Glassnode on-chain analysis is showing a possible reverse in exchange flows, indicating investors are looking to hold again.
Crypto Supply is Moving Back to Wallets
According to analysis done by Glassnode, there has been a reduction in supply held in exchange wallets. This means there are more cryptos being taken out of exchanges in the past month than being put in to trade with.
The analysis looks at the supply in all major exchange wallets, including Binance, Coinbase and Huobi, among others. The red bars indicate supply leaving exchange wallets, and green bars show supply moving into exchange wallets.
To some, this is an indication that investors are reverting to HODL mode by putting their digital assets back into their wallets. On June 18, the outflow increased to nearly six times the previous measurement.
Glassnode also recently released an article explaining why the bull run is far from over, based on patterns of accumulation and distribution.
Exchanges Have Been Booming
During the past two months, the amount of cryptos held in exchange wallets have been at a one-year-high. This could have been due to high volatility created by the media at large, as well as regulatory scrutiny that has made holders nervous and ready to sell. This is also why web traffic on crypto exchanges has been off the charts.
The crypto market attracts new investors eager to make money out of volatile assets. However, it’s important to remember which factors can affect the price of Bitcoin and, by extension, the rest of the market.
Everything is being dematerialised and it’s no surprise that money is quickly moving in that direction too. Central banks around the world have recognised that digital currencies are here to stay and in response they are forming their own stablecoins, CBDCs.
What are CBDCs?
A CBDC (central bank digital currency) is simply a digital form of a fiat currency issued and regulated by a central bank and/or government authority. They can be classified as either retail or wholesale.
Retail CBDCs
Issued for all people and companies (or, put differently, the general public)
Wholesale CBDCs
Only used by permitted institutions such as banks
Used as a form of settlement for interbank transfers
Stablecoins are a type of cryptocurrency whose value is tied to an outside asset, such as the US dollar or gold. Unlike CBDCs, issued by public authorities, stablecoins are issued by private companies. Therein lies the primary difference between the two.
Usually the entity behind the stablecoin will set up a regularly audited reserve asset base backing the stablecoin. Fiat is the most common collateral for stablecoins (as is the case with Tether and USDC), but others are pegged to precious metals or other cryptocurrencies.
What’s the Current Regulatory State of Stablecoins and CBDCs?
Over the past few years, stablecoins have continued to enjoy increased levels of acceptance among regulators. Most notably in January, the US Office of the Comptroller of the Currency (OCC) announced to the 1,100 banks and federal savings associations that they can issue payments with stablecoins to their clients. The UK Treasury also took steps towards regulation, recognising the important role stablecoins may play in settling and clearing large transactions in capital markets.
Some argue that CBDC projects have been initiated largely in response to the growth in the use of stablecoins, but not all governments agree. At present, there are 77 CBDC projects in either research, pilot or close to production stages.
At this stage, it remains unclear how stablecoins and CBDCs will coexist in a future fully digitised economy. In some respects, it looks to be a race between corporates and governments.
In the short term, it is unlikely that growth in the use of stablecoins between merchants, corporates and retail will subside. It also seems reasonable to expect more robust regulatory frameworks and increased competition and development of CBDCs over the coming year.
Despite a lack of clarity, one thing is certain: the race is on as to which digital currency will be the first to be recognised as legal tender.
A report by Financial News London shows that over US$43 billion worth of Bitcoin is currently held by investment companies.
These funds are spread across hedge funds, ETFs and wrapped Bitcoin (wBTC).
19 Firms Declare $6.5 Billion Share of Investments
Another report by Nickel Digital shows that of this total sum, around $6.5 billion worth of BTC has been declared by 19 companies, such as Goldman Sachs, Blackrock, Deutsche Bank and JPMorgan.
MAJOR DEVELOPMENTS IN DIGITAL ASSETS – Report by Nickel Digital
Commenting on the reports, Nickel Digital CEO Anatoly Crachilov said that not only can BTC serve as a hedge against inflation, its adoption by financial institutions may reduce its overall volatility in the near future.
The cryptoassets space remains volatile as it is going through the early stages of an adoption curve. [This is] a very important endorsement for Bitcoin’s emerging functionality of the hedge against inflation. Increasing allocations by large-scale institutional investors and corporate players is expected to lead to a reduction of [Bitcoin’s] volatility over time, due to a longer-term, stickier type of capital brought by those investors.
Nickel Digital CEO Anatoly Crachilov
The same report estimates that $4.3 billion was spent by these companies purchasing the BTC, bringing a profit of over $2 billion.
The vast majority of these companies are based in the US, with a few other publicly declared Bitcoin investors located in Europe, Australia and Asia. However, another survey by Nickel Digital shows that 81% of European institutional investors believe the amount of crypto purchased by wealth management firms is about to sharply increase.
Although the wind may be blowing in favour of mass crypto adoption, it’s important to remember that in the financial world things can change on a whim – so, as always, Do Your Own Research.
To help you get ready for tax time in Australia, we’ve taken the main things you need to consider when declaring your cryptocurrencies.
You can check out the full guide, written by Australian crypto exchange Swyftx. They have also created a crypto tax calculator which you can use to get an estimate on your tax payable.
Crypto Tax Calculator Australia by Swyftx
Everyone has different tax situations so please clarify your personal circumstances with your accountant.
1. Investor vs Trader
First up, the Australian Tax Office (ATO) does not view crypto as money. Instead, crypto is seen as property, subjecting it to the Capital Gains Tax (CGT). This classification means that you should update your info every time you buy, sell or gift crypto. Keep in mind that HODLing for 12 months or more will bring with it a 50% CGT discount.
Going further, if you can classify yourself as a trader, your income might instead be taxed as business proceeds.
Here’s how to tell which category you fall into.
Investor: If you’re using crypto mostly as a personal investment and earning most of your profits by making long-term investments, you would be classified as an investor.
Trader: If, on the other hand, you are running a business involving cryptocurrency, you could be classified as a trader. For instance, if you buy crypto in order to turn a profit for clients from whom you receive a commission, you could be classified as a trader.
Keep in mind that the ATO has to agree with you on this – so make sure you keep accounting records, follow a business plan, and stick to your planned business model.
2. Capital Losses and Total Assessable Income
While the CGT will deduct from your crypto profits, the reverse is also true – if you’ve lost money trading on one trade while making money on another, the financial hit you’ve taken on the negative trade can help offset the CGT owed from the positive trade.
Furthermore, your income tax and CGT tax are paid together – this is called Total Assessable Income. Make sure to combine your incomes from all taxable sources in order to figure out which tax bracket you fall into.
What Information Does The ATO Collect? The ATO can collect personal information – including your ABN – from Designated Service Providers (DSPs) in order to ensure accurate income reporting.
When is CGT applied? CGT is applied whenever you dispose of your crypto, whether by giving it away, trading it or selling it. So if you bought Bitcoin five years ago but haven’t touched your stash yet, you’re good to go.
Personal Use Assets: Although CGT can be charged in some cases when crypto is used in order to buy goods and services, it may be classified as a Personal Use Asset, and therefore exempt from CGT.
Fred is buying a new laptop from his favourite online retailer. They offer discounts on purchases made in cryptocurrency, so Fred uses Australian dollars to purchase cryptocurrency, and on the same day purchase his laptop. In this instance, cryptocurrency would be constituted as a personal use asset.
3. Getting Paid In Crypto
If you work for a crypto-related business, you’re probably getting at least a part of your pay cheque in crypto. In this case, crypto would be classified as personal income tax, not as a capital gain.
Although crypto taxes can be confusing to deal with at first, Swyftx exchange does all it can to help by partnering with developers that provide accurate reporting tools – and by keeping easy-to-understand records of your activity.
The crypto boom has created wealth for young early adopters and according to a new survey, nearly half of millennial millionaires have at least a quarter of their money in crypto.
CNBC Millionaire Survey Findings
According to the CNBC Millionaire survey, about 47% of millennial millionaires have more than 25% of their wealth in crypto. The survey sampled 750 investors with at least $1 million in investible assets, and showed that more than a third of millennial millionaires have at least half their wealth in crypto. Australian millennials are no different, as we recently reported that aussies are more interested in crypto than real estate.
The younger investors were more intellectually engaged with the idea even though it was new. Older investors and the boomers were largely saying, ‘Is this legit?’
George Walper, president of Spectrem Group
Older millionaires are far less likely to invest in crypto due to a lack of interest or an inability to understand it. The survey shows that 83% of American millionaires have none of their wealth in crypto, and only one in 10 keeps more than 10% of their wealth in crypto assets.
Generational Gap Opens Wider on NFTs
The generational divide is at its largest with regards to non-fungible tokens (NFTs). The majority of millionaires say they don’t know what NFTs are, and regarding millennials a third of them are saying they are an “overhyped fad”. The other two-thirds are saying NFTs “are the next big thing”.
Nearly half of millennials surveyed own NFTs, and 40% say they don’t currently own an NFT but have “considered” it. In comparison, 98% of boomer millionaires say they don’t own any NFTs and aren’t considering acquiring any.
US Millionaires Plan To Sell Stocks and Cryptos Before Tax Time
The survey also showed that 69% of US investors with more than US$1 million expect higher taxes under the Biden administration, specifically higher capital gains tax and business tax. This could push investors to sell their investments before the tax hikes come into play. According to the survey, 19% of participants plan to do this.
Businesses Should Be Prepared For New Buyers In The Market
The importance of crypto to young millionaires could shift the wealth management industry as private banks, brokers and wealth management firms scramble to cater to a new, crypto-heavy clientele. Businesses that wish to capute this new market segment must therefore cater to their needs.
We see more and more providers offering access to crypto investing. It’s changing fast.
George Walper, president of Spectrem Group
And as younger millennials become home owners, businesses need to adapt to their needs to survive. Some Aussie buyers are even using crypto as house deposits.
Bitcoin’s influence is having a domino effect across almost the entire South American continent as crypto-fever rises in neighbouring countries south of the border from the US.
El Salvador is Leading the Way
El Salvador passed a bill this month to become the first country in the world to approve Bitcoin as legal currency. Late on June 8, the two-paged proposal put forward by 39-year-old El Salvadorean President Nayib Bukele was voted in by Congress with a supermajority in favour of the new Bitcoin law.
El Salvador President Nayib Bukele
President Bukele is undoubtedly one of the coolest political leaders pushing crypto forward, even adopting laser eyes for his Twitter profile. He is a Bitcoin supporter who has put El Salvador on the map, making history as the first nation to adopt Bitcoin as legal tender.
The Rest of South America to Follow
Bitcoin and cryptocurrency entrepreneur Tyler Winkelvoss tweeted about the South American countries following El Salvador’s lead:
First they ignore you, then suddenly Paraguay 🇵🇾, Argentina 🇦🇷, Panama 🇵🇦, Brazil 🇧🇷, El Salvador 🇸🇻, and Nicaragua 🇳🇮 embrace #Bitcoin
Panamanian congressman Gabriel Silva posted on Twitter (also sporting laser eyes as part of a meme contest) that he was preparing a proposal to present at the national assembly.
This is important, and Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies.
Gabriel Silva, Panamanian congressman
Argentina is also looking at Bitcoin as its inflation soars above 42.6%. Argentinian congressman Francisco Sanchez joined in the laser eyes meme, as did two Brazilian congressmen.
Adios Capital Gains, Hola Bitcoin!
It isn’t hard to understand why Latin American countries would be so supportive of cryptocurrency adoption. For Salvadoreans living abroad, using Bitcoin instead of cash (with its high international transaction costs) will make it easier, faster and far cheaper to send money home. The new law will also open up financial services to the 70 percent of Salvadoreans who do not have bank accounts.
In the 5th round of an operation named “Operation Card Breaking” by local authorities, the Chinese police force has arrested over 1100 people for offences combining SIM card fraud and money laundering via crypto.
China has been cracking down on crypto-related activity for a while now – but this time the crackdown is not targeting traders or miners.
Black Market SIM Cards Used to Launder Money Through Crypto
In China, access to extra SIM cards is restricted. Seeing as in China your phone number is more or less tied to your identity due to the prevalent use of apps like WeChat Pay, many bad actors attempt to dodge these identity checks via the SIM card black market.
The Chinese government has been heavily targeting this market throughout 2020 and 2021 – and this time, the people arrested were allegedly using these black market SIM cards to launder money through cryptocurrency.
In this case, most of the arrests targeted “independent contractors” who would use the aforementioned SIM cards to sign up on crypto exchange platforms, after which money launderers would give them cryptocurrencies to trade.
Once the fences had moved the crypto around and split it up into multiple currencies – both crypto and fiat – the funds would be sent to wallets and bank accounts designated by the money laundering rings, sans a commission fee ranging between 1.5 and 5%.
Organised Crime Rings Brought Down
Much like the warrants served for an illegal crypto gambling ring back in April, these arrests targeted organised crime syndicates.
The arrests in the cities of Hangzhou, Shaoxing, Anhui, Hefei, Hunan, and Changsha were announced by the Ministry of Public Security on their official WeChat account.
In a post on Reddit, a crypto enthusiast tried seven different ways to earn “free” cryptocurrencies and tokens. Let’s see how it went …
1) Earn BAT Token Using Brave Browser
Brave is a great browser for a multitude of reasons, one of which is the possibility to get crypto from ads. Instead of being bombarded with ads that are irrelevant to you, Brave shows you only relevant ads and in return you get some free Basic Attention Tokens (BAT).
2) Use DeFi Search Engine Called Presearch
Presearch is a decentralised search engine which rewards you with PRE tokens when you search. Presearch is similar to Brave, but it pays you around 0.12 of its native tokens per search. This can be repeated up to 30 times a day, most likely to prevent scrapers abusing it – and you can claim your tokens once you’ve gathered 1000 of them. Although this might take a while, it’s also something that doesn’t take much effort.
3) Scrape GEO Data using COIN geominer
Coin is a social geoapp for your mobile phone. And Geomine is one of the main features of the app where “Geomining” is the act of locating and discovering valuable digital items or assets from a real, physical space. Kind of like Pokemon Go but instead of collecting pokemons you’re collecting crypto.
In exchange for in-app XYO tokens, this app will have you either fill out surveys for crypto or walk around the city scraping geodata in exchange for crypto.
I usually go for a walk each day, so I brought it with me and mined all the trails and parks in the area. I’d boot up the app, stick it in my hoodie pocket (can’t lock the screen) and a half-hour walk would drain about half my battery.
Reddit user u/Llama_in_a_tux
4) Mine Crypto on your Phone with Stormgain Express
Besides being a crypto exchange, Stormgain also claims to allow you to mine crypto on your phone. However, apparently the mining is neither demanding, nor does it require an internet connection – which makes one wonder how this “mining” actually works, or if it’s mining at all.
If you know anything (and I mean anything) about bitcoin mining, this has to be a straight up lie. Mining on my phone (and a crappy one at that)? It works even when I turn off my wifi and data? And my phone doesn’t even overheat? I don’t know what’s going on here, but they claim it’s bitcoin mining.
Reddit user u/Llama_in_a_tux
5) Mining Crypto with Pi
Ah yes, that pre-formatted message your old high-school acquaintance sends you that you pretend to be excited about. Pi allows you to “mine crypto” by clicking a button on your phone. Unfortunately, the project has been around for two years and still hasn’t launched – so it’s up to you to decide whether it’s worth bothering with.
6) Filling out Captchas on Cointiply
Cointiply is an app and a website that gives you free BTC or DOGE every hour, as long as you fill out a captcha. Unfortunately, you get almost nothing for your efforts.
At this rate, it will take me 20 months to make a withdrawal. In that time I will have earned approximately US$5, which will then be converted into whatever the price of BTC is at that time.
Reddit user u/Llama_in_a_tux
7) Participating in Crypto Faucets
Crypto faucets have been around since BTC launched – in fact, around the beginning, some BTC faucets were offering one whole BTC to everyone who stopped by, in order to raise awareness. Unfortunately, in spite of heartwarming stories about former 13-year-old gamers finding keys to wallets full of BTC, the amount of crypto paid out by faucets today isn’t really worth your time.
Although nothing is truly free, some things can get pretty close to it – so if you’ve got some time to kill, you may want to try out some of these methods. As always, however, Do Your Own Research (DYOR) – as some of these methods may be hiding the true extent of the data they collect from you.
More and more Aussies are using cryptocurrencies to put down deposits or to pay off a large portion of their mortgages altogether.
Marvin Coleman, from Mortgage Choice in Oakleigh, Victoria, revealed this week that at least 5 percent of his clients have crypto, and it’s becoming a common practice to cash out crypto savings to either fund a deposit or pay off an overall mortgage.
We’re obviously at a very embryonic stage of this. Around 5 percent of my clients have crypto, so the obvious question is, ‘can I use it to demonstrate I can complete my property purchase?’
Marvin Coleman, Mortgage Choice
Crypto and Real Estate Booming in Australia
Real estate and cryptocurrencies are considered alternative investments for Australians, but it seems the crypto wave is getting more attention than ever – especially in 2021, which has become one of the most tumultuous years for Bitcoin.
There’s a lot of FOMO [Fear of Missing Out] in both the crypto and the property markets, and lots of people still want to ride the crypto wave. But I think right now there’s slightly more nervousness around crypto and huge FOMO in the property market.
Marvin Coleman, Mortgage Choice
The global property market boom has elevated house prices to astronomical levels across Australian capital cities. The number of Aussies seeking home loans has increased tremendously in the past few months, and some of these homebuyers have holdings in cryptocurrencies as high as A$300,000, Coleman noted.
It’s also worth noting that some real estate agents are accepting cryptocurrencies as payment for properties. The biggest crypto real estate purchase to date was a luxury penthouse in Miami, Florida, which was bought anonymously for US$22.5 million using an undisclosed cryptocurrency.
Over a Million Millennials Will Buy Crypto Next Year
While the property market booms in Australia, so does the number of Aussies investing in crypto. As reported this week, at least 40 percent of Millennials and 31 percent of Gen Zs prefer crypto over real estate, according to a recent survey by cryptocurrency exchange Kraken.
As Australians become increasingly interested in alternative investments, a recent survey by international cryptocurrency exchange Kraken has found that 40 percent of millennials prefer investing in digital assets over real estate.
More Than a Million Millennials Will Buy Crypto in the Coming Year
40% of millennials and 31% of Gen Zs believe crypto is a good alternative to property
20% of crypto investors view crypto holdings as being useful in saving for a home or investment property deposit
On average, Australian crypto investors have 12.5% of total assets in cryptocurrencies
10% hold more than 25% of total assets in digital currencies
Just under 25% of investors are long-term HODLers
As real estate investment becomes increasingly elusive, the report notes that up to 4 million Australians will be buying cryptocurrency in the coming 12 months, a third of whom are millennials. Up to 67 per cent of this group were found to believe that digital assets are a good alternative to an investment property. We also saw recent survey results that 49% of Money Invested into Bitcoin Would Have Gone into Stocks with over 62,000 answers, shows the percentage breakdown of investor capital by markets that was invested into cryptocurrencies..
Kraken Optimistic About APAC
Jonathon Miller, Kraken’s Australia-based managing director, says that cryptocurrency adoption in Australia is growing at a rapid pace with the bulk of demand rather unsurprisingly stemming from millennials and other younger generations. Miller notes:
Australians maintain some conservative attitudes towards investment. Property has been a cultural norm and high on the wish list for most investors, but as affordability continues to be an issue we’re seeing more young people look for other options to grow wealth.
Jonathon Miller
Jonathon Miller, Kraken Australia MD
Miller maintains a positive outlook for the broader Asia-Pacific region and confirms what many have long suspected, that youth is undoubtedly leading the way in crypto adoption:
We’re confident that as more investors look to diversify their portfolios and seek investment opportunities outside of the traditional offerings, we’ll see cryptocurrency come into its own in APAC.
