- Bakkt is set to launch on September 23rd
- Bitcoin hash rate reached a new ATH this month ahead of halving
- New Zealand tax authority lets citizens receive crypto salaries
- BTC/USD bull market is far from over
August 2019 has been full of positive crypto news so far.
The Bakkt launch will bring legitimacy to crypto and attract additional institutional capital. The BTC hash rate hitting a new all-time high indicates the world’s largest cryptocurrency is doing well and miners are betting big on price increases leading up to next year’s halving event. New Zealand has issued new tax guidance for wages paid in crypto, and the bull market for BTC/USD is not over.
Bakkt: Institutional Custody and Physical-Settled Futures Contracts
Bakkt will offer custodial services for over 100 tokens on 13 blockchains, including many coins in the top 20 by market capitalization such as XRP, ETH, XLM, LTC, EOS, XMR, DASH, and more, in addition to a long list of ERC-20 tokens on the Ethereum blockchain.
In a blog post published August 16th entitled “cleared to launch”, Bakkt CEO Kelly Loeffler described the difference between Bakkt derivatives and other platforms offering similar contracts:
“Uniquely, Bakkt bitcoin futures contracts will not rely upon unregulated spot markets for settlement prices, thus serving as a transparent price discovery mechanism for the benchmark price for bitcoin. The importance of this differentiator is only amplified by reports of significant manipulative spot market activity, and other concerns such as inconsistent anti-money-laundering policies and weak compliance controls.
Bakkt’s bitcoin futures will be exchange-traded on ICE Futures U.S. and cleared on ICE Clear US, which are federally regulated by the CFTC. Regulated exchanges differ from trading platforms, such as crypto spot markets in many respects, including risk management, compliance and market surveillance.”
The introduction of a regulated custodial service offering physically-settled bitcoin futures contracts represents a massive step forward in institutional adoption of cryptocurrency.
In addition, the existence of a regulated price discovery mechanism for bitcoin could make regulators more likely to approve a bitcoin ETF, another bullish development.
Bakkt Launch a Price Fix?
Some have said that the Bakkt launch could be used to manipulate crypto prices. After all, gold and silver prices are “fixed” on the COMEX every day and have been manipulated by banks using naked paper shorts.
There are two reasons this isn’t true for bitcoin, and they can be explained in short order.
First, Bakkt isn’t cash-settled like most other derivatives platforms. It’s physical-settled, meaning contracts payout in the underlying asset, in this case, bitcoin.
Second, bitcoin is a digital asset that can’t be duplicated at will, unlike fiat currency. Users can take ownership of their private keys and nothing fake (e.g., naked paper shorts) can be created in their place. This would pull the rug out from underneath any price-fixing mechanism, as the asset would no longer be there.
Bitcoin Hash Rate Reaches New All-Time High
While everyone likes to discuss the dollar price and market capitalization of bitcoin, hashrate is one key metric that often gets overlooked. It’s easy to argue that hashrate is more important than any other factor when evaluating the health of a mineable cryptocurrency.
Coindesk reported on August 5th:
“According to data from mining services operator BTC.com, the average bitcoin mining hash rate over the last two weeks has reached 71.43 quintillion hashes per second (EH/s), up from 64.49EH/s on July 23. The threshold was breached as bitcoin adjusted its mining difficulty at block height 586,672 on Monday 2:52 UTC – that is a 6.94EH/s, or 10.78 percent jump since mid July.
Bitcoin mining difficulty is a measure of how hard it is to compete for mining rewards on bitcoin. Just how difficult the bitcoin software makes it to generate new blocks adjusts every 2,016 blocks – approximately every 14 days – to ensure the block production time remains about 10 minutes at the next cycle.”
The BTC hash rate fell sharply from its ATH just days after reaching its new high as torrential rains led to mudslides that mucked up several large Chinese mining operations, as Coindesk also reported.
Still, we remain confident that mining power will bounce back, as Chinese miners rebuild operations and compete for new blocks before the 2020 halving.
For a countdown until the next halving, see bitcoinclock.com. There are 38,700 blocks and 253 days left to go at the time of writing.
Outlook for BTC/USD Remains Bullish
While the tremendous bull run that began in April of this year seems to have stalled out, it doesn’t appear as though the bears have gained control.
Traders are watching for support at the $9,500 level to hold in order to maintain the bull market. But 9,180 is the major support level to be wary of.
A breach below this price could signal a significant downtrend.
To the upside, major resistance points are at the Fibonacci retracement levels of $12,00 and $13,700.
Failure to break through either of these support or resistance levels within the next few months could indicate BTC/USD is entering a period of consolidation. For now, it’s too soon to tell. The Average Directional Index is indicating a weak trend (in other words, selling or buying pressure isn’t too intense), and while BTC has been making lower highs, it has not been making lower lows. This is a hopeful sign for the bulls.
In my view, BTC under $12,000 is an obvious buy, and under $10,000 is a super buy. If the support levels mentioned are breached in the near term, however, it may be wise to wait for a bottom before acquiring additional coin, as further downside could be ahead.
New Zealand Tax Authority Issues Crypto Guidance
Citizens of New Zealand are one step closer to using cryptocurrency as actual currency.
The island nation’s tax authority has issued guidance for how wages paid in crypto will be taxed.
Cointelegraph reported on August 17th:
“The national tax authority of New Zealand, the Inland Revenue Department (IRD), has recently published binding rulings and guidance for salaries and bonuses paid in crypto, made under s 91D of the country’s Tax Administration Act of 1994. This ruling applies only to salary and wage earners and not to self-employed individuals, and only for services performed by an employee for a fixed amount and as a regular part of his/her remuneration.”
While this ruling isn’t quite what some crypto enthusiasts hoped for, in terms of classifying crypto as legal tender (like Japan has done), it’s still a huge step forward.
Classifying crypto as an asset results in double taxation and doesn’t make any sense. You can’t tax currency.
Receiving crypto as payment when it’s an asset makes it subject to income tax, and then again subject to capital gains tax when it gets converted to fiat currency. The next logical step then would be for New Zealanders to be allowed to make tax payments in cryptocurrency, as locals have been hoping for some time.
Now all eyes are on the IRS to issue its new guidance for American taxpayers, which the organization has promised to do very soon.
GSB is on the Money
Events taking place so far in 2019 have begun to make clear the effectiveness of the GoldStockBull philosophy and investment strategy. Safe haven assets are seeing incredible gains as a result of increasing global instability and central bank debauchery, with gold, gold mining stocks, and bitcoin providing the best returns anywhere in the market.
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