News from the other side of the world continues to impact the crypto market this week with US President Trump catching COVID and claims of him allegedly dodging millions of dollars in taxes and suspended stimulus plans alongside this backdrop, the charges against BitMEX founders by CFTC added fuel to the fire and continued to weaken the market for the first half of the week.
With both traditional and crypto markets in the red this week BTC prices briefly fell below $10,500 unable to hold up the elusive $11,000 handle.
But every cloud has its silver lining. On Thursday, Square announced the purchase of $50mm BTC. According to the announcement, the company purchased approximately 4,709 bitcoins averaged at the price of 10,600 U.S. dollars. With the support of this news, the price of Bitcoin exceeded $11,000 by the end of the week. Are these the beginnings of a new emergent segment to the industry? Square is an American financial services, merchant services aggregator, and mobile payment company who can easily add digital currencies for cross border use, the company’s listed share was also one of the best performers during Covid-19 this year. #reallifeapplication
In October's Bloomberg Crypto Outlook, Bloomberg Commodity Analyst Mike McGlone predicted that the acceptance of Bitcoin will increase, based on ‘historical growth data, demand and application measures’, he predicts that the price of Bitcoin will reach $100,000 by 2025.
On 6th October, the Financial Market Conduct Authority (FCA), the British financial regulator, announced that from January 6,2021, it will prohibit the sale of crypto derivatives to retail investors. The UK will ban the sale of derivatives and exchange-traded notes (ETN) related to crypto assets because these may cause ‘harm’.
Over on the other side of the pond, David Schweikert, US congressman and co-chair of the blockchain core group, proposed a bill this week to recognize the legality of digital signatures on the blockchain.
On Thursday, the U.S. Department of Justice also announced the release of a cryptocurrency enforcement framework. According to information on the official website of the US Department of Justice, the framework provides a comprehensive overview of new threats and law enforcement challenges related to the increasingly popular cryptocurrency, and details the important establishment of the Department of Justice with regulatory and law enforcement partners within the US government and around the world.
US Deputy Secretary of the Treasury Justin Muzinich said at the digital seminar that the US Treasury Department is conducting studies into how to produce a Central Bank Digital Currency (CBDC) linked to the US dollar. Muzinich was quoted saying that ‘the use of distributed ledger technology obviously has efficiency advantages and cost advantages, and in a broader sense, I think the government should accept innovation.’ However, he also noted that the implementation of CBDC may change the money supply and lead to financial disruption (for example, foreign hackers acquiring most of the tokens), which will cause changes in the basic reserve currency basket.
The Bank of Japan issued a document on Friday outlining Japan’s specific approach to developing a CBDC. According to the report, Japan will begin the first phase of its CBDC testing in 2021. This stage will include the development of a testing environment for digital currencies and experiments with their basic functions as payment tools.
In contrast, China's DCEP has already entered an adoption phase. A few days ago, Shenzhen started a digital CNY red package distribution activity with 10 million yuan in total. The lucky draw has now been completed with 1.91 million people participating and 50,000 lucky people drawn. It is understood that at this time Shenzhen is promoting a series of consumption activities.
This week’s news on exchanges has been littered with negativity. One week after the U.S. government placed charges on BitMEX, the crypto derivatives exchange experienced a drop-in liquidity, with one of the defendants, founder Arthur Hayes no longer serving as the CEO effective immediately. Similarly, Samuel Reed, the now ex-CTO of the exchange, who has been arrested has also stepped down.
Jointly with the recent news regarding the hack over at KuCoin, which affected US$150 million in user funds, Tether once again froze the hacker’s USDT "hiding place", which was obviously the company's expected action. However, it is absurd that some so-called decentralized projects want to follow Tether and use some "centralized" methods to prevent hackers from predatory behaviour.