GB Market Commentary 06/08/2021
by Freddie Williams
Bitcoin’s price has rallied 46% from July 20th to August 1st and tagged $42,451 to set up a swing high at $42,599. Since this upswing, BTC has retraced 12% and is attempting another run-up that shatters the range high at $42,451. If this were to occur, it would open up the path to retesting the supply zone that extends from $43,150 to $45,321.
A successful change to the code underlying the world’s second biggest cryptocurrency Ethereum has help improve sentiment and drive crypto prices higher. Developers successfully completed a “hard fork” of Ethereum on Thursday, essentially changing the underlying code that the cryptocurrency relies on to run. The so-called “London hard fork” changes the way transaction fees are calculated on the network. “The fees will not necessarily be reduced, but they are likely to stabilize”, said Mati Greenspan, the founder of Quantum Economics. “What’s more interesting, however, is that a portion of the fees that used to go to miners will now be burned instead. It’s not a great time for miners, but it is really good for hodlers, as it reduces supply”. Over 4000 ETH have been ‘burned’ as of 0800 GMT, just hours after the ambitious EIP- 1559 upgrade was rolled out on the Ethereum network. The burned stash is worth over $11 million at press time, representing a tiny portion of the assets $325 billion market cap. Still, the burns mean everything is working as intended, ahead of Ethereum’s move to proof-of-stake upgrade in the coming months.
Mayhem appears to have broken loose in the world of American politics, and the crypto community may be caught in the eye of the storm, as now, proof-of-stake (PoS) networks might be left in danger at a time when Ethereum (ETH) is moving towards PoS. A controversial infrastructure bill being moved with alacrity through the parliamentary system contains a number of clauses that pertain to crypto players and how they are taxed. As previously reported, most of these pertain to the legal definition of a “broker”. This week, the American crypto community has attempted to drive up support for a bipartisan amendment to the bill put forward by three senators, including the crypto-keen Cynthia Lummis. The original bill could force the crypto mining and trading community to cough up a staggering $28 billion to help fund hundreds of billion of USD worth of public spending projects. “Broker” status would force miners and developers to provide exhaustive lists of documents and transaction history records to Internal Revenue Service officials, before paying taxes on their holdings and historic earnings. Lummis, along with the Senate Finance Committee Chairman Ron Wyden and the Republican Senators Pat Toomey, proposed an amendment that would exempt miners, validators, blockchain developers and wallet-making developers from being classed as “brokers. But now a fresh spanner has been thrown into the works, in the shape of a brand-new rival amendment that appears to have backing from the Presidential office. The amendment was launched by senators Rob Portman, Mark Warner and Kyrsten Sinema. Confusingly, perhaps, this new amendment proposed the same for of exemption as the original amendment, but only for proof-of-work miners, such as Bitcoin (BTC), and (for now), ETH miners. That means developers and validators on proof-of-stake networks like Cardano (or yet to be launched Ethereum 2.0) would be classed as brokers, while Bitcoin protocol professionals would effectively escape unscathed.
Africa’s appetite for digital currencies is growing significantly. Private cryptocurrency providers are also increasing on the continent and even central banks are making sure they are not left behind, by exploring better ways to create and own virtual money, inside secure ecosystems. A number of African countries are looking to launch their own virtual money, backed and issued by central banks, as appetite for digital currency grows exponentially across the continent.