Crypto Market Forecast: Week of February 13th 2023
A curated weekly summary of forward-focused crypto news that matters. This week, crypto slides as major exchange Kraken faces SEC charges, one of Brazil's largest banks allows customers to pay for taxes with crypto, and the IMF recommends that El Salvador reconsiders its Bitcoin exposure.
The price of Bitcoin (BTC) is down by ~3.9% this week and currently sits at ~US$22.1K. Ether (ETH) dropped by 5.0% over the week, and currently trades for ~US$1.55K. Binance-coin (BNB) fell by 1.7%, presently at ~US$320.
The US Securities and Exchange Commission (SEC) charged Kraken last week for failing to register its staking-as-a-service for crypto assets program. The SEC asserts that the assets involved in Kraken’s staking program, which offer annual returns on investment, qualify as securities.
Kraken has settled with the SEC and has agreed to shut down staking-as-a-service and pay “$30 million in disgorgement, prejudgment interest, and civil penalties”.
The day just before the SEC’s publication of a press release on the matter, Coinbase CEO Brian Armstrong tweeted a rumor that such enforcement was on the way and published a series of follow up tweets making the case for staking. Armstrong argued that “Staking is not a security” and broke down his view of some of staking’s various benefits.
Banco do Brasil, one of Brazil’s largest banks, announced on Friday that it has launched a tool for tax residents of the major South American market to settle their tax obligations in cryptocurrencies. Banco do Brasil launched the program in partnership with fintech startup Bitfy.
The option will first be launched for Bitfy smartphone app users. The app allows users to select the cryptocurrency they wish to make payment to Brazil’s tax agency, the Receita Federal, and settlement is done in the local ‘real’ currency.
The announcement follows an October 2022 announcement by the city of Rio de Janeiro allowing for residents to settle certain tax obligations in crypto assets as well as a December 2022 bill signed into law by former President Bolsonaro that expands the scope of digital currencies allowed as legal payment methods across the nation’s territory.
The IMF issued a statement this past Friday with findings on the El Salvadoran economy, where Bitcoin remains legal tender. The statement highlighted risks “to financial integrity and stability, fiscal sustainability, and consumer protection”. It further called for the Salvadoran government to “reconsider” its exposure to Bitcoin and for more transparency around the government’s own transactions in the currency “and the financial situation of the state-owned Bitcoin-wallet [Chivo].
Crypto news for the weeks ahead
28 February
Sepolia Testnet, Ethereum’s next big test before the March ‘Shanghai’ hard fork, will take place on 28 February.
21-22 March
The Federal Open Market Committee (FOMC) will be meeting. Possible further additional interest rate hikes will be announced. Markets are presently leaning towards yet another interest rate hike, currently expected at 25 bps.
March 2023
Ethereum’s next major upgrade since the Merge, the ‘Shanghai’ hard fork, will allow stakers to withdraw staked ETH, which presently remains locked.
February 14th
The Consumer Price Index data for January 2023 is released. Given recent strong employment data emerging for the USA, there are expectations of high inflation numbers.
Top 10 Crypto Summary
There was a minor drop in a few of BNC’s top-ten digital assets by market cap since last week. The drop follows the announcement that the SEC charged Kraken with failing to register its staking-as-a-service program with the regulatory body.
Bitcoin Price Chart
The Bitcoin network has seen promising activity over the past month. The 7-day moving average of the number of transactions on the Bitcoin blockchain has again spiked above the 300K mark for the first time since April 2021 when the bull market was last in full swing. This does not include second layer transactions happening over the Lightning and Liquid networks, for example. Meanwhile, Taproot, an upgrade to Bitcoin from 2021 that improves upon security, fees and multiple key transactions, has seen a recent surge in activity as well. Taproot adoption, measured by “the number of transactions that spend at least one Taproot input to the overall number of transactions” jumped from under 2% in early January to well over 7% by February 4th.
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