If Predictions about Bitcoin Had Not Failed, It Would Trade at USD 72,000

Alexander Salazar
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If Predictions about Bitcoin Had Not Failed, It Would Trade at USD 72,000

The drop in the price of Bitcoin shows that metrics such as SF2 are not helpful. The macroeconomic situation has been one of the primary reasons for the current value of the cryptocurrency.

Every day, there are postings of predictions about the price of Bitcoin (BTC), the leading cryptocurrency in the market. However, even some metrics and analysts hitting the nail on the head on other occasions have erred.

For example, the tool Stock to Flow (S2F) predicts the Bitcoin price by dividing the issuance of the cryptocurrency by the annual production.

That metric has predicted moments like the correction from May to July 2021 but suggests Bitcoin will reach USD 72,000 this week. Since that projection is unlikely in the current context, the co-founder of Ethereum, Vitalik Buterin, has criticized Stock to Flow.

The pioneering cryptocurrency is down as inflation and measures against it increase in the United States and Europe. BTC has traded between USD 20,000 and USD 22,000 for six days, so specialists are watching whether it will rise or drop.

According to Fidelity, SF2 is no longer accurate as it is almost impossible to calculate the future adoption rate of Bitcoin. The current drop has been among the highest in the market, but many metrics and specialists did not anticipate it.

Various analysts predicted that the price of Bitcoin would reach a new all-time high at this time, contrary to its current bearish trend. Even specialists who have closely guessed its price on different occasions have failed.

Last year, Carlos Maslatón said that Bitcoin would be worth more than USD 120,000 in June 2022. However, he has been right in his predictions at other times, which has allowed him to become rich as an investor. He argues that he has succeeded due to his analysis of the human behavior of traders.

The Predictions Cannot Depend on a Single Metric or Person

In this context, the lesson is that the price of Bitcoin depends on a confluence of factors. Therefore, its predictions cannot base on a single metric or the vision of an analyst.

It is possible to observe that despite the growing institutional adoption and interest in BTC, its price has fallen freely. Economist Jose Sarasola explained that the economic-political context and the fear caused by some events are the main reasons.

It is crucial to understand that it is impossible to predict the price of BTC based on a single factor. It is convenient to use various metrics and follow the behavior of Bitcoin investors to foresee its movements.

It is possible to predict the price movements of Bitcoin more accurately by knowing the reality impacting the market. Since nobody has the crystal ball to predict the future, it is necessary to consider the possible risks.

BTC is trading at around USD 20,079 and has accumulated a 1.4% loss over the last 24 hours. While its daily trading volume is above USD 20.29 billion, its market capitalization is about USD 383.29 billion, according to CoinGecko.

By Alexander Salazar

Argentine Authorities Detect Overbilling in the Importation of Bitcoin Mining Equipment

Alexander Salazar
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Argentine Authorities Detect Overbilling in the Importation of Bitcoin Mining Equipment

The estimated overbilling in a batch of seized cryptocurrency mining equipment is around USD 5 million. Although the company that invoiced the purchase has its headquarters in the United States, the hardware comes from China.

The General Directorate of Customs of the Argentine Republic recently reported seizing over 2,000 pieces of Bitcoin mining hardware. The authorities alleged that they took that action because they detected a case of overbilling in importing that equipment.

The mining hardware models that the Argentine Customs seized included the Whatsminer M30S from the MicroBT brand.

The cost of the 2,233 mining devices seized amounts to USD 21.9 million, an average of about USD 10,000 per unit. However, the investigations conducted by the customs revealed that the actual price ranges between USD 5,770 and USD 7,700 per unit. Therefore, that results in an estimated nearly USD 5 million in overbilling.

Concerning the cryptocurrency mining equipment market, the prices of those devices have dropped for several weeks. For example, the Whatsminer M30S is around USD 6,000, the same as Bitmain’s Antminer S19 Pro. That is consistent with the prices that the Argentine Customs have indicated.

How the Overbilled Bitcoin Mining Equipment Arrives in Argentina

The destination of the Bitcoin miners arriving in the administrative city of Ezeiza was the Free Trade Zone of La Plata. Although the equipment came from China, the headquarters of the company that issued the invoice is in Florida, United States.

The American company and those leading the Argentine importer conducting this procedure are under investigation by the authorities.

The investigators explain that this is a maneuver to avoid organisms that regulate imports and foreign currency transfers. In this case, the importers seek to evade the Comprehensive Import Monitoring System (SIMI).

The Argentine Customs Seeks to Analyze Import Operations Exhaustively

The measures taken by the Argentine Customs include blocking transit requests carrying a similar modus operandi between Ezeiza and La Plata Free Zone. Besides their criminal complaint, they seek to analyze each import operation exhaustively.

In addition, the companies or natural persons involved with companies making imports under that modality may be subject to tax inspections shortly. They want to track the movements of those taking part in the overbilling of products arriving in the Argentine Customs.

The Argentine Customs also decided to increase controls for those operations, passing all of them through the obligatory red channel. The procedure, which they would initially conduct for 15 days, implies documentary and physical control of the merchandise.

They also sent a proposal to the Central Bank and the Ministry of Productive Development to improve foreign exchange control for free zone operations. In that way, they seek to reduce the number of overbilling cases related to imported merchandise and thus protect buyers.

BTC is trading at around USD 20,079 and has accumulated a 1.4% loss over the last 24 hours. While its daily trading volume is above USD 20.29 billion, its market capitalization is about USD 383.29 billion, according to CoinGecko.

By Alexander Salazar

How to Deal with a Bear Market

Audy Castañeda
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How to Deal with a Bear Market

In difficult times, patience is important. But patience alone can lead us to the slaughterhouse. We also need a strategy, prudence, and good sense.

The main objective of investors is to grow financially. To achieve this goal, they must take their capital and invest it in assets that will rise in value over time. This is possible because the markets fluctuate. So investors make money by buying low and selling high. For this reason, at the time of purchase, every investor must have a theory of the future in order to place their bet.

If the investor is optimistic, it is time to buy. If the investor is pessimistic, it is time to sell. Of course, the best bets are made when the investor is bullish, but the market is not. In this contradiction lies the profit.

However, this is not an easy task, because every rule has exceptions and every investor is vulnerable to self-deception. In other words, it’s not as simple as “buying the dip” all the time. That would be extremely naïve; investors need to go beyond that.

Value as Quantification

Financial growth is measured in numbers. It is something quantifiable. In other words, “value” refers to monetary value, which is always fixed in numbers.

The custom is to use the dollar as the unit of account par excellence. The challenge in a bull market is usually to outperform the S&P 500. And, during a bear market, it’s usually to outperform US Treasury bonds. The period to take is annual. That is the measure of success.

 While it is true that we are not here for the short term, it is always cautious to invest with annual goals. Of course, it is perfectly acceptable to take losses for periods of a year or two. But this is in the case of individual assets. Such losses are not so acceptable for entire portfolios.

Income Must Exceed Expenses

Our assets must exceed our liabilities. This must be fulfilled in all scenarios. The eventual depreciation of our assets during down cycles must be taken into account. If we borrow against collateral during a bull run, we must remember that our liabilities will follow us during the bear cycle. That means that we will have to make the same payments but under much more difficult conditions. That is, with less income and with depreciated collaterals. The mistake is not preparing for the lean times during the fat cow season.

This implies that during a bearish cycle the one with enough cash and enough stability is the king. That person can fulfill his obligations. You can maintain your lifestyle. And you can take advantage of discounts. This is not the case for the highly indebted, those investors who have too large a proportion of risky and volatile assets in their portfolio. That is because we don’t know for sure how long a bearish cycle will last, or when we will bottom out. However, our expenses and obligations remain the same. Obviously, there are many opportunities during a bear market, although if we do not have enough cash to take advantage of those opportunities, we will be surely left out of the game.

In conclusion, this is not a game. No one knows the future, nor does anyone know for sure the price of Bitcoin in the coming years. The most sensible course of action is to protect assets and investments by being as cautious as possible. In this sense, it is always healthy to think of the worst possible scenario in order to take preventive measures. Relying solely on faith and illusion is not always profitable.

By Audy Castaneda

NYDIG Study Calculates the Value of Regulation Worldwide in Terms of BTC Price Gains

Audy Castañeda
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NYDIG Study Calculates the Value of Regulation Worldwide in Terms of BTC Price Gains

The pro-crypto financial services firm looked at Bitcoin prices in the intervals following the regulatory events and found clear evidence of the effects of the events.

The need for regulation is a common theme in cryptocurrency debates, and the claim is often considered self-evident. Now, the financial services firm New York Digital Investment Group (NYDIG) has done some math to prove it. In a new study, NYDIG quantifies the effect of regulation on the price of Bitcoin (BTC) around the world.

According to the authors, they attempted to find support for their thesis that increasing regulatory clarity is supportive of price and that across most countries this relationship holds true. In the case of China, the authors claim that regulation has had a deleterious impact on prices. The report also states that increasing regulatory clarity will be beneficial to price and adoption, as this could provide a tailwind to Bitcoin prices going forward.

NYDIG Study Details

NYDIG studied Bitcoin prices at regular intervals following regulatory developments affecting the taxation, accounting, and payments of digital assets, as well as decisions about the legality of service providers and the digital assets themselves. The research examined the Americas, Europe, China, and Asia excluding China, and was limited to the period from September 30, 2011, to March 31, 2022.

The number of regulatory events considered in the study ranged from 17 in America to 10 in China. With the exception of China, Bitcoin price increases in absolute terms were observed in all intervals and in all regions after a regulatory event, with prices jumping more than 100% in all cases in 365 days.

The data regarding the “average return of Bitcoin” showed similar trends, although less pronounced. In America, Bitcoin prices are up 160.4% in absolute terms 365 days after the regulatory events, and 32.3% in relative terms. In Europe, those figures were 180.1% and 52.0%, respectively. However, in Asia, excluding China, the figures were 116.9% and -11.2%.

China, an Exception

China is the exception that confirms the rule. The authors called regulation in China “existential,” noting that the Chinese government gradually imposed bans on digital asset mining and speculation. Therefore, the negative impact of regulation they found on Bitcoin prices in China was also evidence of the effect of regulation.

Conclusions from NYDIG

The authors conclude by asserting that, “The results of the study are clear. In both absolute and relative terms, increased regulatory clarity is advantageous for the price of Bitcoin.”

They then moderate their language almost immediately, stating that, “The implication is that regulatory clarity, while not always perfect, is appreciated by investors. It is worth noting that it is impossible to directly observe the effect of regulation since there is a myriad of factors that influence price in a market. Given moment”.

However, the authors express confidence that, due to the extent of their sampling, “the effects of this noise are somewhat canceled out” in their conclusions.

By Audy Castaneda

US Government Delays Checks on Cryptocurrency Broker Disclosure Requirements

Audy Castañeda
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US Government Delays Checks on Cryptocurrency Broker Disclosure Requirements

The reporting requirements, intended to reduce the size of the tax gap, were scheduled to go into effect in January 2023, with crypto firms submitting reports to the IRS beginning in 2024.

The provision of the US infrastructure bill enacted in November 2021, which will require financial institutions and cryptocurrency brokers to provide additional information, could be delayed.

According to a Wednesday note from Bloomberg citing people familiar with the matter, the US Treasury Department and the Internal Revenue Service may be unwilling to enforce crypto brokers’ collection of information on certain transactions beginning in January 2023. The possible delay could apparently affect billions of dollars related to capital gains taxes – the Biden administration’s budget for the government for the fiscal year 2023 previously estimated that modifying the Cryptocurrency tax rules could reduce the deficit by roughly $11 billion.

Infrastructure Bill Details

Under the current infrastructure bill, section 6050I mandates that cryptocurrency brokers handling digital asset transactions worth more than $10,000 report them to the Internal Revenue Service with personal information likely to include the name of the sender, their date of birth, and your social security number. The requirements, intended to reduce the size of the tax gap, were scheduled to go into effect in January 2023, with companies submitting reports to the IRS beginning in 2024.

“Delaying is smart,” said Jake Chervinsky, chief policy officer for the Blockchain Association, in response to the news. “We’re getting closer & closer to the effective date of the infrastructure bill’s tax provisions & we’re still waiting for guidance or rulemaking on implementation. We’ve also seen legislative proposals that could make big changes.”

Some Reactions of the Community

“IRS and Treasury are likely to delay new reporting rules for crypto brokers, according to people familiar who asked not to be named because a final decision hasn’t been made. The move would push back efforts to collect billions in taxes from traders,” posted a response on Twitter reporter covering crypto regulation for Bloomberg Business, Ally Versprille.

@_GoblinCrypto, a goblin writing about the latest happenings in Goblin Town, posted a contrasting view of the matter, “Bloomberg: The IRS is giving relief to tax cheats! Reality: The IRS doesn’t want to see (or deduct) your depressing losses.”

What has happened so far

Since the passage of the trillion-dollar infrastructure bill, many industry experts and legislators have suggested that broker disclosure requirements are too broad, placing an undue burden on people who may not have the necessary information about the transactions. In June, cryptocurrency advocacy group Coin Center filed a lawsuit against the Treasury Department, claiming that the tax information requirement could “impose a massive surveillance regime on ordinary Americans.”

By Audy Castaneda

Citigroup Points Out Potential Risks of Cryptocurrency-Backed Mortgages and Advantages of Real Estate in the Metaverse

Audy Castañeda
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Citigroup Points Out Potential Risks of Cryptocurrency-Backed Mortgages and Advantages of Real Estate in the Metaverse

“Ultimately, cryptocurrencies can be liquidated if the collateral value falls below a certain threshold, such as 35% of property value,” the report says.

Investment banking giant Citigroup has published a study on how real estate technology could affect the real estate market, mentioning virtual goods in the metaverse and cryptocurrency-backed mortgages.

In a report published on Wednesday, titled “The Home of the Future: PropTech – Towards a frictionless real estate market?” Citi said that cryptocurrencies, Blockchain, and property in the metaverse had the “potential to transform the traditional real estate market.” While crypto-backed mortgages could streamline the home buying process, many individuals have seen investments in metaverse properties soar in the past two years.

Citigroup Report Highlights

Citi reported that crypto-asset-linked real estate loans could allow investors to “use their investment earnings” without incurring capital gains taxes, but commented on the potential for risk in a volatile market. While many standard fiat-linked loans have regulatory procedures to assess a borrower’s ability to repay, crypto holders could be forced to pay significantly more if the price of tokens falls during a bear market.

“If the value of the cryptocurrency declines, the borrower may be subject to margin calls and ultimately the cryptocurrency may be liquidated if the value of the collateral falls below a certain threshold, such as 35% of the value of the collateral property,” the report said. “Introducing cryptocurrency exposure into the credit profile could increase the overall risk of the loan.”

Individual and corporate owners of virtual property in The Sandbox

In addition to buying physical properties, the Citi report discussed the potential benefits of owning and monetizing “digital real estate” in the metaverse. Specifically, the researchers detailed how individual and corporate owners of the virtual property in The Sandbox (SAND) – called LAND – have treated the metaverse as an investment similar to real-world property, with prices rising from about USD 100 per LAND in January 2021 to no less than USD 200,000 a year later:

“Given the nascent nature of the virtual real estate environment, many of LAND’s buyers have no concrete plans to cultivate the properties and are limited to speculating on the future growth of the platform and thus LAND’s price appreciation.”

In conclusion, the banking giant is not the first to consider the risks of cryptocurrency-backed mortgages. Prior to the recent bear market, Florida-based rating and research firm Weiss Ratings warned investors that Bitcoin (BTC)’s falling price, in addition to stock performance, rising interest rates interest and policy changes from the Federal Reserve could turn crypto mortgages into a losing bet.

In the report released in May this year, Weiss analyst Jon D. Markman urged caution with these types of mortgages, citing the poor performance of stocks and cryptocurrencies this year, a housing bubble in the United States, the rising interest rates, and upcoming policy changes by the Federal Reserve.

“The product looks like a profit, assuming real estate and cryptocurrency prices continue to rise […] except there are signs that both bets are unlikely to be winners in the short term. Bitcoin is down 40% since hitting $66,000 in November 2021.”

By Audy Castaneda

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