Category: Bitcoin

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Bitcoin Crypto News Nigeria

Nigeria To Allow Cryptocurrency In Country Due To 32% Adoption

Nigeria To Allow Cryptocurrency In Country Due To 32% Adoption

Despite the Central Bank of Nigeria (CBN) recently banning local banking institutions from serving cryptocurrency users and companies in the country, the interest in crypto has been surging.

Amid the growing adoption rate of cryptocurrency in Nigeria, the CBN governor, Godwin Emefiele, recently assured publicaly that cryptocurrency would be brought back to life in the country.

Nigeria Will Allow Cryptocurrency

The Nigerian central bank withdrew its support for cryptocurrencies in February, citing speculative risks associated with them. They also said digital currencies were used in financing illegal activities.

We have carried out our investigation and we found out that a substantial percentage of our people are getting involved in cryptocurrency which is not the best. Don’t get me wrong, some may be legitimate but most are illegitimate.

CBN governor

However, the governor assured in their 279th MPR meeting that cryptocurrencies would come back to life in the country. The governor added “We are committed in the CBN, and I can assure everybody that digital currency will come to life even in Nigeria.”.

Nigeria Records Massive Increase in Crypto Adoption

One can easily predict that the central bank of Nigeria is open to forming a framework to regulate digital currencies. This is important due to the increasing rate of crypto adoption in the country.

Nigeria is considered one of the top countries with the highest rate of cryptocurrency adoption. A recent survey conducted by Statista in different countries (1,000 to 4,000 respondents per country) showed that 32 percent used/owned cryptocurrency in 2020.

The numbers are increasing rapidly as many people are flocking to Bitcoin on P2P exchanges to hedge against the depreciating value of the national currency, Naira (NGN). This is evident as Paxful exchange recently announced Nigeria as its largest market, with over $1.5 billion in trading volume as of April.  

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Bitcoin Cryptocurrency Law Investing

Crypto App Told To Remove Billboard Advert Saying “It’s Time To Buy”

A crypto trading app called Luno was told to remove their ads featured on the London tube, in a ruling by the UK Advertising Standards Agency (ASA) earlier this week.

Billboard Considered Misleading

The investigation by the ASA came in the wake of 3 separate complaints formulated by anonymous individuals. Although all 3 complaints were based on the fact that not enough warning is given to consumers regarding the perils of a notoriously volatile market, one of the complaints hinted that perhaps the ad was taking advantage of inexperienced consumers  outright.

It’s important to note that the ASA did not consider Luno’s advertisement malicious. Rather, they were asked to change their ad which could give people the impression that cryptocurrencies are easy to invest in and a surefire way of making money.

DOYR

As always, DYOR (Do Your Own Research) applies more than anywhere else when it comes to cryptocurrencies. However, the ad simply stated: “If you’re seeing Bitcoin on the underground, it’s time to buy.”.

According to the ASA, this could be taken as investment advice, leading to unfortunate events if misunderstood.

“The ads gave the impression that bitcoin investment was straightforward and accessible, when it is in fact complex, volatile, and could expose investors to losses. We therefore concluded that the ad was misleading.”

Luno did not contest the decision and informed the ASA that future advertisements would be designed differently, and clearly feature an appropriate risk warning.

Although success stories and saucy jokes about boating accidents and Lambos abound, there is an equally large number of tales of unfortunate wipeouts by those who did not follow the DYOR rule – and hopefully, the decision regarding this ad will help cut down on the latter.

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Bitcoin Crypto News Ethereum Trading

Ethereum to Flip Bitcoin With Over $20 Billion USD in Trading Volume

Ethereum Flips Bitcoin With Over $20 Billion USD in Trading Volume

Ethereum is gradually outperforming Bitcoin in several metrics that point towards its complete “Flippening” of Bitcoin as the largest blockchain network.

Recent data from Messari, a cryptocurrency data insights and analytics platform, showed that Ethereum has surpassed Bitcoin in daily spot trading volume.

Ethereum Posts Over $20 Billion Volume

As Messari Researcher Ryan Watkins shared on Wednesday, Ethereum spot trading volume surpassed Bitcoin since the past month. Presently, Ethereum sees over $20 billion USD in trading volume, while Bitcoin sees less than the amount.

This record checks off one of the “Flippening” metrics that Ethereum is expected to fill before it completely outperforms Bitcoin as the largest blockchain network, as per Blockchain Center.

Following the Flippening data, Ethereum has already surpassed Bitcoin in transaction count, transaction volume, and total transaction volume. However, it has a lower market capitalization, active address, node count, and Google Search Interest compared to Bitcoin.

Ethereum Flippening [BlockchainCenter.net]

At the time of writing, the Flippening index reads that Ethereum is about 43.9 percent closer to overtaking Bitcoin completely. Judging by the number, the chances of Ethereum completely Flippening Bitcoin seem still relatively low, probably because the market capitalization of both coins is considered the major factor. Bitcoin has a market cap of $725 billion USD, while Ether sees $317.8 billion USD at the same time.

Most Altcoins Still Correlate With Bitcoin

Regardless of the Flippening metrics, Bitcoin still leads the cryptocurrency market. A separate data analysis from Messari also indicated that many major altcoins – including Ethereum, Binance Coin, Ripple and Litecoin – have a correlation of about 60-80 percent with the market value of Bitcoin.

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Bitcoin Bitcoin Mining Crypto News

Michael Saylor Hosts Bitcoin Miners and Elon Musk in Effort to Promote Sustainability

Michael Saylor, CEO of business intelligence company MicroStrategy, has stepped up his support for Bitcoin.

In a recent tweet, Saylor informed that he hosted a meeting between Bitcoin (BTC) miners in North America and the founder of Tesla, Elon Musk, on ways to promote Bitcoin sustainability and energy transparency.

MicroStrategy CEO Forms “Bitcoin Mining Council”

The meeting led to the formation of the “Bitcoin Mining Council”, which aims at promoting the use of renewable energy for Bitcoin mining. The meeting included executives from major mining companies like Riot Blockchain, Hut8Mining, Marathon, Galaxy Digital, Argo Blockchain, and many others.

The council will basically work to standardise energy reporting, pursue industry ESG goals, and educate/grow the Bitcoin marketplace.

Judging by global Bitcoin mining hashrate stats, the number of miners in North America is no match to those in China. However, many people believe that the formation of the council is a big step towards driving Bitcoin to cleaner energy.

Will Tesla Restart Accepting Bitcoin Payments?

The quest and criticism on the source of Bitcoin energy became mainstream debate after Elon Musk announced that his electric car company would no longer accept Bitcoin as a form of payment for their products over environmental concerns. The announcement caused quite a notable drop in the price of Bitcoin (BTC), possibly leading into the recent massive correction.

Will the movement towards a “greener Bitcoin” prompt Tesla to reopen the possibility for customers to pay in BTC? Only time will tell, meanwhile Elon commented on the formation of the Bitcoin Mining Council, saying “potentially promising”.

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Banking Bitcoin Crypto News Institutions

Billionare Ray Dalio Opens Up In Interview “I Have Some Bitcoin”

Ray Dalio, founder of Bridgewater Associates (one of the world’s largest hedge funds), has revealed that he holds some Bitcoin (BTC).

The entrepreneur and fund manager, who has previously expressed concern about the possibility of heavy regulation of Bitcoin, now seems to have acquired some.

Bitcoin Over Bonds

Both Dalio and Stanley Druckenmiller, also a billionaire hedge fund manager, have pessimistic views of the dollar and have taken positions in Bitcoin.

The elephant in the room is inflation. It may become so obvious that the Fed has to move, and the longer they wait to move, the bigger the bubble will be and the bigger the reaction.

Stanley Druckenmiller

With views like these pervading the air, many people are looking for an alternative to the dollar. Dalio mentioned during an interview with CoinDesk that retailers might prefer buying bitcoin over bonds due to inflation. This poses a risk to government and since “it goes into bitcoin, and it doesn’t go into credit, then [governments] lose control of that.”

Dalio also mentioned that Bitcoin’s “greatest risk is its success” such that governments, fearing competition from Bitcoin to state monetary systems, could crack down on its owners.

One of the great things, I think, as a worry is the government having the capacity to control almost any of them, including bitcoin, or the digital currencies,

Ray Dalio

An Asset To Combat Inflation

One of the perceived uses of Bitcoin is that it could act as an asset that fights inflation, and in an inflationary future where “cash is trash” Bitcoin might catch on as a store of wealth. Due to the ongoing printing of money and harsh economic position due to the COVID-19 pandemic and various other factors, the power of the dollar has decreased.

You need to borrow money? You have to print that. You need more money? So, taxes go up and that produces a dynamic. Now I can keep going on about what happens in that dynamic. It may be capital controls. … I painfully learned in 1971 that it causes stocks to go up. It causes… gold, bitcoin, real estate, everything to go up, because it’s really going down in dollars. And that’s the part of the cycle we’re in.

Ray Dalio

In countries like Argentina, Bitcoin has seen a major increase in use due to the devaluation of the Argentine Peso (ARS), causing a major reduction in the buying power of people in the country. For them Bitcoin is a solution to store their wealth. If someone had 100 ARS in 2019 versus 100 ARS worth of BTC, that BTC investment would be considerably higher now. In the last 10 years the Argentine Peso has devaluated almost 95% against the US dollar.

The steady devaluation of the Argentine Peso [xe]

Dalio also spoke at Consensus, a massive online blockchain seminar on Monday regarding money, monetary policy & Bitcoin. Being part of an event like this shows that there is an interest in the technology and a willingness to share information and knowledge with individuals in this space.

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Bitcoin Crypto News Market Analysis

Bitcoin’s Historical Corrections And Why They Happened

Bitcoin (BTC) has shown a tremendous increase in value since its inception and even been considered one of the best performance institutional digital assets.

However, its price history has not been a smooth one. In fact, the leading cryptocurrency has suffered a number of significant drops (not less than 20 percent) since January 2012, as shown in an infographic by Visual Capitalist Datastream.

Bitcoin’s Massive Drops

2012

After Bitcoin recovered from the first massive drop of  42.9 percent ($7 – $4 USD) in January 2012, the price further declined by 56.3 percent ($16 – $7 USD) in August the same year, following the exit of Bitcoin Savings and Trust Ponzi scheme with about 150,000 BTC belonging to clients.

2013 – 2016

The biggest BTC drop was noted between November 2013 – January 2016, when Bitcoin price declined from $1,163 – $152 USD, which accounted for about $86.9 percent price change. This happened after the news of Mt. Gox hack, China’s ban on Bitcoin, and regulatory challenges.

2017 – 2018

In 2017, the largest cryptocurrency also dropped by over 40 percent following the breaching of Coincheck, one of the leading Japanese exchanges. The attack resulted in the loss of over $530 million worth of cryptocurrencies. Bitcoin also took a significant drop of over 83 percent ($19,666 – $3,220 USD) from December 2017 to December 2018. This had many people referring to Bitcoin as a “burst bubble.”

2019 – 2021

Bitcoin also dropped by over 60 percent between June 2019 and March 2020, which was partly induced by the coronavirus outbreak. This leads up to the recent market crash in March 2021, which was triggered by Tesla’s news that they stopped accepting Bitcoin for payment and China’s call to crack down on Bitcoin mining and trading. Bitcoin is down by about 33 percent when compared to its current price of around $38,000 USD at the time of writing.

Following these historical corrections of Bitcoin, many people are optimistic that the cryptocurrency will rebound from the current dip.

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Bitcoin Cryptocurrencies Investing Market Analysis Trading

The 5 Biggest Problems In The Crypto Space Right Now

As the crypto market continues its biggest correction of 2021, while future investments are hedged and day traders rush to cash out, more experienced investors resign themselves to jumping yet another HODL hurdle.

Although steep corrections are just business-as-usual in the crypto world, there are a number of factors setting this particular correction apart from previous ones and pointing to broader issues in the crypto sphere.

There is a prevalence of shitcoins

The term “altcoin” looks definitely outdated – many new cryptocurrencies really do bring something unique to the table and are backed by plenty of research and development.

Everyone is looking to get a piece of the crypto pie – and for every Chainlink (LINK) or Cardano (ADA), there is an army of cryptocurrencies that either have arguably no real use case, like Safemoon, or were explicitly created as a joke. Not only do investors stand to lose a lot by investing in dodgy cryptos – the rugpulls many of these coins do lower the level of trust in cryptocurrencies overall.

New crypto traders are entering the crypto space without training and buying at All-Time Highs (ATH)

In a market where DYOR (Do Your Own Research) raises from common sense to paramount importance, many investors hop right in and buy the latest crypto they heard about on Twitter. There often seems to be a lack of understanding of the project behind a certain coin, let alone the planning of an investment or trading strategy.

Combined with the excitement of being involved in the crypto space, the desire of quick gains and maybe the fear of missing out on that, some people end up buying at the ATH of a certain cryptocurrency. A quick look at a price chart would have indicated that a correction could be imminent.

Thankfully, resources like Binance Academy are doing a great job of breaking down the basics and turning new investors into more seasoned veterans.

Certain individuals are able to cause 25% price swings with a single tweet

The popularity of some “cool billionaires” has definitely contributed a lot in terms of public awareness of cryptocurrencies. However, the veneration bestowed upon them can also lead the same fans to take sharp turns with their own crypto positions, based on their celebrities activity on social platforms like Twitter.

Such influence results in certain coins getting pumped (or dumped) in price just because they are mentioned by a popular supporter. Case in point, Dogecoin (DOGE) – which may be funny, but at the end of the day, it was created as a joke.

Two consequences stand out: on one side, uneducated retail investors may end up making poor decisions with their cryptos just by following the hype and social media noise. On the other, the control a given influencer seems to have on the price volatility of specific cryptos makes them, if not the overall market, less attractive for institutional investors.

Over 60% of Bitcoin mining power is still controlled by China

Bitcoin is now mainly mined in huge facilities, as the difficulty has gone up making the process not financially viable for small mining rigs. Many Chinese entrepreneurs have made their fortune by sprawling complexes pumping out digital gold. Unfortunately for them though, the Chinese government doesn’t seem to be too happy with cryptocurrencies outside of their tentative CBDC. Bans or policies on cryptocurrency issued by the country where 60% of BTC is mined can have tragic consequences for the corresponding markets.

Furthermore, some regions of China have decided to crack down on crypto miners due to the amount of electricity used in the process. A dramatic shortage in BTC mining not only cuts the supply but also hinders the overall network.

Bitcoin’s Proof-of-Work blockchain consumes an excessive amount of energy

Bitcoin has changed the world of digital payments. Unfortunately, given its current scale and rate of adoption, the Proof-of-Work (PoW) component of the the most popular cryptocurrency’s blockchain is now causing huge amounts of energy consumption globally.

Transaction fees and mining power have seen such a steep increase that some companies have stopped accepting BTC payments. It’s also no surprise that a lot of attention is being turned towards “greener” cryptocurrencies and technologies built to make Bitcoin work in ways that do not harm the environment as much.

As the bull market that lasted for over half a year seems to be fading, it’s important to remember that this has happened plenty of times before. The market will hopefully emerge from this temporary hurdle stronger and more mature than it previously was.

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Bitcoin Crypto News Institutions

The 4th Largest Bitcoin Whale Just Bought An Additional 926 BTC

Whale's tail on water
Whale's tail on water https://unsplash.com/photos/kkXDhAUnxYI

A Bitcoin billionaire has been buying the dips since early 2019 and this dip is no different. There was an additional 926 BTC added to the wallet yesterday for $3.9 million USD at $37,738 per bitcoin.

BTC Price and Wallet Balance [BitinfoCharts]

The wallet above has a balance of 105k bitcoin with an estimated market value of $4 billion USD. The largest address, according to bitinfocharts, currently holds 269,427 BTC worth $10 billion USD, which also bought 34,000 BTC last week.

In crypto talk, when stuff like this happens, people say it shakes out all of the weak hands and the people … who maybe bought because they saw it on the news,

Ethan Lou, author of “Once a Bitcoin Miner” [source]

Whales Loving The Dip

Institutions and long term HODLers have been accumulating bitcoin during this dip after the large sell-off inspired by various influences.

Institutions seem to be the forerunners in buying however, no one really knows who these massive wallets belong to. Some companies have been quite open about their crypto acquisitions, including Micro Strategy which recently bought additional bitcoin for $10 million USD. They hold more bitcoin than any other institution according to Bitcoin Treasuries. They currently hold 92,000 bitcoin with Tesla in second place holding 43,000 bitcoin.

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Bitcoin Crypto News Market Analysis

Bitcoin Has Crashed, But is it Time to Buy?

Over a 50% ShakeOut

Don’t panic. This is normal. Even though it has been hailed as the best performing asset ever, Bitcoin’s infamously known for its wild volatility. As more and more money has poured into the cryptocurrency market and Bitcoin, from new retail investors and also large institutional deep pockets; the volatility is crazier than ever.

Market Correction or Huge Dump?

Call it what you will, there is no denying that there is a mixture of panic and excitement in the air: for those more experienced investors who are not deterred by the sea of red, who have weathered many a Bitcoin storm and have a bag of cash set aside, exactly for these ‘rainy days’, can only smell opportunity.

Is it time to buy?

Was this huge ‘correction’ inevitable? Bitcoin had been experiencing an impressive state of steady growth, however, the usual 20% and 30% dips we are used to seeing, were getting bought up faster than ever before, causing the price to rise too quickly for it to be sustained. Those that are unshaken by this last correction hope that Bitcoin will now continue to the upside, but at a more slow-and-steady healthy pace.

Reasons to stay bullish

There are some key levels of support and resistance around the low $30,000 range that Bitcoin needs to either break or sustain before we can know if this is the start of the bear market or just the bull market being prolonged. If so, we might see a second rally to the upside. Either way, the market will likely be very choppy for the next few weeks or even months.

When in doubt, zoom out

While it now seems extremely unlikely that Bitcoin will hit a target of $300,000 anytime soon, we do have some fundamentally good news still to come later this year. Parachains such as Polkadot and Kusama are coming, we have Ethereum’s EIP 1559 and Smart Contracts being announced for Cardano. If Bitcoin can keep its head up, it might just carry the Bullrun into 2022.

Youtuber Sheldon Evans breaks it down.

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Australia Bitcoin Cryptocurrency Tax

Australian Crypto Collateralized Loans Tax Questions Answered

What is a Crypto Collateralized loan?

A crypto collaterized loan is a type of borrowing where you stake cryptocurrency as collateral to borrow against funds receiving (typically another cryptocurrency).

Example of a crypto collaterized loan

For example to apply for a loan of $1,000 AUD worth of USDT stablecoin you could use $2,000 AUD worth of Bitcoin (BTC) as collateral which would set the LTV (Loan to Value Ratio) to 50%.

  • Borrowed Coin = The crypto that you borrowed from the loan.
  • Collateral Coin = The crypto that you used to fund for the loan.

This type of loan is also known as a CLO – collateralized loan obligation, where the Collateral Coin price vs the Borrowed Coin price can fluctuate based on the market directly affecting the LTV of the loan and produce a margin call or even liquidation.

Below are some common tax questions to help you with your fiat-liquidity crypto collaterized loan decisions.

Common Crypto Loan Tax Questions Answered

ASIC Rulings on Loans?

All lenders must be licensed with ASIC and have an Australian Credit Licence Number to be able to offer loans in Australia. Majority of crypto backed loans currently available are via non-Australian companies, and therefore don’t fall under the ASIC lending rules for offering crypto loans. Be aware that you are not protected under ASIC when taking a loan from an overseas crypto loan provider if problems were to occur.

Can you claim back the interest on the loan as a tax deduction in Australia?

If you have taken the loan for personal reasons, then the loan and the interest portion of the loan are not tax deductible. If the loan is being used for either business purposes or investment purposes, then the interest paid portion of the loan can be claimed back as a tax deduction against the earnings received from the business activity or investment income earned. It is best to seek professional advice to determine tax deductibility as everyone’s circumstances are different.

Do you pay capital gains tax on the Bitcoin once you’ve closed off the loan?

Because you have collateralized your loan with crypto, you still hold ownership of the original crypto that was collateralized. You would pay capital gains tax as normal upon disposal of that crypto. For the crypto that is received (the loan), if the value goes up in the time you received the loan to when you dispose of that crypto, then you will pay capital gains tax. If however, the value goes down, then it would be classed as a capital loss on disposal.

Are there any tax differences between lenders? Or its all the same?

There is no tax differences between lenders, except for the interest rate. If you have a higher interest rate, then you will receive a higher tax deduction if the loan is not for personal reasons. The main difference to consider between lenders would be creditably of the loan provider so check if they have an Australian Credit Licence Number with ASIC.

Do you pay tax on the loan when you borrow it? Ie If you borrowed $3,000 worth of LTC and then transferred it to AUD and withdrew it to your bank account.

You are not required to pay tax on the value of the loan borrowed but if the value of the crypto increases prior to disposing of it, then you would be required to pay tax on the difference. For example, if you borrowed $3,000 worth of LTC held on to it for a few days, then sold the LTC to AUD but because LTC value had increased over those few days, the value of AUD ($3,200) received into your bank account would be higher than $3,000. You would be required to pay tax on the difference being $200 capital gain. If you withdrew LTC to AUD bank account at the same value that you borrowed it, then although it is a disposal of LTC you would have no tax to pay.

If you repay (close) your loan and your Collateral Coin increased in value do you pay tax on that? It’s an unrealised gain so no right? However, if the value decreased are you able to claim that back (offset) somehow?

It only becomes a taxing event on disposal of the collateral coin. So if the value increases and you haven’t sold the collateral coin, then the gain is unrealised and not taxable yet. Likewise, if the value decreases and you haven’t sold the collateral coin, then the loss is unrealised, and not a taxable event until sold and therefore you are unable to claim the loss against other income.

If the loan gets liquidated, whats the Tax implications on that?

If the loan gets liquidated, then this means the crypto gets disposed to cover the loan. It becomes the taxing point for the crypto disposed. If the liquidation price is higher than the original purchase price of the crypto it will be a capital gain, otherwise it will be reported as a capital loss. Note that capital losses cannot just be offset against other ordinary income, they can only be offset against capital gains.

If you adjust the LTV ratio or or get a margin call and put more Collateral Coin into the loan, does that affect the tax in any way?

As long as you are not disposing of any cryptocurrency, then it is not a tax event. For example, if you just put more Collateral Coin into the loan, you are reducing the risk of the loan being margin called or being liquidated.

Does a Crypto Backed Loan get taxed differently if I am a Crypto Trader instead of a Crypto Investor?

If you are classified as a crypto trader because of the volume of crypto transactions that you are involved with, then you may not be able to use the capital gains method, which means that any unrealised gain you may make by the end of the financial year (30 June) will be taxable.

Any specific ASIC considerations for collateralized loans?

N/A

How to Get a Bitcoin Backed Loan in Australia

See our guide on How To Get A Crypto Backed Loan With Binance Australia for instructions on how to apply for a Bitcoin backed loan within Australia.

The answers in this article we’re provided to us by an Australian Tax Expert. If you spot any mistakes, or have any additional questions you would like to ask, please let us know.

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References