In the past week Bitcoin (BTC) has gone through a few price dips – the kind of situation that could scare new investors causing them to sell-off their assets in fear of losing everyting.
Has anything actually changed though? Has something triggered the drop in price? Is there a reason to panic?
The market has shown various times that when public sentiment about cryptocurrency lowers due to some public figure or negative news there are people who sell their assets. This looks like an emotional reaction with little regard for fundamentals.
In a post by Glassnode they state that there are “strong signals that short-term holders are leading with panic selling”. Bitcoin which is down to $44,757 USD at the time of writing from $55,000 USD one week ago is seemingly being driven by weak hands.
[…] weak hands traders have predictable buying and selling behaviors as they are driven by fear, uncertainty, and doubt (FUD).
While the long-term price action seems to be driven by the monetary preferences of the world changing from fiat money to crypto, short-term price action is driven by leverage and derivatives markets.
As the price of Bitcoin has dropped to around $44,000 USD, it looks like institutions are buying the dip. The recent three-month consolidation can be thought of as bitcoin simply moving from weak hands to strong ones.
Bitcoin: Number of Accumulation Addresses [Glassnode]
There is also an increase in accumulation addresses, which are thosethat have at least two incoming transactions but have never spent any coins. This suggests that long term investors are buying this dip too.
The Importance of Research
An important phrase in the crypto world is “Do Your Own Research” (DYOR), meant to encourage people to understand what they are buying so that they get to know the project or technology they are investing in. By not just following sentiment, investors can feel more secure about their decisions.
DYOR seems to be applicable beyond the crypto world – due to the amount of misinformation floating around, one needs to keep a keen eye on the sources, or get professional advice.
Hungary has had a year rougher than most due to the ongoing pandemic. Looking for ways to attract capital in an effort to get back on their feet, they’ve decided to slash taxes on crypto by half.
In a video posted on Facebook, Hungarian Finance minister Mihály Varga announced that the taxes on capital gains made through cryptocurrencies would be cut from 30.5% to a mere 15%.
Currently, cryptocurrencies are taxed as “other income” in Hungary, as regulations around Bitcoin and other cryptos are less developed than in other EU states.
However, this tax cut would make Hungary one of the most attractive destinations in the EU for crypto investors, alongside countries such as Germany, whose legislation rewards you for HODLing – if tokens are held for more than a year, cryptocurrency is no longer subject to taxation.
Crypto Tax Rates by Country Comparison
Here’s how Hungarian crypto taxes will measure up to other countries:
Australia
Subject to CGT rates – up to 47%
USA
Subject to Property Tax – can be up to 37% in the first year
New Zealand
Subject to rates for individuals and businesses
Germany
0% if held for over a year – 0 tax if transaction is worth less than 600 EUR and tokens were held for less than a year
Hungary
30.5% currently, soon to be reduced to 15%
Italy
26%, provided profit is over 51,645.69 EUR for 7 days in a row
Spain
19% to 23%
Belgium
33%
Denmark
55%
Israel
30%
UK
Subject to UK CGT – Income tax may also apply if trades are done frequently
Argentina
15%
France
33.33%, to be reduced to 25% in 2022
Netherlands
Subject to progressive income tax
Crypto Tax Rates Per Country
While Hungary may not be as far on the road to crypto adoption as states like Estonia, the country is taking important steps toward becoming crypto-friendly, which should attract fintechs and investors from around the globe.
If you’re in Australia and need some help with your Tax then check out the following guides:
Decentralized Finance (DeFi) is a new financial system powered by blockchain technology, the same tech which powers Bitcoin and Ethereum.
DeFi is the technology which powers NFTs and Decentralised Exchanges such Fantom, Australian based DEX. The DeFi market is really booming right now, we recently saw DeFi Tokens Generated $252 Million In Revenue For April 2021.
Let’s take a look at the most common risks of using DeFi.
10 Risks Of DeFi Investing
1. Financial Risk
Because DeFi is a new technology, it comes with sizeable financial risk. We have seen people that have lost millions, and also those that have made millions. The financial risk of DeFi could be considered high risk, high reward, depending on a number of factors, mentioned below.
2. Counterparty Risk
Some of DeFi is completely decentralised and some is “semi-decentralised”. For example, using Uniswap to facilitate on-chain peer-to-peer crypto transactions would be considered completed decentralised, as it transacts directly using the Ethereum blockchain. And on the other hand, an example of a semi-decentralised platform would be Binance Smart Chain (BSC), a clone of Ethereum, is controlled by Binance.
3. Software Risk / Smart Contract Bugs
A bug is what allowed hackers to drain 6.3 million ETH from the Dao back in 2016; the first major project to resemble what we now call DeFi today. Reputable DeFi platforms attempt to mitigate the risks of bugs by hiring strong teams of developers and by submitting their code to auditing teams. However time after time we have seen both audited and unaudited code fail a DeFi community, leading to loses in the millions of dollars. This has seen the arrival of DeFi insurance; offered by companies such as Nexus Mutual and Swissborg.
4. Storage Risk / Phishing
Crypto stored in non-custodial wallets risk the loss of funds through phishing. This is where a user is tricked into giving out their seed phrase, or entering it into a fake website. It is a very sure fire way to lose everything in your wallet. The lesson: Never Ever enter your seed phrase to an unknown source or store it in a digital file on your phone or computer, where you could get hacked.
5. Platform Risk / Oracle Failure
Oracle failure has been a major vector of attack in DeFi in 2020. Where bad actors use a Flash Loan to buy or sell an asset, which manipulates the price of that asset just long enough for them to arbitrage the difference and exploit a protocol for millions. This is why projects such as Chainlink are so highly revered, because they solve a massive challenge in DeFi adoption.
6. Security Risk / Admin Key
When you hear of “Rug Pulls” it’s usually because of an admin key. We always have to be on the look out for centralised admin controls that allow a developer or team to lock or move funds deposited into the DeFi app. The most reputable teams in DeFi such as Compound will firstly put in a timelock that prevents changes to code from happening without approval from a Dao governing upgrades and proposals. Secondly they will add a time delay so a community will be warned if a potentially unfavourable or controversial change is coming to the protocol.
7. Liquidity Crisis
Liquidity crisis refers to a lock up of funds and a lack of liquidity. For example: if you lend Dai to Aave, all the Dai is then subsequently borrowed and the app indicates that 100% of Dai is utilised, then you can’t your Dai out until some borrowers return the funds. This can become a real risk particularly due to the use of over collateralised loans that dominate DeFi.
8. Protocol Risk / Governance Failure
Governence failure is another factor interwoven into DeFi protocols. There are debates over whales exerting their massive influence to their own best interest and hurting the smaller fish in the wider community. Others argue that whales wouldn’t self-sabotage a protocol where their money is invested. There are also ongoing debates over deep-pocketed CFi now exerting their influence on DeFi governance and protecting the interests of the larger exchanges.
9. De-Pegging
Pegged assests or Stable Coins risk the chances of de-pegging. This can cause many issues, like an AMM liquidity pool going to zero.
While there are still many problems and risks associated with DeFi, they are being addressed as the cryptocurrency space evolves. DeFi is still very new but as it matures and improves, we will likely see more and more users moving to DeFi in the near future.
10. Compound Risk
All of the risks together form a compound risk for the entire DeFi application. Over time, as this new technology starts to mature, and go through testing and fixing phases, we will see fewer critical edge case risks and lower compound risk.
It seems cryptocurrencies are calling the attention of ASX investors as they seek more speculative assets like Bitcoin and Ethereum.
According to a survey from TradingView, cryptocurrencies are the second most preferred assets, outranking other traditional assets like bonds and futures.
Key Points:
59% of Australian traders said they trade cryptocurrencies (compared to 64% Stocks and 32% Forex)
230,000 Australians are registered on TradingView (up 340% since 2019)
Cryptos Brushing Stocks
The survey, in which 2,134 Australians participated, was divided into two categories: veteran traders with over five years of experience and newer traders.
54% of experienced traders said they would include crypto-assets in their portfolios, while 65% of new traders were even bullish on crypto, outlining the strong surge in interest for digital assets across the country.
Stocks remained the most popular option for investors, however, by a small 3% margin. Fiat currencies remained the third most popular option for traders, followed by exchange-traded funds, options, and futures.
Source: TradingView
Cryptocurrencies are having strong momentum in the country as more Aussies recurred to sites like TradingView to check in on the latest market movements.
There are 230,000 Australian users registered in TradinView, and at least 100,000 registered on the site in 2020, marking a 340% increase from 2019 and 2.25 million unique visitors in Australia last year.
“The popularity of cryptocurrency appears to be moving ahead of most traditional asset classes [. . .] This brings a new level of ‘credibility’ for crypto and Bitcoin in particular, and could help sustain the current momentum for a longer period of time.”
— Glenn Leese, director of growth for Australia at TradingView
Not only the number of investors is growing, but Australian-based blockchain companies and crypto communities are taking significant steps to bring awareness to the regulatory environment in the country.
A recent Australian company that hit an important milestone is Fantom Foundation, passing 3 million transactions on May 5, now processing over 200,000 transactions daily.
A freelancer who was paid in cryptocurrency in August 2020 was recently left stumped by the CEO of a startup he had worked for, who requested he return the crypto and invoice the company in USD at the original rate.
Return Sevenfold Gains
According to the freelancer – who went by the name Crypto Confused when writing to The Moneyist, a column dedicated to financial advice – his advertising and market research activities for the company were billed in an unspecified cryptocurrency that has since grown by 700%.
He has since been contacted by the CEO of the small company who contracted his services, stating that since his services had not brought the company any direct revenue, he should return the cryptocurrency and rebill the company in USD.
According to Crypto Confused, the company was still struggling to find clients despite the services he and others provided.
“Please note that there have been several other people trying to sell the company’s solutions. It is a startup and so far, they are still trying to generate their first dollar in sales. The purpose of the contract was to generate sales and it included a commission component, but the understanding was that I would bill hourly for cold calling and emailing people, generating proposals, setting up meetings, participating in and leading pitches, etc., with the goal of generating revenue.”
In the letter to The Moneyist, he stated that he has known the CEO in question professionally for years, and this wasn’t the first time he had tried to change the terms of a job.
Crypto Confused asked for advice on how to respond to the situation – and was advised to not send back a single satoshi.
“No. Alas, no. No, thank you. Absolutely not. Ask me again in 2121.”
Leaving aside the possible legal ramifications of the CEO’s laughable request, it’s worth asking: would he have written the same email if crypto had tanked instead?
Seems like whole point of accepting #crypto for payment is the potential for gains from higher prices.
If the employer paid in #dollars and the relative value of U.S. currency went up would he make the same argument?
Although the contract with the unnamed company did state that payments could be made either in USD or in cryptocurrency, at the end of the day payment was made in crypto – and there’s no reason to take a net loss due to terms that the employer probably regrets now. A contract is a contract is a contract.
Bitcoin prices are surging in Argentina and latin-america, as inflation continues to rise in Agentina since 2014.
The Argentine Peso hasn’t been doing well as the currency has been going through inflationary spikes with brief returns back and forth for years. Now the latin-amricans are turning to Bitcoin and cryptocurrencies to combat the loss of purchasing power.
Argentina Government Laws Limiting Savings In USD
It’s common practice in Argentina to keep savings in USD – but the government limits purchases of USD to $200 a month, which is sending many looking for alternative ways of storing value – and for many in South America, the answer is crypto.
According to Marcos Zocaro – an Argentinian expert in digital assets said that “older clients who used to be afraid of making a fixed deposit with a bank but are buying cryptocurrency without fear of risk”.
And according to Maximiliano Hinz – the director of Binance South America “The number of user accounts for investing in ‘cryptos’ has multiplied by ten in Argentina since 2020”.
The cryptocurrencies of choice are not limited to BTC and ETH either – many Argentines are also buying up stablecoins such as USDT and DAI.
Huobi Asset Management Launches one of Asia’s Largest Virtual Asset Funds as announced on South China Morning Post.
Huobi (Hong Kong) is a wholly-owned subsidiary of Huobi Technology Holdings Limited and is one of the largest virtual asset funds in Asia, looking to meet the growing demand for cypto based investments. Huobi leads the way in the movement of intitutional adoption into cryptocurrency for the Asian market.
Following Grayscale (US), Huobi Asset Management is aimed at professional investors, offering them a virtual assets portfolio. Huobi Asset Management’s new crypto-based funds include a BTC tracker fund, ETH tracker fund, and a multi-strategy virtual asset fund.
Huobi is the second fund manager to receive approval from the Securities and Futures Commission to issue 100% virtual asset funds. Head of Huobi Asset Management, Gillian Wu, explains how the fund could be ideal for the new type of investor, looking to enter the cryptocurrency market.
“According to the professional investors’ knowledge level and risk appetite of virtual assets, we will advise our clients to choose the fund products that best suit their needs. For institutional, especially corporate clients, they want to allocate to virtual assets through a convenient and compliant channel to achieve diversification needs.
Our Bitcoin and Ethereum tracker fund, in the way of traditional financial products, solves the worries of clients who have to research on their own how to custody, how to account, how to audit this novel asset class and whether there are tax uncertainties, etc. At the same time, some ultra-high net worth individual clients, as well as some large virtual asset miners, who have previously been passively holding their virtual assets, started to look for options to achieve better returns through different market cycles compared to simple passive allocation, thus our active multi-strategy virtual asset fund is born.”
Gillian Wu
The first pioneers to shine a light on investing in cryptocurrencies were individual retailers. As Bitcoin and Ethereum become more well known and widely adopted, it is only natural that major institutions turn their attention to the crypto space and adapt to follow the trend.
Huobi will offer piece of mind to serious investors, as demand grows for those looking to invest millions. Huobi’s new fund will likely enjoy the success of Grayscale’s Bitcoin Trust, which has been very well received.
NYDIG is an American based intitutional financial services company planning to bring crypto services to hundreds of American banks by the end of 2021.
Banks are asking for bitcoin because they can see their customers sending dollars to Coinbase and other crypto exchanges.
Yan Zhao, president of NYDIG
The annoucement on 5th May, details a partnership with technology company Fidelity National Information Services (FIS) to bring Bitcoin custody and trading services to banks via the FIS Digital One Mobile user-friendly interface.
Founded in 2017, the company is a subsidiary of asset management firm Stone Ridge (currently valued at $10 billion). NYDIG has declared that the demand for crypto in bank accounts is growing – and that they’re prepared to answer it.
“As demand for bitcoin as a store of value continues to grow, FIS is focused on enabling our core banking clients to respond to growing market demand and better serve their customers,” said Rob Lee, head of Global Core Banking and Channels, FIS. “Unlocking these capabilities for financial institutions of all sizes levels the playing field for banking with bitcoin and can drive further innovation.”
Rob Lee, head of Global Core Banking and Channels
The Road Ahead for USA Crypto Banking
Smaller banks, such as California-based community bank Suncrest, have already agreed to try out the NYDIG platform.
According to Patrick Sells – the head of banking solutions at NYDIG – the service would help cut down on the number of apps and accounts needed to purchase crypto.
What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships. If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin.
Patrick Sells, head of banking solutions at NYDIG
Yan Zhao – the president of NYDIG – also added that although banks seeing their customers’ accounts emptied in favour of crypto exchanges may have been the catalyst behind the rising demand for crypto banking services, NYDIG also sees this as a way to help any interested parties invest in Bitcoin, no matter how low the sum.
Most people can’t invest in things that institutional investors get to invest in. With bitcoin available through your bank to be purchased with as little as $1, now you have an attractive asset that’s available to be owned by anyone in any amount. We think that’s huge for economic empowerment.
Yan Zhao, the president of NYDIG
In practice, it looks like the banks involved in the project won’t handle the cryptocurrency themselves, just adding the option to their bundle of available services. Instead, FIS will use its vendor services to handle the link to lenders, with NYDIG managing the crypto side of things (custody and trade execution).
Banking Going Pro Crypto?
It seems not long ago Banks like Goldman Sachs and JPMorgan were dismissing crypto, even calling it a fraud – and now they have both recently started taking blockchain and crypto more seriously.
This is a recap of our Partner NGS Crypto, who are Australia’s Blockchain Mining Specialists.
April was yet another successful month for NGS Crypto and all of our members. We have made some exciting developments this month.
Updates To The NGS Crypto Dashboard
30 days before each IMA is due for expiration a notification will appear on your dashboard.
For those members who choose to reinvest via their NGS Crypto Dashboard prior to their IMA expiry, will receive a loyalty bonus.
Loyalty Bonus
We highly value our members at NGS Crypto, and have introduced our new Loyalty Bonus Reward for members who choose to reinvest with us.
This is a great way to show our valued members that we appreciate their ongoing loyalty and support.
All members will be able to add an additional IMA through their own NGS Crypto Dashboard following the easy payment options.
2,3 and 5-Year Packages
We have recently introduced our new NGS Crypto 2, 3 and 5 year IMA package options, this ensures that our members have greater flexibility within their investment with NGS Crypto.
If you wish to talk to Australia’s leading and most trusted Digital Asset Mining service about how you can safely break into the crypto market, contact us today for a free, over the phone appointment with one of our NGS Crypto experts.
Stay up to date with NGS Crypto
Australia’s leading Digital Asset Mining specialists, providing a safe, stable and reliable investment vehicle. Hundreds of everyday Australians are taking advantage of the NGS Crypto service, entering into the digital asset mining space and making returns between 10% – 15% ROI p/a.
As reported by Business Insider Australia, the ASX could launch a cryptocurrency-based exchange-traded fund (ETF) as soon as this year.
Although they have not specified exactly when it will go live or which companies are applying as providers, they have confirmed that they have been “spending an enormous amount of time” focusing on the digital assets space.
Huge Demand for Crypto In Australia
According to Max Cunningham – Executive General Manager at ASX – recent developments in Canada, Europe and elsewhere have compelled the ASX to look into the creation of a local ETF for cryptos
I think there’s an inherent obligation for us and the regulator and other key decision-makers to ensure that, if these assets are broadly being sought by retail investors, that we not only have the safeguards in place but that we have good transparent and low-cost mechanisms for them to access it.
Max Cunningham, Executive General Manager at ASX
ASX General Manager of Listings Max Cunningham – source
Cunningham wouldn’t be drawn on the issue, but would say that the huge demand for cryptocurrencies like Bitcoin and Ethereum meant that Australians were going to buy it one way or another.
Business Insider Australia
The ASX is Turning Pro Crypto
Mr Cunningham also stated that the commonly held opinion of the ASX having a negative view of cryptocurrencies is false.
Because we were turning down a number of spurious offerings five or six years ago, there’s a perception that we have banned this asset class, and we have categorically not got a ban on it.
Max Cunningham, Executive General Manager at ASX
Joke Coins Will Not Make the Cut
He also went on to say certain cryptocurrencies bring concerns for price manipulation. Certain “coins being established as jokes” that show great volatility “just by someone putting a tweet out” seem therefore unlikely to make the cut to get listed.
Despite the forms and spreadsheets to be filled before an Aussie crypto ETF can be established, it looks like investors might be able to buy cryptos from sources other than the usual exchanges in a not distant future.
What is a Crypto ETF?
An exchange-traded fund (ETF) is a type of investment fund. […] An ETF holds assets such as stocks, bonds, currencies, and/or commodities. […] Most ETFs are index funds, that is, they hold the same securities in the same proportions as a certain stock market index or bond market index.
Bitcoin ETFs are exchange-traded funds that track the value of Bitcoin and trade on traditional market exchanges rather than cryptocurrency exchanges. They allow investors to invest in bitcoin without having to go through the hassle of using a cryptocurrency exchange while providing leverage to its price.
Using pooled investment funds, the funds purchase the actual bitcoins and hold them in “cold storage” — an offline destination that can’t easily be hacked or breached. The ETFs then track the performance of bitcoin in US dollars (or such) on a specific index.
Further Benefits of buying Bitcoin through an ETF include:
