GB Market Commentary 1/02/2022
by Marcus Sotiriou
After a green day yesterday, for both crypto and U.S. equities, Bitcoin is currently at an inflection point. It is now facing resistance from a key trendline dating back to the all-time-high at $69,000, whilst also facing key horizontal resistance at $39,600 approximately. If it can overcome this level, we can expect upside volatility in the short term, as it would signal a breakout from a 91-day downtrend. However, this is heavily dependent on macro conditions, which is in the driver’s seat.
February has generally been a positive month for Bitcoin throughout its history, and I suspect we may see some significant bounces. One reason for this, aside from being in oversold territory, is because CPI data is released on February 10th, for U.S. month over month inflation. I expect this data to be lower than expected due to the Omicron Variant causing people to spend less. A lower inflation reading would signal that the Federal Reserve has less to do in terms of raising interest rates, which has been the primary cause of fear over the past couple months.
This does not change the broader picture, as firms are reporting persistent supply chain issues which the Federal Reserve aims to resolve – hence a bounce back for global markets this month may not mean we are out of the woods.
Global regulation for the crypto market has progressed significantly over the past few weeks. Following recent news that Thailand will regulate Bitcoin and crypto as means of payment for goods and services, it was reported yesterday that Thailand will remove plans to impose a 15% tax on crypto transactions.
Furthermore, last week Indonesia’s trading regulator – the Commodity Futures Trading Supervisory Agency (CoFTRA) – issued a permit to trade over 200 cryptos within the country, which has a population of 273 million.
Lastly, India has announced plans to tax crypto and NFTs at 30% rather than outright banning digital assets. In addition, India released plans to launch their own CBDC (central bank digital currency) by 2022/23. A Digital Rupee would potentially result in less corruption, leading to a more efficient economy and therefore a higher GDP growth, so I see it as a huge positive for India.
The fact that 1.38 billion Indians will be able to trade crypto without worrying about a ban is an incredible step towards adoption globally and puts less importance on the decisions of U.S. regulators, who are yet to make a clear stance on the industry.