British pounds ($955 million). This led to trading volumes between the pound and Bitcoin soaring 233% in September from the previous month.

Although different, similar uncertainty in the euro area due to the war in Ukraine caused this figure to rise to 68%.

The riots caused by Truss’s “mini-budget” also caused the pound to fall to its lowest level against the dollar, and its volatility to increase.

Surprisingly, as Bitcoin’s volatility dipped to its lowest level so far this year, it almost matched that of the pound. Even the volatility of safe-haven assets such as US bonds has recently matched or exceeded that of Bitcoin.

Bitcoin Inflation Hedging Argument Resurfaces

As a form of digital gold, cryptocurrency advocates have argued that Bitcoin similarly acts as a safe haven asset. One reason is that Bitcoin is independent of any centralized authority, such as a central bank, that could manipulate its supply.

Additionally, with Bitcoin limited to a supply of 21 million, proponents also believe it serves as a hedge against inflation.

Nevertheless, even as its price fell, institutional investment in the cryptocurrency continued to rise over the past year. This caused it to trade more similarly to other traditional risk assets, weakening Bitcoin’s case as an inflation hedge.

However, recent events have seen this argument resurface, especially Bitcoin’s recent moves relative to the aforementioned asset.

Not only have correlations with riskier assets decreased, such as with the tech-heavy Nasdaq, Bitcoin has been trading more and more like gold.

Notably, inflation rates have reached new highs around the world and many countries are struggling to avoid a recession. Bitcoin, like most other assets, is struggling to remain a lucrative investment option, but that doesn’t necessarily mean it has completely failed as an inflation hedge, some say.

In this regard, Kasper Vandeloock, CEO of cryptocurrency quantitative trading firm Musca Capital, argued earlier this month that BTC is still one of the best-performing assets despite the recession, but it depends on how you frame it. The CEO explained this further:

“Sure it’s down 75%, but when you compare it to the strongest asset out there, when you compare it to currencies like the Turkish lira, it shows more strength. Also, it’s not like other hedges, like gold, that they have never suffered a big drop. One factor that many people forget is that an inflation hedge is a kind of “insurance” like real estate, whereas gold is difficult to store and sell as it is illiquid. Bitcoin offers many advantages that those assets don’t have.”

Security with Sunak

Meanwhile, Truss resigned as Prime Minister and the ruling Conservative Party subsequently chose Rishi Sunak as her replacement. The rise of Sunak, who previously served as Chancellor of the Exchequer (His Majesty’s Treasury), restored confidence in the British economy.

Consequently, the trading volumes between the British pound and Bitcoin have returned to the levels prior to the announcement of the mini-budget. However, the incident and the prevailing market conditions have shown the attractiveness of Bitcoin in a crisis.

By Audy Castaneda

Crypto Could Become a Regulated Financial Instrument in the UK

Audy Castañeda
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0
Crypto Could Become a Regulated Financial Instrument in the UK

The House of Commons today voted to make crypto assets regulated financial instruments. With Rishi Sunak as Prime Minister, it remains unlikely that the pound will suffer enough for the British to use Bitcoin as a hedge.

In the UK, a new amendment to the Financial Services and Markets Bill could regulate crypto assets like Bitcoin alongside stablecoins.

Lawmakers in the House of Commons voted in favor of a proposal by Andrew Griffith MP to bring cryptocurrencies under the banner of regulated financial services.

It is worth remembering that Rishi Sunak, former UK Minister of Finance and clearly pro-crypto, has taken over the position of Prime Minister. He envisions making the UK a crypto innovation hub.

FSM Bill Would Place Crypto under Existing Law

The proposal was part of a list of amendments to the original bill that would make stablecoins regulated forms of payment. The proposal includes cryptocurrencies under the Financial Services and Markets Act of 2000. It allows for the regulation of advertisements and the expulsion of unauthorized companies.

Among other details, the bill in question considers some extensions to the current laws, which would also address in part the cryptocurrencies known as stablecoins, those whose value would be related to some currency of legal tender that have been gaining popularity as a mechanism of digital payment for products and services.

“The gist here is to treat [crypto] like other forms of financial assets and not prefer them, but also bring them within the scope of regulation for the first time,” Griffith said.

The bill was introduced when Rishi Sunak was the Minister of Finance. So far, lawmakers have debated the bill in two sessions, one on October 19, 2022, and one on October 25, 2022.

Before being passed, the bill must go through the House of Lords and be subject to one more review, after which it can be signed into law by His Majesty King Charles III.

According to watcher.guru news website, Griffith mentioned that the treasury will consult various stakeholders and industry personnel to execute the framework and assess its risks and benefits.

In similar news, the South African Financial Sector Conduct Authority announced on October 19, 2022, that it would recognize cryptocurrencies as a financial product with immediate effect.

Will Bitcoin Have to Be a Hedge with the New PM?

The news of possible cryptocurrency regulation comes on the heels of a surge in British pound trading volume on cryptocurrency exchanges.

After former British Prime Minister Liz Truss introduced unfunded tax cuts on September 23, 2022, Britons flooded exchanges to buy Bitcoin with British pounds, causing transaction volume to jump 233%, compared to August 2022.

Proponents early on touted Bitcoin as a hedge against inflation because the currency is issued on a fixed schedule with a maximum supply of 21 million. But its correlation with stocks earlier this year has weakened that argument.

Also, the recent appointment of Rishi Sunak as the new Prime Minister of the UK could mean more conservative fiscal policies for the UK in the near future, which would imply stability for the pound. Sunak opposed Truss’s unfunded tax cut policies.

The failure of economic policy vindicated Sunak when it proved disastrous for the UK economy. After becoming Prime Minister, Sunak promised: “integrity, professionalism, and accountability, at all levels of the government I lead.”

By Audy Castaneda

The Chairman of the SEC Questions the Decentralization of the Cryptocurrency Industry

Alexander Salazar
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The Chairman of the SEC Questions the Decentralization of the Cryptocurrency Industry

Gensler said there was a trend for interdealer brokers to benefit from the scalability, network effects, and access to valuable data. He also stated he had seen centralization in the crypto market, noting that intermediaries in the middle of the market concentrate on this field significantly.

Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC), recently attacked the cryptocurrency industry by questioning its decentralized properties.

The government official spoke at the annual Securities Industry and Financial Markets Association (SIFMA) meeting. He said he did not consider the decentralization of crypto assets a factor.

He recognized that finance has tended toward centralization and concentration since ancient times. Besides, they said there was a trend for interdealer brokers to benefit from the scalability, network effects, and access to valuable data.

Gensler highlighted that only four wealth managers managed more than 80% of total net assets in US-registered index funds.

Satoshi Nakamoto created Bitcoin due to a general financial collapse caused by centralized banks and lending companies.

Gensler Does Not Believe in the Centralization of Cryptocurrencies

However, the chairman of the SEC does not consider crypto assets are decentralized, attacking the market with his centralized brush.

Gensler stated he observed centralization in the crypto market, which had emerged from decentralization. He pointed out that intermediaries in the middle of the market concentrate on this field significantly.

He referred to cryptocurrency exchanges like Coinbase, Binance, and FTX, which have become centralized giants that consume profits over the last few years.

The official wants to categorize crypto assets as stocks to regulate them under the same strict rules brokers that cryptocurrency exchanges face. That might complicate the situation for retailers, which would probably benefit institutions jumping through additional hoops.

As for intermediaries, he said there is high centralization on cryptocurrency exchanges and lending platforms. Therefore, the SEC plans to review publicly traded tokens carefully and take steps against offering unregistered securities.

The SEC Might Intend to Throw the Baby and the Bath Water

The SEC Miight want to throw the baby out with the bath water. Although leading cryptocurrency exchanges are centralized, most of the crypto assets they list are decentralized.

Gensler and the SEC can only get away with taking tight measures against cryptocurrencies by classifying decentralized assets as centralized securities.

The proposed Lummis-Gillibrand cryptocurrency bill might give the CFTC more authority to regulate the asset class. However, the regulation might not receive approval in the United States until the end of next year.

The relevance of Bitcoin and other decentralized cryptocurrencies has become increasingly evident worldwide, which the chairman of the SEC knows very well. He seeks to regulate them as stocks, which would affect retail investors to the advantage of some institutions.

Meanwhile, Bitcoin is trading at around USD 19,283 and has accumulated a 0.5% loss over the last 24 hours. While its daily trading volume is above USD 21.40 billion, its market capitalization is about USD 370.07 billion, according to CoinGecko.

By Alexander Salazar

A Survey Reveals 10% of Women Prefer Crypto Assets to other Investments

Alexander Salazar
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A Survey Reveals 10% of Women Prefer Crypto Assets to other Investments

Flori Márquez said the data shows that cryptocurrencies attract female investors, noting that even older generations have changed their conservative position. Despite the interest in investing and adopting cryptocurrencies, a more inclusive community would encourage more women to enter the ecosystem.

American cryptocurrency firm BlockFi recently released a survey about the investment patterns of women. The results revealed that Generation Z and Millennial women prefer to invest in cryptocurrencies to other assets.

In March, another study found that 33% of women already investing had acquired cryptocurrencies.

The respondents included millennials (17%) and Generation Z or post-millennials (11%). The objective was to collect data about the status of cryptocurrencies and their adoption.

The Study Reveals that 10% of Women Own Cryptocurrencies

According to the survey, 10% of women have already bought cryptocurrencies, while most (33%) plan to invest in pension funds.

Flori Márquez, the CEO of BlockFi, said the data shows that cryptocurrencies are attractive to female investors. She noted that even older women had changed their conservative position about assets described as extremely risky and volatile.

The latest survey conducted by BlockFi reveals that many women seek cryptocurrency markets to make their first investment. While digital natives might also adopt cryptocurrencies, Generation X and Baby Boomers are open to participating.

The executive expressed her excitement about the adoption of cryptocurrencies across generations. She also said she expected the figures to increase over time.

According to 20% of Generation Z, Bitcoin Is the Best Long-Term Investment

Most Generation Z women (41%) prefer to invest in real estate, but 20% said the best long-term investment is Bitcoin. That suggests an optimistic long-term outlook for the crypto asset industry.

Besides, 69% of the women consulted said they invested in cryptocurrencies to hold them for a long time.

The survey shows women’s interest in investing and adopting cryptocurrencies has grown. However, Márquez pointed out the significant disparity between women who feel confident in their investments and those who do not. Therefore, she recommends closing that gap through a more inclusive and educational community that attracts more women to the ecosystem.

Concerning the cryptocurrencies women prefer, most respondents said their favorites were Bitcoin (71%), Dogecoin (42%), and Ether (18%).

The relevance of cryptocurrencies like Bitcoin has become increasingly evident among female investors worldwide. The above survey is only an example of how the interest in buying and adopting those assets has grown. It is only a matter of time before the number of women in the ecosystem increases considerably.

Meanwhile, Bitcoin is trading at around USD 19,900 and has accumulated a 5%gain over the last 24 hours. While its daily trading volume is above USD 35.25 billion, its market capitalization is about USD 650.45 billion, according to CoinGecko.

Investors should research the all-time high and possible future price of Bitcoin or any other cryptocurrency before buying it. That will help them find the most convenient investment opportunity to reduce the risk of losing money.

By Alexander Salazar

Cardano (ADA) Price Prediction: Will FTX Be a Catalyst?

Audy Castañeda
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Cardano (ADA) Price Prediction: Will FTX Be a Catalyst?

ADA is trading inside the long-term support at $0.36, thus following a descending resistance line.

Cardano (ADA) price is trading inside a major horizontal support area but is yet to show any signs of a bullish reversal. Its price has fallen below a descending resistance line since August 2021. So far, the drop has led to a low of $0.33 on Oct. 21.

The bottom was made inside the $0.36 horizontal support area. This is a crucial horizontal level as it acted as resistance in both May 2018 and February 2021. After the ADA price broke out, it started a rapid move higher leading to the all-time high of $3.10.

There are no bullish reversal signs in place yet. The weekly RSI is still dipping below a descending resistance line (green) and has not generated any bullish divergence. Furthermore, the price of ADA has yet to break out of its descending resistance line.

Currently, if ADA manages to break out of the line or instead falls below the $0.36 support area it could determine the direction of the future trend.

Bottom at $0.32?

A closer look at the daily price action shows that the ADA price broke out from a symmetrical triangle. It did so on October 2, confirming the start of a new five-wave bearish move (black).

On Oct. 23, FTX CEO Sam Bankman-Fried tweeted that the exchange plans to list ADA in the future. Currently, ADA is not listed on the exchange, but in the futures section. The price started an upward movement soon after.

However, it is possible that the movement was part of the count. If this is correct, the price of Cardano would probably be in the fourth wave. Therefore, another final downward move will follow leading to the bottom.

The closest Fib target for this bottom is at $0.33, created by the 1.27 Fib outer retracement of the triangle.

Otherwise, the next Fib support area would be at $0.23. While this would be a better fit for the breakout of the $0.36 area in the longer term, it would mean that wave five would be extremely long.

Conversely, a rally above the wave one low at $0.43 (red line) would invalidate the bearish ADA price prediction. Instead, it would indicate that a bullish reversal has started.

It is worth noting that technical analysis indicators are bearish. Similar to the weekly RSI, the daily RSI remains bearish. It has not generated any kind of bullish divergence, nor has it broken its descending resistance line (green line).

Cardano (ADA) Price Prediction for the Upcoming Years

According to CryptoGeek, Cardano will have a double win in 2023, both as one of the leading products on the market and as part of the growing market.

FXStreet states that Cardano has been trading sideways since its high of $1.48 set on February 27. The digital asset just had a significant break from a major pattern and is targeting a long-term top.

In conclusion, the future of Cardano (ADA) is promising. It is consolidating in the crypto space at the same time that the eyes of large companies and investment groups show interest in the technology they represent. Cardano (ADA) forecast is bullish for the next few years. But due to the high volatility of the market, Cardano’s prediction may vary in the coming years. Although the upcoming updates and news about Cardano give good hopes for the project.

By Audy Castaneda

Crypto Whales to be Monitored in South Korea to “Prevent” Money Laundering

Audy Castañeda
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0
Crypto Whales to be Monitored in South Korea to “Prevent” Money Laundering

The Financial Services Commission will monitor crypto whales with 100 million won in assets, for the purpose of preventing money laundering and any illicit activities.

South Korea’s regulator, the Financial Services Commission, has announced the drawing up of new plans to control money laundering activities perpetrated by crypto whales.

The regulatory agency said it would start tracing and verifying transactions over $70,000, in a bid to further curb the activities of bad actors in the market.

The South Korean regulator highlighted that owning a large number of digital assets opens the door to the likelihood of use for money laundering purposes.

The South Korean Financial Services Commission has announced new rules for the cryptocurrency market that require tracking of cryptocurrency holders holding more than 100 million won ($347,000) in the asset class.

This is an effort to ensure that money laundering does not take place, one of many steps the financial regulator is taking to enforce AML (Anti Money Laundering).

The authorities say that “the higher the ratio, the higher the risk of money laundering,” and they believe stablecoins are likely to be used especially for criminal purposes. The report further explains that:

“In the case of an independently listed virtual asset, it is possible that it did not meet the listing criteria of other virtual asset operators, and it can be assessed that the money laundering risk of virtual asset operators with a high proportion of virtual assets is high.

The report highlights stablecoins as a likely concern, as they can easily be used to carry out laundering activities. The country classifies dents as independent virtual assets, and they must be evaluated according to the current laws.

In addition to monitoring high-value customers, the report also states that the agency will investigate people who make high-value deposits. The report claims that retail users would be put under the microscope every quarter, as a change in their holdings could be a means of carrying out money laundering activities.

Crypto Whales Facing Extensive AML Rules

The South Korean Financial Intelligence Unit (FIU) is an agency dedicated to preventing money laundering and illegal fund flows. It recently conducted a survey of crypto exchanges focusing on AML violations and counter-terrorism financing obligations.

The agency concluded that there was insufficient compliance with these requirements. It has said that it will regularly disclose illegal transactions and activities. It also encourages exchanges to establish a proper AML system.

These rules relate to how to check for suspicious transactions and what to do in the event of a violation. For example, if someone withdraws 500 million won ($350,000) in 10 minutes, an investigation should be conducted. Failure to report suspicious activity by the exchange could result in a fine of nearly 30 million won.

South Korea Wants No Space for Money Laundering

South Korea has been particularly keen to ensure that money is not laundered through the crypto market. The FSC met with other government agencies at the Financial Action Task Force (FATF) meeting to discuss efforts related to AML and counterterrorism financing.

The FSC chief also called for caution regarding allowing domestic companies to enter the crypto market. Meanwhile, the Governor of the Financial Supervisory Service has said that cryptocurrencies could be subject to securities laws.

By Audy Castaneda

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