Crypto Insights 17/05/2021

by Alex Clark

Bitcoin has crashed below the psychological $50,000 level for the first time since March 6th, touching an intraday low of $48,500. From its ATH a week ago to this price, the correction would be just over 23%, the second largest of the year, and the last of 3 sharp declines of about a week and a half each.

Ether has also pulled back sharply from a record high but has outperformed BTC over recent days, rallying to tag a new all-time high above $2,600 yesterday.

XRP has pared almost all its April gains after plummeting to the $0.80 level and Whale Alert, a service that tracks large movements of digital currencies on the blockchain, has reported that in the past 20 hours, 190.7 million XRP tokens have been shifted by Ripple and leading exchanges.

The primary reason for the crash seems to be the rumour that President Joe Biden —who seems interested in tightening the crypto regulations in the US— proposes to almost double the capital gains tax rate for wealthy individuals to 36.9%, which some warn could curb crypto investment. This has led large investors to close their positions as quickly as possible, given that Bitcoin would have to rise to $85,000 to make up for the losses of selling today versus waiting for that price in order to make the same profit after taxes are deducted.

On the other hand, some analysts point to the Chinese coal mining accident and electricity outage in China's Xinjiang region, which reduced the bitcoin network’s processing power by 19%, thereby exposing bitcoin’s heavy dependency on coal-driven energy.

There is also a possibility that the recent drop has its roots in the $1.55 billion in Bitcoin options expiry set to occur today.

Mastercard is set to incorporate carbon footprint tracking into its blockchain-based solution, to help consumers offset carbon emissions through their purchases. Consumers will be able to interact with the carbon credits directly related to items, as represented by an NFT and unique marker, allowing them to choose a more environmentally friendly cup of coffee, or a sustainable T-shirt for example.

Craig Wright has won a minor procedural legal victory in support of his quest to claim control of the rights to the white paper that laid the groundwork for bitcoin, although this does not settle any questions around the origin of the Bitcoin white paper.

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