Ethereum Key Takeaways:
– ETH prices have plummeted below $1300
– Selling pressure intensifies, which triggers the decline.
– Dire price forecasts for ETH
Having lost about 20 percent of its value over the past 24 hours and hovering around $1,200 on Monday morning, many crypto investors and market observers are prepared for a massive Ether decline back into the triple digits.
On the decentralized exchange Uniswap, however, it occurred late Sunday night, albeit momentarily, as ETH retreated below the spot price, relative to other exchanges, to $950.
The duration of the sell-off saw ETH’s liquidation price dropping from $1,200 to $875.
Suggested Reading | Dogecoin Shed 91% Of Its Value Since 2021 High – A Musk Tweet To Pump DOGE?
$ETH went to $945 on uniswap pic.twitter.com/XybAcnkMCH
— Ash WSB (@ashwsbreal) June 13, 2022
Whale Dumps Over 65K ETH
A whale unloaded over 65,000 ETH into the market for numerous “stablecoins,” including Tether (USDT), USD Coin (USDC), and DAI, at approximately 3:00 am UTC.
The big sell-off observed on the worldwide market has a significant impact on the ETH price. Tuesday’s trade price for ETH is $1,160.20, up 35 percent in the last seven days, according to statistics from Coingecko.
The market value falls below $1300 as the death spiral approaches the upcoming support at $1000. Analysts are currently pondering if Ethereum’s market price would drop below $1,000 or see a bullish reversal.
As the price was much lower compared to the spot rate on other exchanges, which hovered around $1300 at the time, the ETH overselling was closely tracked on Crypto Twitter.
Ethereum Flash Crash Tied To Debt Payoff
A piece of evidence indicated that the whale sold its ETH holdings to settle over $73 million in debt at DeFi’s Oasis.app lending platform. Throughout the period of the selloff, the liquidation price of ETH dropped from $1,200 to $875. Nonetheless, it was a momentary flash crash for Uniswap, and the price recovered in tandem with the rest of the market.
i think so
— DCF GOD (@dcfgod) June 13, 2022
Why this whale’s massive ETH spill is significant? Such swings might be damaging to token prices under unfavorable market conditions, particularly during strong downtrends. Therefore, major position holders must exercise caution while selling their positions on exchanges and decentralized platforms.
Suggested Reading | Ether Drops Below $1,400, Pummeled By US Inflation And Difficulty Bomb Setback
ETH total market cap at $148 billion on the daily chart | Source: TradingView.com
ETH’s technical indicators, such as the RSI, are currently well into oversold territory. Despite the possibility of a slight rebound to the upside, the bear market is only intensifying, indicating that Ethereum and all other cryptocurrencies are expected to continue feeling the pinch for some time.
Meanwhile, Ether’s rise to $950 was quick, indicating that there was sufficient demand for the tokens at that level. Yet another research, this one from veteran trader Peter Brandt, predicted ETH would drop to $650 within the next few weeks.
Featured image from Blockworks, chart from TradingView.com
Albania To Start Taxing Crypto-Related Income From 2023
Authorities in Albania are finalizing regulations that will allow the taxation of income and profits from cryptocurrency investments. The government intends to begin imposing the levy in 2023, after adopting the necessary legislation which has been proposed for public consultations.
Albania Set to Impose Crypto Tax as Early as Next Year
The Albanian state should begin collecting taxes on income from crypto assets as of 2023 in accordance with a new income tax bill, the local English-language portal Exit News reported on Friday. The government also hopes to pass a number of other laws and bylaws this year in order to comprehensively regulate the matter.
The special tax legislation is currently open for public consultations. It introduces the concept of taxing crypto holdings and income derived from virtual assets. The latter have been defined as “a digital representation of a value that can be deposited, traded or transferred in digital form, and that can be used for payment or investment purposes or as a medium of exchange, including but not limited to cryptocurrencies.”
However, the definition does not cover central bank digital currencies (CBDCs), the report notes. That’s despite a growing number of monetary authorities around the world developing a digital version of their national fiats. The list includes major powers such as the United States, the European Union, China, and the Russian Federation.
The Albanian law also defines cryptocurrency mining as an activity using computing power to confirm transactions and gain virtual assets in exchange. The extraction of cryptocurrencies has been a grey area although law enforcement has been going after illegal mining facilities in the country and pressed charges against some of their operators.
Under the new legislation, any income from crypto transactions or mining will be classified as corporate income when it’s received as a result of business activity. And when the beneficiaries are private individuals, they will have to pay capital gains tax of 15%.
Financial Watchdog Tasked to Expand Crypto Regulatory Framework
Earlier this month, the Albanian parliament ordered the Financial Supervisory Authority (AFSA) to prepare and adopt new regulations regarding cryptocurrencies by the end of 2022. Albanian law allows crypto trading platforms to legally work in the country but no licensed entities are currently operating in Albania, Exit News remarked.
Two years ago, Albania also adopted a law titled “Financial markets based on distributed ledger technology.” While many have welcomed the legislation, critics have questioned whether the small nation in South East Europe, still an EU hopeful, is capable of properly regulating its crypto sector to prevent it from being used for money laundering, something it’s struggling to achieve in the fiat space.
The legislature referenced a recent report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval), which recommended additional steps regarding the risks associated with cryptocurrency. In November 2021, the AFSA approved its first two regulations implementing the crypto markets law, which introduced capital and licensing requirements for entities working with digital assets.
Tags in this story
Do you expect Albania to adopt comprehensive regulations for its crypto space by the end of the year? Tell us in the comments section below.
Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Is Bitcoin Like Buying Google Early? Check Out The Shocking Comparison
I’m Tony Spilotro. Behind the pseudonym, I’m a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck – literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn’t yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can’t yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.
Crypto Hasn’t Been The Inflationary Hedge It Was Made Out To Be. Here’s What That Means For Investors
Illustration by NextAdvisor
We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.
Historic inflation is pushing the price of pretty much everything higher than it’s been in years. Except for the crypto market, which is moving fast in the other direction.
Bitcoin fell by 30% last week to below $20,000, with ethereum dropping below $1,000. Between the Fed’s regular and ongoing interest rate hikes, conflict abroad, and continued supply chain disruptions, it appears likely that high inflation will last into 2023. It remains to be seen how ongoing inflation will affect the crypto market, but more volatility is a safe bet.
Historically, cryptocurrency experts and investors touted bitcoin, the original crypto, as an inflation hedge because of its limited supply of 21 million and speculative nature. Bitcoin’s value is, in theory, uncorrelated to the stock market, putting it in a category of investments known as “alts” (alternatives) alongside fine art, wine, and precious metals.
But the crypto market has increasingly tracked the stock market in recent months, suggesting it isn’t as untouchable as early adopters say. In May, an algorithmic stablecoin known as Terra (UST) crashed, wiping out $400 billion in crypto market capitalization within a few days.
It’s been a perfect storm, and crypto investors are left to wonder how long-term inflation could impact their holdings. To find out, we asked two financial experts how long-term inflation and crypto are related, and what investors should do to navigate the uncertainty.
How Long-Term Inflation Could Impact Crypto
Crypto is too young of an asset class to know for sure how inflation will affect it, says Brandon Neal, chief operating officer at the DeFi lending protocol Euler and former trader at the Federal Reserve Bank of New York.
“It might not have necessarily been true that crypto was a good inflation hedge. It may have just been coincidental and that, up until now, crypto merely looked like it was a good inflation hedge,” Neal tells NextAdvisor.
Look at gold, for instance: “If you just decided to cherry pick points in time, certain data points throughout its history, sometimes you could look at gold and say it is an excellent inflation hedge — but you’d have to ignore all the times it simply wasn’t.”
More likely, argues Neal, is that bitcoin has created the illusion of a hedge since it was first launched in 2009. But that’s just 13 years of data during a period of historically low interest rates, so it’s impossible to tell whether this will continue to be the case moving forward — especially given how markets and global circumstances have changed.
Chris Brendler, managing director and senior research analyst at D.A. Davidson, says bitcoin could become a good hedge against inflation over time because it’s decentralized and not tied to any central bank, but the current volatility and speculation in the crypto market are overpowering bitcoin’s underlying value since it’s still a new asset class.
The crypto market has been tracking the stock market recently because trading sentiment is taking over the near-term movements and so much of it is “tied to speculation,” Brendler said.
“If there’s a lot of money printing going on, bitcoin should hold its value [over time],” he says. “What we don’t know is how much of it is speculation, and we’re continuing to see that come out. I think it will be proven over time to be an inflation hedge, but not this time.”
What Does Inflation Mean for Crypto Investors?
So if bitcoin — and crypto generally — isn’t the inflation hedge many thought, what role does it have in your portfolio?
“If inflation erodes the value of a dollar over time, people often look for assets that can consistently outgrow the increase of inflation,” wrote Lindsey Bell, chief markets and money strategist for Ally in a February newsletter. “Crypto’s big moves in a year like 2021 had some people feeling digital assets could serve that purpose.”
But as recent weeks and crashes highlight, crypto investing is still highly speculative, especially given that several of the most promising cryptocurrencies today have only been around since 2016 or later. Expect the volatility to continue, experts say, especially amid the broader economic uncertainty we are seeing right now.
Despite what many early believers have predicted, Neal doubts crypto and decentralized finance (DeFi) will replace the role of legal tender — aka the U.S. dollar and other fiat (government) currencies.
“I’m very excited in the long run about the vision of crypto and ancillary innovations like DeFi,” he says. “But I do think it’s important to be realistic in the short- and intermediate-term that the existing system is going to be around in some form or another for quite a while. Legal tender status really, really does matter.”
But in an increasingly globalized world, that’s not to say crypto doesn’t still have interesting use cases that could support long-term value growth.
Russia’s recent invasion of Ukraine, along with the war that followed, offers an example of how crypto continues to offer opportunity even if its value is leaving plenty to be desired among investors.
Anna Vladi, founder at METL, a company that develops tech allowing consumers to buy crypto through the Automatic Clearinghouse (ACH) network, encouraged her remote, Ukraine-based employee to accept a portion of her salary in stablecoins prior to the February 2022 invasion by Russia. This would in theory offer a way to shelter some liquid assets from an invading hostile power and the uncertainty that comes with war.
“I always paid her by wire in U.S. dollars,” says Vladi. “But eventually, when the rumors were circling around, I [asked] her … ‘Do you think maybe you want to at least partially take something in crypto because if anything does happen … there’s going to be sanctions … funds are going to be frozen? You want to have alternatives, and this way, you can get out.’”
Vladi’s employee evacuated to Greece, where she was able to transfer her stablecoins back to dollars and cash out. This was fortunate, says Vladi, while her home country lived in fear of a bank run.
The decentralized nature of crypto makes it possible for refugees to exchange money, buy goods, and barter, Vladi says.
“Everybody downloaded MetaMask [digital wallets] and people started paying each other for different things — diapers, baby food, whatever it was … I truly believe in emergency situations just like this, this is when [crypto’s value] comes to light.”
How to Inflation-Proof Your Portfolio
So if bitcoin isn’t exactly the inflation hedge it’s been made out to be, what does it mean for investors? Is it still worth holding in your portfolio, or sticking to an investment strategy that includes a share of crypto?
Diversification is the best inflation hedge — not a single asset class in itself.
Experts say diversification is still the best inflation hedge. Diversification simply means adding a robust array of different asset classes — stocks, bonds, ETFs, and index funds — to your portfolio.
For crypto-curious investors, financial planners and other experts recommend keeping crypto investments to less than 5% of your overall portfolio. They also say it’s smart to invest in crypto only what you’d be OK losing if its value dropped to zero. And you shouldn’t invest in crypto before building an emergency fund and paying off any high-interest debt.
The majority of investments, experts say, should live in broad-market funds that comprise several sectors. ETFs can help diversify your portfolio better than cherry-picking individual stocks, and this spreads out the risk (if one company tanks, there are still many more doing OK in your portfolio). There are even blockchain ETFs, which let consumers invest in companies known to have either invested in blockchain or that incorporate the crypto technology into their business.
Bachelors Scholarship7 days ago
Stanford University Scholarships In USA 2022-2023 | Fully Funded
Fully Funded Scholarships7 days ago
McGill University Scholarships In Canada 2022-2023 (Fully Funded)
Bitcoin5 days ago
What to know about Bitcoin’s pricing model and whether BTC will be ‘part of it’
Altcoins6 days ago
The many reasons why DOGE believers aren’t done yet
Binance6 days ago
Binance Suspends Direct Deposits And Withdrawals In Brazil
1600 blocks7 days ago
Bitcoin’s Sinking Price Pushes Hashrate Below 200 Exahash, Mining Difficulty Expected To Slide 2.8% Lower
2:1 ratio of sellers6 days ago
Cumberland Sees Massive OTC Moves During Crypto Market Rout — ‘Most Volume We’ve Seen This Year’
ada6 days ago
Cardano [ADA]: Plotting the path to a 125% rally after 1 August