XRP eyes recovery

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Bitcoin bounces back as declining sell pressure fuels positive price resurgence

Key points:

• CryptoQuant analyst Mignolet revealed that selling pressure on BTC was diminishing.

• AMBCrypto observed a decline in Bitcoin's net deposits on exchanges, falling below the seven-day average.

News - Last week proved unfavorable for Bitcoin investors, due to a substantial dip in the cryptocurrency's value. According to CoinMarketCap data, there was a more than 6% drop in Bitcoin's price over the last seven days, pushing it below the $40,000 threshold.

The consequences - A post from IntoTheBlock highlighted the impact of the recent price correction. The post revealed that Bitcoin's dip to $39,000 significantly affected investor sentiment, with approximately 23% of BTC addresses experiencing losses; a substantial increase from the previous week's 13%.

On the road to recovery? Bitcoin's recent struggles took a positive turn with a more than 1% surge in its value over the last 24 hours, reaching $39,923 and boasting a market capitalization surpassing $782 billion. Adding to the optimism, CryptoQuant analyst Mignolet revealed that selling pressure on BTC was diminishing.

It is also worth noting that AMBCrypto observed a decline in Bitcoin's net deposits on exchanges, falling below the seven-day average. This suggests increased investor buying, hinting at a potential price surge and making it likely for Bitcoin to surpass $40,000 level this week.

U.S. SEC's crypto crackdowns reach 10-year high under Gensler's leadership

Key points:

• In 2021, the number of crypto-related enforcement actions, including litigation or administrative proceedings, amounted to 20. 

• Under Gensler's leadership, the SEC's action on crypto-related matters rose by 50% in 2022 and over 53% in 2023.

News - A 24 January report by Cornerstone Research revealed that the U.S. SEC's crypto-related enforcement cases in 2023 reached their highest level since 2013, underscoring the commission's  increased attention towards digital assets.

Gensler's vendetta?

• Notably, in 2021, the year Gary Gensler's nomination as commission chair was confirmed by the U.S. Senate, the number of crypto-related enforcement actions, including litigation or administrative proceedings, amounted to 20. 

• Under Gensler's leadership, the SEC's action on crypto-related matters rose by 50% in 2022 and over 53% in 2023.

• In 2023, the U.S. SEC took legal action against 46 cryptocurrency firms, surpassing the number recorded in 2021 by more than twice.

• Out of the 46 enforcement actions, Cornerstone Research reported that the SEC imposed $281 million in monetary penalties for settlements and tripled the count of administrative proceedings compared to 2022.

• Even at the time of writing, legal actions against major exchanges, including Binance, Coinbase, Terraform Labs, Ripple, and Kraken, were still underway.

• To this end, critics within the crypto community have voiced objections to Gensler's adoption of a "regulation by enforcement" strategy for digital assets in the U.S., pointing out the absence of a clear framework for companies to follow.

XRP's resilience sparks hope for a recovery amid ongoing price correction

Key points:

• Despite bearish price action, XRP's sentiment surprisingly turned positive.

• The token also sustained high social volume last week, showcasing its continued popularity in the crypto space.

News - Recently, XRP experienced a significant decline in its network activity, indicating a diminished interest from users. This decline in key network metrics was mirrored by a corresponding drop in the token's price.

Sailing in choppy waters - Over the past month, XRP saw a decline in network activity, with daily active addresses consistently dropping after a spike on 30 December. Additionally, both transaction count and volume decreased, reflecting reduced network engagement.

XRP's price followed a similar trend, witnessing a double-digit decline in the past month. Over the last seven days alone, the token's value dropped by almost 10%, reaching a press time trading value of $0.5139. 

A silver lining - Notably, as the token's price plummeted, whales seized the opportunity to purchase. Despite bearish price action, XRP's sentiment surprisingly turned positive, with Santiment's data showing a dominant bullish outlook marked by an upward shift in weighted sentiment. The token also sustained high social volume last week, showcasing its continued popularity in the crypto space. 

Florida tops list for crypto tax friendliness among U.S. states

Key points:

• Florida leads in cryptocurrency tax favorability due to no state income tax and crypto-friendly regulations.

• New York proves challenging due to its high 10.9% income tax rate and regulatory complexities linked to the BitLicense framework.

News - According to CoinLedger data, Florida is considered the best state for cryptocurrency taxes in the United States, while New York is ranked as the least favorable state in this regard.

Both ends of the spectrum - 

• Florida leads in cryptocurrency tax favorability due to no state income tax and crypto-friendly regulations. A pilot program allowing businesses to pay state fees in crypto further enhances its standing.

• Texas and Wyoming, trailing behind Florida, stand out with 0% state income tax, supportive crypto policies, and provisions allowing banks to act as crypto custodians.

• Ranking as the fourth-best state for crypto taxes, Nevada also imposes no state income tax on crypto. Additionally, it holds the distinction of being the first state to prohibit local governments from taxing blockchain usage in 2017.

• Earning the title of the least favorable state for cryptocurrency taxes, New York proves challenging due to its high 10.9% income tax rate and regulatory complexities linked to the BitLicense framework.

• Ranking second from the bottom is California, followed by Hawaii, Massachusetts, and New Jersey. These states share high income tax rates, ranging from 1%-13.3%, 11%, 5%–9%, and 1.4%–10.75%, respectively.

Why is it important to know this? CoinLedger CEO David Kemmerer stressed that investors must understand local tax policies, as some crypto investors could lose profits due to their state's tax rates.

More stories from the crypto ecosystem

• What’s next for DOGE as markets fight for control

• SHIB bulls rejoice as price bounces back, fueling expectations of an uptick

• Solana NFTs thrive as blue chips capture investor interest

• LUNC staking gains momentum as price chart shows signs of recovery

• OP holders unfazed as 83% remain profitable amid recent downtown

Crypto scams uncovered

• Prodeum operated under the guise of an agricultural blockchain project. It conducted a small-scale ICO in 2018, only to abruptly close after collecting funds. Its sudden shutdown left investors with significant financial losses and served as a reminder of the risks associated with unregulated ICOs.

• MiningMax was a Ponzi scheme disguised as a cryptocurrency mining operation. Operating in 2017, it promised high returns on investment in mining activities but ultimately defrauded investors, dashing the hopes of trusting individuals who believed in the project. 

• Centra Tech, known for celebrity endorsements, conducted an ICO by making false partnership claims. The founders faced legal action for fraudulently raising $25 million from investors. The incident emphasized the importance of due diligence when participating in ICOs.

Top 3 coins of the day

Cardano (ADA)

• On 14 January, Cardano's transaction volume fell from around 600 million dollars to approximately 300 million dollars.

• On 23 January, Santiment reported that Cardano continues to lead the cryptocurrency market in development activity. 

What you should know - For the last 7 days, ADA has been in a downward trend, thus declining by 7.0%. In the past 24 hours, the crypto rose by 0.8%, reaching a press time value of $0.47. The RSI's reading of 38, below the 50-mark, highlighted a strong selling bias. If the bulls keep the token's price above the $0.45 support level, it is expected to challenge its resistance at the $0.60 mark.

Polkadot (DOT)

• DOT's price has fallen by almost 30% in the last month, according to data from CoinMarketCap.

• An on-chain assessment of the network activity on Polkadot revealed that it has witnessed a fall in user activity since the year began.

What you should know - Following a rejection at the $9.60 mark less than a month ago, DOT has been in a downward trend. Over the past week the crypto fell by 10.3%. At press time, DOT was trading at $6.45 after a dip of 1.1 over the last 24 hours. While the token has stayed strong above the support at $6.0, the awesome oscillator flashing several red histograms below the midline, suggested that bullish momentum may continue for a while; causing DOT to test the $6.0 level.  

Avalanche (AVAX)

• Avalanche's NFTs have managed to attract and retain users on its network, with a notable surge in both new and returning NFT users over the last six months.

• Avalanche's lack of progress in other sectors resulted in a 94% decrease in the protocol's revenue within the last month.

What you should know - Following a rejection at the $50 mark last month, AVAX has been in a downward trend. Over the past week, the token fell by 14.9%. At press time, AVAX was changing hands at $29.78, following a 5.5% dip in its value in the last 24 hours. The MACD revealed red histograms below the half-line as the lines were bound south, indicating that sellers were in command. The Fear & Greed Index displayed a score of 42 (Fear), suggesting that investors may be inclined towards heightened selling activity, potentially contributing to a more bearish market sentiment.