Crypto Market Forecast: Week of August 8th 2022

The Bitcoin price recovered by about 3% this week and BTC currently trades for ~US$23K. Ether’s (ETH) price remained flat during the week at US$1.7K. Binance-coin (BNB) had a bullish ~11% uptick this week and currently trades for US$324.

US Senators Patrick Toomey (R-PA.) and Kyrsten Sinema (D-AZ) have released a bipartisan bill (the Virtual Currency Tax Fairness Act) that would exempt the taxes and reporting requirements for virtual currency purchases, trades, or earnings worth $50 or less. This would presumably allow for a user to buy coffee with Bitcoin without having to record the transaction for tax purposes.

The 4-page bill makes provisions for inflation adjustments to the $50 threshold. The alternative Lummis-Gillibrand Responsible Financial Innovation Act currently circulating with agencies around Washington (in its present form) allows for a $200 threshold for capital gains exemption.

When such tax exemptions make their way to law in the US or elsewhere, wider adoption of the Bitcoin network may be possible — especially as second layer networks like Lightning make it technically possible to transact with near-zero fees.

Yet another major crypto lender finds itself on shaky ground as the “crypto credit winter” continues. On June 17th Hong Kong and Singapore-based Babel Finance froze redemptions and withdrawals, citing “unusual liquidity pressures”. The Block now reports that it has obtained a restructuring proposal deck, putting Babel Finance’s losses at roughly 8,000 BTC and 56,000 ETH of customer funds, used by the company in “proprietary trading”. The deck reportedly divulges Babel’s plan to convert lost customer funds into equity and raise additional funds for a revolving credit facility.

The Babel update follows related news from Celsius Network, Voyager Digital, Three Arrows Capital, Vauld and BlockFi.

MicroStrategy published a press release this past week announcing that CEO Michael Saylor, who drove the company’s Bitcoin acquisition strategy while serving in that position, would step down as CEO to serve as the company’s Executive Chairman. Phong Le will take the role of CEO.

The press release quoted Saylor saying that his new role will focus on its “bitcoin acquisition strategy and related bitcoin advocacy initiatives”. As of the present time, MicroStrategy holds approximately 129,699 bitcoins (about 0.68% of all 19.1M bitcoins currently in existence) — worth roughly US$3B at today’s prices.

Crypto news for the weeks ahead

Between 6-12 August

The Etherum blockchain will conduct its final testnet proof-of-stake transition, combining the Goerli and Prater networks, but retain the “Goerli” name thereafter.

Week of September 19th

The Ethereum blockchain is now scheduled to launch its long-awaited proof-of-stake (PoS) “Merge” during the week of 19 September.

August 13th

This Saturday the privacy-focused Monero network is set to undergo an hard fork that will add a number of improvements to the blockchain. Privacy, transaction efficiency, security and wallet sync times are all set to be upgraded.

Top 10 Crypto Summary

A strong week for Binance-coin (BNB) — up by nearly 11% versus the previous week — and a poor week for Solana (SOL), down over 8%. Solana’s price drop follows a major hack on the network, reportedly draining roughly 8,000 wallets of funds. Blockchain auditing firm OtterSec tweeted that affected wallets were Phantom, Slope, Solflare, and TrustWallet.

Bitcoin Price Chart

Glassnode’s special report this week looked at both Bitcoin and Ethereum onchain activity and concluded that the recent price rally “[struggles] to achieve a convincing follow through” (meaning no sign of a bullish recovery yet). Ethereum users, for example, are paying less in gas fees, despite the fact that blocks are full — meaning low congestion due to the blockchain being used less and less. Similarly, there has been a drop in active addresses on the Bitcoin network. It is worth noting, however, that Glassnode’s analysis does not account for Bitcoin’s sidechain activity: Liquid, Lightning, and even “wrapped Bitcoin” used in smart contracts (including on Ethereum).