Crypto Chronicle - 05/12/23

Welcome to the seventeenth edition of the Crypto Chronicle, brought to you by Imperial Wealth.

You can listen to todays episode here.

News

Pando Joins as the Thirteenth BTC ETF Applicant While BlackRock Introduces Updated In-Kind Model

In the competitive field of spot Bitcoin exchange-traded funds (ETFs), Pando Asset AG emerges as the thirteenth applicant while the SEC engages in discussions with potential issuers. 

BlackRock presents a revised ETF model, coinciding with Pando’s submission of Form S-1 for the Pando Asset Spot Bitcoin Trust on November 29. 

Pando, known for diverse crypto ETPs in Europe, aims to enter the US ETF market, aligning with BlackRock’s SEC engagement. 

Recent SEC discussions favour cash over crypto transactions, with firms like BlackRock advocating for in-kind transactions, anticipating reduced restrictions and avoiding reliance on third-party entities for BTC transactions among institutional players. 

The competition intensifies, setting the stage for a heated race toward January.

Read more here: https://imperialwealth.com/news/pando-joins-as-the-thirteenth-btc-etf-applicant-while-blackrock-introduces-updated-in-kind-model 

BlackRock and Bitwise Submit Revised Applications for Spot Bitcoin ETF to the SEC

BlackRock and Bitwise filed updated spot bitcoin ETF applications with the SEC, indicating ongoing discussions despite the SEC’s history of delays in approving such funds. 

Analysts, like JSeyffart, suggest significant efforts by both sides, implying potential progress. 

BlackRock’s revised filing included anti-money laundering measures and an audited statement. 

The document highlighted strict criteria for third-party service providers. 

Amid speculation that the SEC might approve a spot fund, Bitcoin surged 20.6% in the past month, nearing $42,000. This surge hints at market anticipation surrounding the SEC’s decision.

Read more here: https://imperialwealth.com/news/blackrock-and-bitwise-submit-revised-applications-for-spot-bitcoin-etf-to-the-sec 

ATO Refrains From Clarifying its Perplexing and “Aggressive” Cryptocurrency Rulings

The ATO’s recent guidance implies capital gains tax (CGT) applies to routine decentralised finance transactions, but lacks clarity on specific activities like staking Ether or transferring through layer 2 networks. 

The criteria suggest potential CGT implications for various actions like token transfers without “beneficial ownership.” 

This ambiguity leaves DeFi users uncertain about compliance. Despite inquiries, the ATO didn’t clarify, leaving investors unaware of the consequences. Australian DeFi users might face CGT even without selling assets. 

Delays in cryptocurrency tax rules’ release have given the ATO free rein, raising concerns among users and experts about the lack of understanding and clarity.

Read more here: https://imperialwealth.com/news/ato-refrains-from-clarifying-its-perplexing-and-aggressive-cryptocurrency-rulings 

Law Firm Labels Australia’s New Crypto Tax Guidance as ‘’Toilet Paper’

An Australian law firm advises disregarding ambiguous cryptocurrency tax guidelines, comparing them to “toilet paper.”    

The Australian Tax Office’s (ATO) Nov. 9 release outlined potential tax implications for decentralised finance (DeFi) activities. However, Cadena Legal highlights the non-binding nature, urging a public ruling instead. 

Widespread confusion persists about tax-free DeFi actions, prompting Harrison Dell, the firm’s founder, to recommend temporary non-compliance. 

Despite this, a crypto tax expert warns against disregarding ATO guidelines, foreseeing legal risks. Queries about specific activities’ tax implications received no direct ATO response. 

Dell leans towards these actions triggering taxable events based on private rulings. Clarity, according to Dell, awaits a public ruling or new legislation, indicating a prolonged uncertain period ahead.

Read more here: https://imperialwealth.com/news/law-firm-labels-australias-new-crypto-tax-guidance-as-toilet-paper 

Cryptocurrency Emerges as the Fastest-Growing Asset Class in Australian Self-Managed Superannuation Funds

Australians are increasingly embracing cryptocurrency for retirement savings, with self-managed pension fund allocations surging 400% in four years, exceeding stock and bond growth rates. 

Around 612,000 funds hold a total of $658.6 million in crypto, a massive increase from $131.5 million in 2019.

Despite crypto’s growth, SMSF allocations slightly declined recently. Although crypto holdings dropped by 38% from the peak in June 2021, it represents only 0.1% of total SMSF assets. 

Smaller funds tend to allocate more to crypto. Local exchanges offering crypto-based retirement products are on the rise, but strict regulations apply, requiring clear SMSF strategies and audits.

Specific crypto details within SMSFs remain undisclosed by the ATO.

Read more here: https://imperialwealth.com/news/cryptocurrency-emerges-as-the-fastest-growing-asset-class-in-australian-self-managed-superannuation-funds 

Binance’s Future Strategy Unveiled by New CEO Post CZ’s Departure

Newly appointed Binance CEO Richard Teng outlined a commitment to regulatory cooperation in his debut blog post. 

Former CEO Changpeng Zhao’s guilty plea to violating the U.S. Bank Secrecy Act resulted in a $50 million fine and stepping down. 

Binance faced a $4.3 billion penalty in a DOJ settlement over alleged misconduct. Teng stressed Binance’s financial robustness but faced critique for not disclosing key financial details. 

He aims to strengthen compliance and engage policymakers for a global regulatory framework. 

Teng also plans to promote decentralised applications. 

Zhao, amidst travel restrictions, faces potential prison time after admitting guilt.

Read more here: https://imperialwealth.com/news/binances-future-strategy-unveiled-by-new-ceo-post-czs-departure 

Binance to Cease Support for BUSD Stablecoin by December

Binance will cease supporting BUSD, the stablecoin, by December 15 following a gradual phase-out plan initiated after Paxos, the coin’s issuer, was directed to halt coin minting in February. 

Users can redeem BUSD until February 2024, but withdrawals end on December 31, converting remaining balances to FDUSD. 

This decision follows regulatory issues with the U.S. SEC and NYDFS labelling BUSD an unregistered security. 

The $4.3 billion settlement with U.S. authorities led to CEO Changpeng Zhao’s resignation, replaced by Richard Teng. 

BUSD previously ranked among top stablecoins, peaking at $23.3 billion in November 2022.

Read more here: https://imperialwealth.com/news/binance-to-cease-support-for-busd-stablecoin-by-december 

BLOCK CEO Jack Dorsey Heads $6.2 Million Investment in Decentralised Bitcoin Mining Pool

Mummolin, Inc., based in Wyoming, celebrates a $6.2 million seed funding round led by Jack Dorsey, drawing support from investors like Accomplice and NewLayer Capital. 

This backing propels the launch of OCEAN, an initiative aimed at globalising Bitcoin mining decentralisation. 

OCEAN’s non-custodial platform directly allocates block rewards to miners, combating risks posed by conventional pools. 

Jack Dorsey supports OCEAN for its positive impact on Bitcoin’s decentralisation. The project addresses mining pool centralisation, custodianship issues, and promotes transparency. 

OCEAN plans further decentralisation enhancements in 2024. Details can be found on http://OCEAN.xyz.

Read more here: https://imperialwealth.com/news/block-ceo-jack-dorsey-heads-6-2-million-investment-in-decentralised-bitcoin-mining-pool 

Technical Analysis

With the week off for the Chronicle/Podcast last week, been a good two weeks of technical price action since we’ve spoken, much of which is up only!

Bitcoin (BTC) has been on a rampage.

Last time we touched base, we were priced around $37,300 as Bitcoin was whipsawing between support ($35k) and resistance ($38k), but maintaining its strong uptrend.

After briefly hitting $38.5k, and retracing to mid $36k’s, this was Bitcoin’s last little momentary dip before shredding its way all the way to $42.5k which is its current high for 2023.

Please see the chart below:

All HIGH TIME FRAME charts I have shown in prior Chronicles are coming to fruition. These were 4 main ones I had been showing for some time now – our HH/HL structures on relative and log scale, our LOG descending parallel channel breaks with oscillator confluence, and our traditional inverse weekly H&S pattern.

I will update these below.

Please see the chart below:

Please see the chart below:

Please see the chart below:

Please see the chart below:

All of these charts have been shown prior in the chronicle a few times and help you navigate this bullish movement!

Particularly given how I went into length in a Chronicle about all HTF bearish scenarios being invalidated!

What’s important from here is following the trend, but understanding there will be dips to come, particularly on alts as we see BTC.D hit 54% and make its move towards 57-60% where I expect it to hit – particularly on an ETF approval in January.

Please see the chart below:

I spoke about this yesterday at length with Trading Academy Members, detailing that:

“When Bitcoin is in only up mode, it’s easy to get lost in the euphoria – I often mention that over and over in here (and maybe I am guilty of deploying too much euphoria at times, but we’ve had it hard!)

Bitcoin rarely only just goes up.

A crash/dump will come eventually to shake the paper hands out – but at this stage of the market, if we are truly in it, these dips are for buying – and buying ALTS.

Dominance is raging.

You will notice some alts are the same price as what they were when BTC was $25k, $30k, $35k and even $41.5k.

These will get VICIOUS wicks to the downside on BTC flash crashes/dumps if there are any to shake out people. PARTICULARLY ON ALTS. Do not be one of those shaken out. I say this all the time, and you have seen multiple times this year when we have crashed I have instantly deployed capital. 

Dips haven’t come pretty much on this entire move, but they will eventually!”

This happened just last night!

Be careful with alts!

BTC’s time now, ETH soon, then alts!

Cryptocurrency Mining

We are seeing another strong uptick in Bitcoins profitability with increased block rewards based on transactional fees rising. Currently the additional reward sits at +1.03BTC per block and rising.

This is mostly due to the rise in BTCtransactions due to the recent price rise. Not all good news with difficulty to follow with the recent hashrate growth of 10%. 

We are looking at some new ATH for hashrate in the coming future, quite a lot of chatter around the big boys with ETFs mining to get BTC at cheaper rates than spot price in the future. It makes sense, which is a good thing for all miners, so long as you have good miners.

Upgrading to efficient miners is key, so aim for sub 25w/th and will be looking very handsome over the coming years. Breakeven efficiency is also rising due to the BTC price which now sits at 44w/th which is the highest since Aug 2022. 

Around the networks:

Kaspa – Hashrate is now sitting at 88PH which is a decent jump due to the oncoming machines, Still not growing at the rate one would think its detrimental as it was 55ph a month or so ago. Profits for the KS3 9.4th sit at $300 per day so still very healthy. 

Litecoin and Doge has seen a 15% increase in difficulty over the past week but compensates with a 18% price increase. 

Dash sitting at a 13% reduction in difficulty with its 7% price increase is also looking great still. 

Kadena and CKB Nervos are sitting very similar to what we have previously seen but both sitting around 5% higher in price which is positive. 

Best buys at the moment are still the S19k pro 120th miners. Currently Hosted these are a 14-15 month ROI.

If you wish to speak to Taylor on any of these machines, feel free to book a free online consultation here!

That’s it for this weeks edition, stay tuned for next weeks!

Thanks!