Crypto News Headlines (02-Feb-2022)

The SEC has asked Bitwise to clarify how the investment firm will prevent share manipulation, fraud and other potential issues in its proposed spot bitcoin ETF, according to a notice to the company on Tuesday.

The agency also flagged its concerns about the Bitwise Bitcoin ETP Trust’s liquidity and transparency and requested more color on the “suitability” of bitcoin as the underlying asset for the fund.

The SEC’s request veered from its serial denials to date of other proposed spot Bitcoin ETPs.

Over the past two months, the agency has rejected applications from WisdomTree, Krypton, SkyBridge and Fidelity. It is weighing a number of other applications from investment firms.

Last December, the SEC delayed a decision on the spot bitcoin applications of Bitwise and Grayscale, a unit of Digital Currency Group, which is the parent company of CoinDesk.

Bitwise will have 21 days to respond to the SEC’s concerns.

Blockchain mining’s massive carbon footprint is impossible to justify — and puts it in the crosshairs of global environmental legislation.

t was only a matter of time before China slapped a ban on Bitcoin (BTC) mining, trading and crypto services. To do anything with Bitcoin anywhere in the People’s Republic, one needs a special exemption. The Chinese government’s given reason for the Bitcoin crackdown is to reduce its well-documented climate impact. Regardless of the amount of truth in this explanation, one thing is clear: China’s righteous anger toward electricity-guzzling and carbon-spewing mined cryptocurrencies in the service of Earth’s climate is only the first shot in an impending global showdown over Bitcoin and other crypto projects that rely on proof-of-work (PoW), the complicated crypto security mechanism we subsume under “mining.” This does not seem like a battle crypto can or will win.

For many cryptocurrency enthusiasts who are holding Bitcoin, this is a difficult realization to face. Luckily, there is a helpful parallel, and it even has the same name: coal mining. Coal is on its last legs because there are cleaner, cheaper, more efficient and more technologically advanced alternatives.

Bitcoin started February, a seasonally strong month for speculative assets, in green, as investors seemed ready to increase their exposure to risk assets.

At the time of publication, the oldest cryptocurrency was trading at a little below $39,000, up about 1% over the past 24 hours, according to CoinDesk data. Ether, the second-biggest cryptocurrency by market capitalization, was up to $2,800, a more than 4% gain over the same time period.

According to Danny Chong, co-founder of Binance Smart Chain-based yield-enhancing asset tracker Tranchess, new investors, whether retail or institutional, may have entered the crypto market amid the lower prices in recent weeks.

“Compared to the traditional financial market, the crypto market is significantly smaller in market [capitalizations], enabling modest changes to create a more noticeable impact,” Chong said via a representative. “With rapid support at current levels as well as added liquidity from new and current users, a market rebound can happen relatively quickly as market sentiments turn positive.”

Data compiled by CoinDesk shows that bitcoin’s trading volume across major centralized exchanges on Tuesday was slightly lower than a day ago. As mentioned in previous First Mover Asia columns, major Asian markets are expecting a slowdown this week because many traders and investors are taking time off for the Chinese New Year/Lunar New Year celebrations.

El Salvador’s government today announced it contracted U.S. software company AlphaPoint to fix its buggy state-sponsored Bitcoin wallet—and implement the Lightning Network.

New York-based AlphaPoint started improving the Chivo wallet in December, the company confirmed today to Decrypt. It improved the wallet’s user interface, fixed various bugs, and installed a feature so it can handle the Lightning Network.

The Lightning Network is a “second-layer solution” that speeds up Bitcoin transactions, while reducing costs. Its proponents claim it will help people spend Bitcoin on everyday transactions.

“AlphaPoint has improved the Lightning integration for nearly instantaneous low-fee Bitcoin transactions via QR and Lightning addresses,” AlphaPoint co-founder and CEO Igor Telyatnikov told Decrypt. “This is the first deployment of Lightning at this scale.”

Cryptocurrencies are starting to stabilize after falling in January, and some analysts expect prices to recover this month, especially as several alternative cryptocurrencies (altcoins) outperformed bitcoin over the past week.

Bitcoin was roughly flat over the past 24 hours, versus a 2% gain in ether (ETH) and a 10% gain in SOL over the same period. Metaverse tokens such as MANA and SAND failed to sustain Monday’s rally as both tokens declined as much as 5% over the past 24 hours.

On Tuesday, Indian Finance Minister Nirmala Sitharaman announced a 30% tax on any income from the transfer of virtual digital assets, a first for the nation. “India is finally on the path to legitimizing the crypto sector in India,” said Nischal Shetty, co-founder and CEO of WazirX, one of India’s largest crypto exchanges. The announcement didn’t trigger a significant market response.

Analysts expect regulatory headwinds to fade over the short term, which could boost investor sentiment. For example, the crypto Fear & Greed Index is starting to rise from extreme lows, indicating more bullish activity. And in the bitcoin futures market, there are signs of a pending short squeeze, which occurs when prices unexpectedly rise, forcing short sellers to exit positions.

For now, some buyers continue to return on dips. MicroStrategy (Nasdaq: MSTR), the software company that’s taken to accumulating bitcoin, said it bought about 660 bitcoins for about $25 million between Dec. 30 and Jan. 31.

Technical indicators suggest a possible rise in BTC could be limited at the $40,000-$45,000 range as long-term momentum weakens.

Leading NFT marketplace OpenSea generated more than $5 billion in total trading volume in January between Ethereum and Polygon sales, breaking the previous record from August 2021.

Public blockchain data collected by Dune Analytics shows that OpenSea had more than $4.95 billion of Ethereum trading volume in January, plus over $79 million on Polygon, a sidechain scaling solution for Ethereum. Both are single-month records for each respective platform.

OpenSea’s previous Ethereum peak came in August 2021 as the NFT market exploded following a subdued summer, topping $3.4 billion in trading volume for the month. Meanwhile, the marketplace’s previous Polygon record was set in December with $76 million, as NFT trading on the scaling solution has steadily increased in recent months.

On the Ethereum front, OpenSea had its best single day in months yesterday, January 31, with $233 million worth of NFT trading. It’s one of four single days above the $200 million mark for Ethereum trading in January for the marketplace.

Crypto donations to privacy focussed non-profit The Tor Project surged 841% in 2021 compared to the previous year, according to a blog post from Monday.

The Tor Project is a non-profit which steers the development of the privacy network and web browser Tor. Tor aims to empower people by helping them achieve better online privacy. On Jan. 31, the team published the results of their biggest fundraising drive, which took place over the last few months of the year.

Of $940,000 raised, 58% of donations were from cryptocurrencies. This is a much larger percentage compared to 2020, when donors sent $58,000 in crypto.

“It’s clear that cryptocurrency folks are extremely philanthropic, and that they care deeply about privacy online,” The Tor Project fundraising director Al Smith told CoinDesk.

Of the crypto donations, 68% ($371,000) where in the form of bitcoins, 28% ($154,000) were ether, 2% ($9,000) DAI, and 1% ($7l) was monero, a privacy-minded cryptocurrency.

The cryptocurrency community is more privacy-conscious than most, as is illustrated by bitcoin’s creator, Satoshi Nakamoto, who hid his or her real name and identity when launching the digital currency back in 2009.

Crypto is not illegal as it is taxed like gambling win, says govt officia

All the major After years of dilly-dallying on how to treat cryptocurrencies, the government’s budget Tuesday proposed taxing income from the transfer of virtual assets at 30%.

The Indian government said it doesn’t treat trading in crypto assets as illegal, a day after it announced taxing such transactions just the same as winnings from gambling.

“They are in a grey area. It’s not illegal to buy and sell crypto,” Finance Secretary TV Somanathan said in an interview to Bloomberg Television. “We have now put in a taxation framework that treats crypto assets the same way we treat winnings from horse races, or from bets and other speculative transactions.”

(Bloomberg) — Bitcoin continues to trade below a valid line of resistance drawn from the token’s record peak of $69,000 in November. The small recovery in January saw a so-called “shooting star” candlestick occur right at the trendline barrier, which pushed prices down by 24% to as low as $32,970 last week. The rebound since has swung Bitcoin back to this trendline, and a break above it will bring into focus the next cluster of Fibonacci resistance — which is near $40,000.

Cryptocurrency start-ups are having a solid start to the year, bagging hundreds of millions of dollars in fresh cash even as investors grow wary about a steep drop in digital asset prices.

Several privately-held firms announced bumper cash injections in January. Crypto exchange FTX and its U.S. affiliate raised a combined $800 million, valuing the companies at $32 billion and $8 billion respectively.

Fireblocks, a crypto infrastructure start-up, was valued at $8 billion in a $550 million round, while rival Blockdaemon scored $155 million on a $1.3 billion valuation. It’s worth noting some negotiations for these deals likely began late last year.

It follows a blockbuster year for both cryptocurrencies and the ventures being developed to support the growth of the industry. Crypto and blockchain start-ups raised a record $25 billion in 2021, marking an eightfold increase year-on-year, according to CB Insights data, as venture capitalists sought to ride a rally in bitcoin and other tokens.