Daily Archives: April 22, 2022

Bitcoin extended gains above $42,500 against the US Dollar. BTC struggled near $43,000 and started a sharp downside correction.

• Bitcoin started another decline after it failed to clear the $43,000 resistance zone.
• The price is now trading below $41,000 and the 100 hourly simple moving average.
• There was a break below a major bullish trend line with support near $41,250 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair could attempt a fresh increase, but the $41,000 resistance holds the key.

Bitcoin Price Dips

Bitcoin price remained well bid above the $41,500 resistance zone. BTC gained pace and cleared the $42,000 resistance zone. It even moved above $42,500 and the 100 hourly simple moving average.

However, the bulls failed to push the price above the $43,000 level. A high was formed near $42,950 and the price reacted to the downside. There was a sharp move below the $42,000 level. Besides, there was a break below a major bullish trend line with support near $41,250 on the hourly chart of the BTC/USD pair.

There was a break below the 50% Fib retracement level of the upward move from the $38,750 swing low to $42,950 high. Bitcoin is now trading below $41,000 and the 100 hourly simple moving average.

The price is now consolidating above the 61.8% Fib retracement level of the upward move from the $38,750 swing low to $42,950 high. An immediate resistance on the upside is near the $40,750 level. The next key resistance could be $40,950 and the 100 hourly simple moving average.

Source: BTCUSD on TradingView.com

To start a strong upward move, the price must settle above the $41,000 zone and the 100 hourly simple moving average. If the bulls succeed, the price could rise towards the $41,800 resistance zone.

More Losses in BTC?

If bitcoin fails to clear the $41,000 resistance zone, it could continue to move down. An immediate support on the downside is near the $40,250 level.

The next major support is seen near the $40,000 level. A downside break below the $40,000 zone could send the price towards the $39,250 support zone.

Technical indicators:

Hourly MACD – The MACD is slowly losing pace in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now below the 50 level.

Major Support Levels – $40,250, followed by $40,000.

Major Resistance Levels – $40,750, $41,000 and $41,800.

The United States Office of the Comptroller of the Currency, or OCC, has said it intends to pursue cease and desist proceedings against cryptocurrency custody bank Anchorage Digital for violating certain anti-money laundering requirements.

In a Thursday announcement, the OCC said it issued a consent order against Anchorage Digital based on its “failure to adopt and implement a compliance program” in accordance with required Bank Secrecy Act, or BSA, and AML standards. The government bureau said such actions placed Anchorage Digital in violation of its operating agreement with the OCC, established in January 2021.

“The OCC holds all nationally chartered banks to the same high standards, whether they engage in traditional or novel activities,” said Michael Hsu, acting comptroller of the currency. “When institutions fall short, we will take action and hold them accountable to ensure compliance with federal laws and regulations.”

Anchorage neither admits nor denies the comptroller’s findings, but the order reported the bank has “begun corrective action and is committed to taking all necessary and appropriate steps to remedy the deficiencies.” A consent order, by definition, implies two parties — in this case, Anchorage and the OCC — have reached an agreement in principle on moving forward.

In a statement to Cointelegraph, Anchorage Digital said it had “already been working to strengthen the areas identified [by the OCC] and will continue to bolster these areas, reinforcing a new, digital asset standard for internal BSA/AML controls and procedures.” The bank hinted that the OCC’s actions might help establish a regulatory precedent that could encourage other firms in the space to set up federally regulated digital asset banks.

According to the OCC, there is a 15-day deadline to establish a committee for “specific corrective actions” to ensure the bank is in compliance with the AML and BSA requirements, and issue progress reports on the plan as it is executed. In addition, the government bureau ordered Anchorage make a BSA officer available to ensure compliance.

Related: OCC Comptroller calls for federal collaboration with crypto intermediaries

Anchorage was the first crypto firm in the United States to receive a national bank charter from the OCC in January 2021. Since his departure from the government bureau, former Acting Comptroller of the Currency Brian Brooks was briefly the CEO of Binance.US and now the CEO of crypto mining firm Bitfury.

A study from the Bank of Canada found that Bitcoiners on average have lower financial literacy than those who don’t own Bitcoin (BTC).

The study was compiled from four years of annual surveys from 2016 to 2020, with the sample sizes ranging anywhere from 1,987 to 3,893 respondents.

The Bank of Canada’s full study is titled “Bitcoin Awareness, Ownership and Use: 2016-20” and was published on April 19. A key conclusion from the study was that:

“Bitcoin owners displayed greater knowledge about the Bitcoin network than nonowners, yet they scored lower on questions testing financial literacy.”

However the financial literacy testing was based on just three multiple choic questions that focused on interest rates, inflation and stock/mutual fund comprehension. The three Bitcoin questions focused on supply, the digital ledger and whether the network is backed by the government or not.

Given the limited number of questions the idea they can accurately gauge someone’s financial literacy is arguable. On the other hand, the questions are pretty easy.

The Bank of Canada’s researchers emphasized that the “interaction between financial literacy and participation in the market for crypto assets” is important to explore, as there are many risks associated with the sector that could be potentially avoided via further education.

Bitcoiners

The data found that over the four years, the average Bitcoin hodler fell in the demographic of young males aged between 18-and 34, and men accounted for at least double the number of women each year. The  gender gap has been a long-running and widely reported subject in crypto’s short history.

“Overall, marginal effects are consistent with descriptive findings already discussed. We find that the probability of Bitcoin ownership decreases with being female, older and unemployed, but increases with education,” the report reads.

In terms of a specific type of Bitcoin hodler, the report suggests that young educated men who scored low on financial literacy but earned more than $70,000 were the most typical type:

“In particular, Canadians who were young, male, employed, had a university degree, high household income and relatively low financial literacy were more likely to own Bitcoin.”

Related: 3.6M Americans to use crypto to make a purchase in 2022, research firm predicts

Non-bitcoiners

On the other end of the spectrum, those that scored high on financial literacy were “more likely to be aware of Bitcoin but less likely to own it.”

Notably, the reasons offered in the study for not owning Bitcoin that polled the most each year weren’t necessarily anti-Bitcoin, with a lack of understanding and current payment methods being satisfactory being the main answers.

After those two reasons, the next highest reason each year was that respondents didn’t “trust a private currency that is not backed by a government.”

“We find that between 2018 and 2020, the level of Bitcoin awareness and ownership among Canadians remained stable: nearly 90% of the population were aware of Bitcoin, while only 5% owned it.”

An individual survey from this study dubbed “Cash Alternative Survey” was previously reported on by Cointelegraph, with the report suggesting that Canadians with a lower level of understanding of finance could be twice as likely to invest in crypto.

European Union (EU) officials discussed banning Bitcoin trading during a debate on a proposal to ban Proof of Work mining according to documents obtained through a freedom of information request. 

According to a report, published by German digital culture organization Netzpolitik, officials from the EU went as far as suggesting that an all out ban on trading Bitcoin (BTC) should be enforced in order to curb its overall energy consumption.

The most worrying comments from the crypto community’s perspective came from a document that detailed the minutes from an EU meeting with Sweden’s financial supervisor and an environmental protection agency in which officials suggested that regulators pressure the Bitcoin community to switch to a Proof of Stake (PoS) mechanism, instead of its current energy-intensive Proof of Work (PoW) mechanism. A unidentified official in the discussion said:

“Ethereum started moving [to PoS] because of its community…if Ethereum is able to shift, we could legitimately request the same from BTC. We need to ‘protect’ other crypto coins that are sustainable. We don’t see [the] need to ‘protect’ the Bitcoin community.”

Another unnamed speaker suggested that the EU could reasonably place a blanket ban on trading any crypto assets that used a PoW algorithm.

The answer to this question was redacted in the document to protect the “ongoing decision-making process,” but it brings attention to the fact that the EU was seriously considering such dramatic regulation.

When discussing the potential effect of an outright Bitcoin ban on investors and retail traders the officials were largely unconcerned, claiming that all Bitcoin investors are fully aware of downside risk.

“Participants in BTC are fully aware of the volatility of the currency/investment risk. [We] do not need additional protection measures.”

This report comes as Bitcoin’s energy usage continues to draw attention from environmental organizations and regulators. According to the University of Cambridge’s Bitcoin Electricity Consumption Index, Bitcoin mining currently consumes roughly 139 terawatt hours (Twh) of electricity every year. For comparison, the entire UK only used an estimated 265 Twh in 2021, according to Statista.

At the end of March, Ripple co-founder Chris Larsen teamed up with Greenpeace to pressure Bitcoin to change its consensus mechanism to PoS, much like Ethereum intends to do later this year.

The EU’s Economic and Monetary Affairs committee recently voted against legislation calling for a ban on Proof-of-Work mining. However, these documents do provide unique insight into the lengths that some EU officials are willing to go to in order to crack down on mining-related energy usage.

While it appears that PoS cryptocurrencies remain safe from sweeping regulatory action in the near-term, Bitcoin mining will continue to be a contested issue in the EU.

Elon Musk’s electric car company, Tesla, is hodling bitcoin. The company’s balance sheet shows $1.261 billion in digital assets. Tesla has neither purchased nor sold any crypto assets since the first quarter of last year.

Tesla Continues to Hodl Bitcoin

Tesla released its earnings results for the first quarter of 2022 Wednesday. Elon Musk’s electric car company reported another record quarter of sales and profit exceeding Wall Street estimates despite inflation pressure.

The company’s revenue rose 81% to $18.76 billion from $10.39 billion a year ago. Its earnings jumped 658% from $438 million in the previous year to $3.32 billion in the first quarter of this year. “I’ve never been more optimistic and excited in terms of the future than I am right now,” Musk said during Wednesday’s earnings call.

Amid record profit, Tesla’s balance sheet shows net digital assets of $1.261 billion.

Tesla’s statement of cash flows still shows that the company’s only purchase of digital assets happened in the first quarter of last year when it bought $1.5 billion worth of BTC. The only sale of digital assets also happened in the same quarter.

In January, Tesla began accepting the meme cryptocurrency dogecoin for some merchandise. However, the company has yet to bring back bitcoin as a payment option.

Musk has said that he sees bitcoin as a store of value whereas dogecoin is better suited for transactions. He previously revealed that he personally owns bitcoin (BTC), ether (ETH), and dogecoin (DOGE) — and will not sell them.

The Tesla boss has recently made an offer to buy Twitter Inc. with the aim to make “significant improvements” to the platform. The offer followed him taking a 9.2% stake in the social media giant. Musk has reportedly secured $46.5 billion to buy Twitter.

What do you think about Tesla hodling bitcoin? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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