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Actions speak: China’s crypto ban may reveal digital yuan CBDC goals

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Actions speak: China’s crypto ban may reveal digital yuan CBDC goals

Chinese regulatory authorities gave yet another shock to the cryptoverse by imposing a ban on all cryptocurrency transactions on Sept. 24. This measure came just as the market was beginning to recover from the government’s June prohibition on cryptocurrency mining activities.

The fear, uncertainty and doubt (FUD) that resulted from the ban caused Bitcoin (BTC) to crash nearly 9% within five hours, from exchanging hands in the $45,000 range to bottoming out at $41,142. Soon after, Alibaba announced that it would be banning any sale of cryptocurrency rigs and related accessories starting Oct. 8.

However, the flagship cryptocurrency has since recovered to trading above pre-ban levels of around $45,000. At the time of writing, BTC is exchanging hands in the $47,300 range. This recovery could be on the back of two favorable developments: the chairman of the United States Federal Reserve, Jerome Powell, mentioning that there is no intent to ban Bitcoin or cryptocurrencies in the United States and Iran’s lifting of its temporary Bitcoin mining ban.

This is not the first time that BTC or the market as a whole has recovered from FUD caused by China. As per an analysis by Cointelegraph, the cryptoverse has bounced back from China’s crypto bashing over a dozen times. This instance marks another of these inevitable recoveries.

In addition to the falling price of tokens as an immediate consequence of the ban, the long-term impact on crypto businesses and investors in China is enormous. Huobi Global, the most widely used cryptocurrency exchange in China by trading volumes, immediately stopped crypto transactions for its Chinese investors per the regulator’s guidelines. 

Additionally, the exchange outlined a plan for their users in China that ensures users can safeguard their assets before their accounts are permanently closed on Dec. 3. Du Jun, a co-founder of Huobi Global cryptocurrency exchange told Cointelegraph on the matter:

“Customers will be able to transfer their assets to other exchanges or wallets over the next few months. If customers don’t or cannot see our latest announcements, we will provide other ways to protect customer assets and wait for them to be withdrawn.”

In contrast to the previous instances in which China has thrown shade on cryptocurrencies or announced “bans,” this time there seems to be no gray area or loopholes that allow crypto businesses to continue to offer their services in the country.

China’s motive

As is the case with many countries, China’s hostility toward crypto seems to juxtapose the promotion of its own central bank digital currency (CBDC), the digital yuan.

Ariel Zetlin-Jones, associate professor of economics at Carnegie Mellon University’s Tepper School of Business, told Cointelegraph:

“China clearly wants to promote the digital Yuan. Removing its competitors by banning crypto activities is one way to do this so it seems reasonable to consider this motivation as one rationale for their policies.”

Kristin Boggiano, co-founder and president of cryptocurrency exchange CrossTower, told Cointelegraph: “China seems to be choosing control over innovation, and its actions indicate that crypto could be a threat to the digital yuan as much of crypto is permissionless.”

The government has been pushing its CBDC initiative throughout various provinces to the extent that the Xiaong’an New Area enabled the country’s first blockchain-based salary transaction in June this year. 

This shows immense belief and commitment to the digital currency initiative, as compared to other major economies where the point of discussion is still around the safety and reliability of digital currencies. Thus, this move could definitely be an effort to curb the proliferation of “private” cryptocurrencies and push users in China toward the digital yuan.

China’s loss, America’s gain?

Huobi’s Jun further mentioned that, since the exchange has been expanding its footprint across various countries in recent years, business outside of China already accounts for nearly 70% of the firm’s entire portfolio.

In July, after a series of crackdowns on Bitcoin mining in China, the Bitcoin mining difficulty was impacted immediately, dropping 30%. Zetlin-Jones said similar outcomes are now emerging on the Ethereum blockchain where large Ether (ETH) mining pools in China are now going offline. Zetlin-Jones continued:

“The reduction in mining difficulty reduces the entry costs for mining and creates opportunity for new entrants to mining. While I believe this could be beneficial in driving decentralization in mining, it is unclear this is an opportunity for the U.S. in particular.”

Charles Allen, CEO of BTCS Inc. — a publicly-traded company offering blockchain infrastructure — remains optimistic. He told Cointelegraph: “Blockchain technologies have the power to change the world in the same way the internet did. Simply put, they are the future of finance and beyond.”

Allen said that if China doesn’t want a hand in development and innovation, it is 100% an opportunity for the United States in the long run. 

Related: Crypto community concerned over impact of infrastructure bill on DeFi

U.S. Senator Pat Toomey is of a similar opinion, writing on Twitter, “China’s authoritarian crackdown on crypto, including #Bitcoin, is a big opportunity for the U.S. It’s also a reminder of our huge structural advantage over China.”

The opportunity for the United States and other major economies here is huge, as various sectors of crypto businesses, like exchanges and mining, need to relocate out to China and thus, would contribute to the surrounding economy with employment opportunities and a consistent capital flow.

Even though there is absolute clarity about the law for crypto business and services, individual investors and cryptocurrency holders are still uncertain about whether the possession of cryptocurrencies is illegal. Boggiano claimed that, even though China-based investors cannot transact in cryptocurrencies over exchanges, the over-the-counter access to the crypto market remains relatively unaffected.

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PlanB Admits $98,000 November Bitcoin Price Target ‘First Miss’

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PlanB Admits $98,000 November Bitcoin Price Target ‘First Miss’

Some investors reacted angrily after PlanB admitted that his model failed to accurately predict the price of bitcoin (BTC) for November.

The popular crypto analyst aimed for a $98,000 BTC price for the end of this month. Just last week, he insisted the price target was still possible, even as markets declined.

PlanB correctly predicted BTC reaching $47,000 in August and $43,000 in September. He slightly missed the $63,000 target for October, but said the three percent “rounding error was close enough for me.”

Now the pseudonymous Dutch investor says that his $98,000 prediction for this month “will probably be a first miss,” according to a tweet posted on Nov 25. He did not give an exact reason for the failure.

“I see this miss as an outlier, a black swan, that has not occured in the data last 10 years,” he explained.

He spoke as the price of bitcoin tanked to $55,300 on Nov 23, down 20% from its record high of $69,000 reached on Nov 10. Some analysts are blaming the decline on fears of the impending Mt. Gox BTC repayments.

Bitcoin ‘stock-to-flow model still on track to $100,000’

PlanB, who claims 25 years of financial markets experience, is famed for creating the stock-to-flow (S2F) price prediction model. The model is based on the ratio of the current supply (stock) of an asset or commodity to its annual production (flow).

It can be applied to any asset with limited supply really, and the Dutch analyst did so with bitcoin in 2019. The idea is that since the bitcoin supply diminishes with every “halving” event every four years, it will create boom and bust cycles. He then uses these cycles to forecast prices.

PlanB explained that the missed November target relates only to the “floor model,” one of his three price prediction tools. Unlike the S2F, the so-called floor model relies on price and on-chain data, he says.

He insisted the stock-to-flow model had not been “affected and indeed [was] on track towards $100,000.”

Justin Stagner put the miss into perspective. “[It is] not like you just barely missed it either. I mean, its looking like you really blew this one,” he stated.

Mounting criticism

Some investors reacted angrily to PlanB’s admission of failure, blaming the crypto analyst for their financial losses.

“I used my student loans along with a short term loan using my house as collateral to go all in at $68k because you told me it would reach $98k. Now I’ll be homeless and without a degree…” complained Twitter user Brett Lethbridge.

Another lamented: “Now your stock-to-flow model is not reliable anymore. Most people incurred great losses because of your prediction.”

However, several other people replying defended PlanB, and even thanked him for his predictions. Often, they defaulted to a familiar refrain, a disclaimer of sorts, that his forecasts are “not financial advice. Do your own research.”

PlanB himself averred:

It is indeed absurd that when you publish information for free, somehow people make you responsible for their investment decisions and actions. Everybody is responsible for their own (investment) decisions and actions. Blaming others is a sign of immaturity: NGMI (not going to make it).

The Dutch analyst has faced criticism before. He’s often accused of adjusting his price predictions lower once it becomes clear that the S2F would miss its target, and be invalidated.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin (BTC) Falls Below $56,000 After Failure to Sustain Rebound Rally

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Bitcoin (BTC) Falls Below $56,000 After Failure to Sustain Rebound Rally

After initiating a bounce on Nov 25, Bitcoin (BTC) decreased considerably the next day and is back at its weekly lows.

Since Nov 19, BTC had been hovering above the $56,500 support. This is both a horizontal support area and the 0.382 Fib retracement support level.

Yesterday, technical indicators started to show some bullish signs.

After 15 successive lower momentum bars, the MACD finally created one higher (green icon). This was a sign that the short-term trend is gradually picking steam. 

Furthermore, the RSI generated a bullish divergence (green line). This is a bullish occurrence in which a price decrease is not accompanied by the same increase in selling momentum.

However, BTC reversed its trend on Nov 26 and is in the process of creating a bearish engulfing candlestick (red icon). This is a type of bearish candlestick in which the entire previous day’s increase is negated the next day. There are still more than 15 hours until the daily close, but the start of the day looks extremely bearish.

If a breakdown were to occur, the next support area would be found at $53,250.

Short-term BTC movement

The six-hour chart shows that BTC has been decreasing under a descending resistance line since Nov 19. This is a sign that BTC is correcting.

Furthermore, BTC created a lower high relative to the price on Nov 20. This is considered a bearish sign since it didn’t have enough strength to reach its previous highs.

The even shorter-term two-hour chart shows that BTC is trading inside a symmetrical triangle and is very close to its support line, which coincides with the $56,500 horizontal support area. 

Therefore, a breakdown from it would likely accelerate the drop.

Wave count

The wave count suggests that BTC is in the C wave (red) of an A-B-C corrective structure. This means that after the correction is complete, the upward movement is expected to resume. 

The sub-wave count is shown in pink. It shows that BTC is in wave five of the correction, which is the final phase. 

There is a considerable Fib confluence between $53,250-$53,800, created by: 

  • Length of sub-wave one (pink)
  • External retracement of sub-wave four (white)
  • Length of wave A (red)

These levels also coincide with the long-term Fib support outlined in the first section. Therefore, BTC is expected to reach a low in this area before reversing.

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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South Korea Crypto P2P Trading Hits New Highs as Regulators Debate Taxation

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South Korea Crypto P2P Trading Hits New Highs as Regulators Debate Taxation

P2P crypto trading has hit a new all-time high in South Korea, data from LocalBitcoins shows. The jump in P2P trading comes at a time when there is a lot of uncertainty surrounding regulation in the country.

Peer-to-peer trading of cryptocurrencies in South Korea is hitting all-time highs as regulators offer some ambivalent comments on regulation. Data from LocalBitcoins shows that over 353 million in Korean Won was traded in the first week of November. This is a significant jump from previous weekly volumes.

South Korean P2P trading volume: Coin Dance

Pondering crypto tax

The increased interest in P2P trading comes as regulators are working on implementing a regulatory framework. South Korea, already one of the leading governments when it comes to cryptocurrency market regulation, is doubling down on its bid to prevent any illicit activity.

The high P2P volume may be a result of investors seeking to make the most of their capital as regulators bear down. Recent reports have indicated that there is some confusion among investors because of the lack of clarity surrounding regulation.

One of the primary issues is the implementation of crypto taxation. South Korea officials announced that it would tax the asset class, to the tune of 20%.

But lately, reports have suggested that there could be a change or complete repeal to this taxation scheme. The taxation law will come into effect in 2022, though it remains unclear about what specific form it will take.

NFT regulation is also throwing more confusion into the mix, as the Financial Services Commission (FSC) said in early November that it would not subject the special asset to taxation. However, later, the Vice Chairman of the organization said that tax provisions would be made for NFTs.

Uncertainty still looms

At the moment, it’s uncertain exactly what the regulatory landscape in South Korea will look like, given the lack of conclusion so far. The South Korean opposition party challenged the taxation scheme and pushed for a delay to 2023, demanding a more generous tax plan.

Exchanges are one of the major elements of the industry under the microscope, with 2021 seeing the first regulatory compliance certifications being sent to them. Several exchanges have had to shut down following regulatory scrutiny.

As it stands, it’s unclear what the specifics of crypto regulation will be. However, it’s almost certain that there will be a framework implemented, and whether or not it is stricter than investors like remains to be seen.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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