Election's crypto swing

 

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Bitcoin boosts MicroStrategy's asset value with recent 7.3% surge

Key points

  • The stock market was closed from 29 December onwards, but the crypto market remained open, resulting in a four-day gap for equity investors.  

  • Over the previous 24 hours, Bitcoin increased by 3.6%. On 29 December, Bitcoin's value rose by 7.3% because of a significant rise on 1 January.

News - At the start of 2024, Bitcoin spearheaded a robust rally in the cryptocurrency market, propelling major tokens to notable gains. While both Bitcoin and Ethereum experienced substantial upticks, Solana, Binance Coin, and XRP maintained a more steady trajectory.

Bitcoin boosts corporate returns - The surge particularly benefited companies connected to Bitcoin's performance. MicroStrategy, a company and significant corporate holder of Bitcoin that held 158,400 Bitcoin as of Q3 2023, saw enhanced returns due to its $2.2 billion loan. Similarly, Riot Platforms, after creating and selling Bitcoin in November 2023, held onto 7,358 Bitcoin, increasing its asset value with Bitcoin's rise.

Both companies profited from Bitcoin's recent climb and recovered from a four-day market break.

ETF speculation and market shifts - The expectation of a Bitcoin ETF persists, though its effect remains uncertain. An ETF's U.S. approval might initially depress Bitcoin prices. 

Historically, Bitcoin's trajectory often mirrored that of growth stocks. While a thriving stock market could bolster Bitcoin, any market downturn could threaten its 'safe-haven' status and prompt investors to seek alternative assets. 

IRS mandates reporting for $10k crypto transactions in 2024

Key points

  • U.S. President Joe Biden signed an infrastructure bill with provisions that require digital asset transactions over $10,000 to be reported to the IRS  (Internal Revenue Service).

  • Lawmakers suggested additional legislation to address concerns about the reporting requirements.

News - Aspects of the infrastructure bill signed into law by United States President Joe Biden in 2021 are now in effect. The president enacted the infrastructure bill that widened the crypto transaction reporting duties for brokers to the IRS, especially for amounts over $10,000. 

Many legislators voiced concerns about the bill's implications, arguing that the stipulated broker details, like social security numbers, were challenging to complete within 15 days. These provisions, designed to narrow the U.S. tax gap, were set to roll out in 2023, with reporting beginning in 2024.

Crypto compliance challenges ahead - An executive from Coin Center, a leading non-profit focused on policy issues facing cryptocurrencies, highlighted potential complications. He questioned the implications for miners or validators receiving over $10,000 in rewards and the ambiguity surrounding decentralized crypto exchanges. 

The exec underscored the challenges, especially in anonymous donations made via cryptocurrencies, where identifying the sender became problematic.

Coin Center's proposed solutions - Coin Center proposed a de minimis exemption for crypto transactions and urged the IRS to refine reporting norms. While the IRS had mandated crypto transaction disclosures in 2019, the new infrastructure law might complicate compliance by 2024 without guidance or direction.

LUNC token burn boosts price amid ongoing development-related concerns 

Key points

  • In 2024, Terra Classic showcased its deflationary nature and emphasized its commitment to re-establish the network. 

  • LUNC observed a price surge, which was accompanied by an increase in its Open Interest, indicating a potential continuation of the prevailing price trend.

News - On 1 January 2024, LunaClassic HQ announced that they had burned 100 million LUNC tokens on the Terra Classic blockchain. Data from LUNCMETRICS, which AMBCrypto analyzed, showed a significant increase in LUNC's burn rate, reducing its circulating supply to 5.85 trillion. 

CoinMarketCap data revealed that LUNC's price had risen by about 6% in 24 hours, reaching $0.0001447. Its market cap had also exceeded $845 million, placing it 84th among cryptocurrencies.

However, some concerns arose. Development activity around LUNC decreased, hinting at possible challenges ahead. AMBCrypto's analysis highlighted bearish signs: LUNC's price stability increased, and Terra Classic's RSI stayed below the neutral level, highlighting the market exhaustion.

LUNC and USTC analysis - In the Terra ecosystem, USTC, the stablecoin, experienced positive movement. According to CoinMarketCap, USTC's value rose by 4% in 24 hours, reaching $0.03372. Its market cap surpassed the $302 million mark. Despite this increase, market sentiment regarding USTC was subdued the previous week, with a prevailing bearish sentiment evident in its weighted sentiment.

Crypto voters prioritize inflation and regulation stances for 2024 candidates

Key points

  • Crypto users in the U.S. could be a crucial swing voting bloc in the 2024 elections, given the tight margins in many races.

  • A hypothetical 2024 poll between U.S. President Joe Biden and former President Donald Trump indicated that Trump would lead Biden by 10 points among crypto voters.

News - A recent survey by the Crypto Council for Innovation highlighted that 83% of respondents prioritized a candidate's stance on cryptocurrency regulation for the 2024 election. Former U.S. Senator Cory Gardner, an adviser to CCI, emphasized the growing influence of "crypto voters," indicating that their concerns swayed close electoral contests.

Inflation dominates crypto concerns - The survey, conducted in December 2023 among 454 U.S. voters, revealed that 89% held a favorable view of cryptocurrencies. However, their primary concern, cited by 31%, was inflation and living costs. 

Notably, while crypto supporters leaned towards Democratic candidates, they favored Donald Trump over Joe Biden by a 10-point margin in a hypothetical election face-off, indicating significant split-ticket tendencies.

2024 candidates and their leads - As the 2024 election season approached, both Biden and Trump maintained substantial leads within their parties. However, challenges loomed for both: Biden's handling of international conflicts eroded some Democratic support, while Trump faced legal scrutiny stemming from the 2021 Capitol incident. 

The Republican primaries commenced with the Iowa caucuses on 15 January, where Trump led by a wide margin, followed by Ron DeSantis and Nikki Haley, while pro-crypto candidate Vivek Ramaswamy trailed at approximately 6%. 

Did you know?

  • Dogecoin, a popular meme-based cryptocurrency, started as a joke in 2013 by software engineers Billy Markus and Jackson Palmer. Despite its origins, Dogecoin gained a significant following and has been involved in various charitable efforts and community-driven initiatives.

  • The true identity of Bitcoin's creator, Satoshi Nakamoto, remains a mystery. Several individuals have been suspected, but no conclusive evidence has been provided to confirm Nakamoto's identity.

  • The first-ever block of the Bitcoin blockchain is known as the Genesis Block. Embedded within its data is the text: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." This is believed to be a commentary on the financial system's instability and the reason for Bitcoin's creation.

Top 3 coins of the day

Internet Computer (ICP)

  • The recent surge in Internet Computer's price by 13.8% in 24 hours, despite Bitcoin's sideways movement, underscored ICP's independence from traditional crypto market dynamics. 

  • Its robust utilities, such as the Network Nervous System (NNS) for staking and store of value, contributed significantly to its value. 

What you should know - In 2023, ICP showcased impressive growth, with its value surging by 234% on a year-to-date basis. The coin also exhibited positive signs at the start of 2024. It successfully surpassed the $10 resistance level on 30 December and also overcame the $11.30 hurdle on the same day. However, charts indicated that ICP might be overbought. The Relative Strength Index was 79 at the time of writing. Despite these indicators, with a lack of negative price movements, ICP began 2024 as one of the top-performing altcoins.

Filecoin (FIL)

  • At press time, Filecoin showed robust trading activity with a trading volume of 677,276,708. 

  • Impressively, over the past 30 days, FIL surged by 55.87%, reflecting a prevailing bullish long-term sentiment that underscored the crypto community's optimism.

What you should know - In the last seven days, Filecoin's price increased by 30.74%. However, in the past 24 hours, FIL dropped by 3.10% and was sitting at $7.41 at press time. A slight bearish signal emerged in the crypto market. Nonetheless, the long-term sentiment remained bullish. The total circulating supply of Filecoin was $491,147,711 at the time of writing, and the market cap of FIL stood at $3,665,467,816. An RSI reading of 72 indicated that the market sentiment entered the overbought state, suggesting potential exhaustion among buyers and an increased likelihood of a pullback. 

Ethereum (ETH)

  • With the anticipation surrounding the approval of a spot Ethereum ETF, the macroeconomic impact suggested a potential surge in institutional and retail investment into Ethereum, possibly leading to increased liquidity and price stability, and enhanced market recognition. 

  • The predicted outperformance of Ethereum over Bitcoin in the upcoming period indicated shifting investor sentiments toward altcoins.

What you should know - At the time of writing, Ethereum was priced at $2,378, showing a positive start to the year. The daily chart suggested bullish momentum, with buyers gaining strength after they overcame the $2,272 mark and subsequently surpassed the $2,375 resistance level. Analysis from AMBCrypto suggested that ETH could rise to $2,500. Press time indicators, like the Relative Strength Index (RSI) with a reading below 50, potentially supported a dip from that price point.

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