Taiwan joins growing list of countries developing CBDCs

Taiwan’s central bank is working on developing a central bank digital currency (CBDC) but does not have a clear timeline for when it will be ready for public release, Reuters reported, citing the regulator’s governor, Yang Chin-long.

CBDC pilot is already well underway

The central bank disclosed that a pilot scheme involving the use of a digital wallet for payments had been in operation for the past two years. Yang called this a “closed loop environment” for testing the program under simulated conditions.

To complete the project, Yang specified meeting three specific challenges: communicating the idea with the general public and convincing them of its merits, building a stable system, and developing the legal framework for its use.

However, given the scale of the task at hand, Yang further commented that completing these objectives may take at least two years. And in that time, the central bank would need to re-evaluate its position, especially as locals tend to favor using cash.

“We still have to push forward. After all, most of the young people in the future will use mobile phones, so we have to think about the next generation.”

Still a divisive topic

Despite the trend towards CBDCs, several objections remain unanswered, including the role of retail banks in a CBDC economy, cybersecurity threats, the cost of implementation, and most pressing of all, concerns over privacy.

An article by Pantera, dated July 2021, takes the privacy angle a step further by calling CBDCs a “cyberpunk dystopian nightmare.” In particular, the article posited that transactions would be recorded and monitored. Meaning that the pieces would be in place to censor “enemies of the state.”

“It is about control, censorship, surveillance, and restriction of financial activity.”

The question is, especially considering the actions of certain governments during the health crisis, can we trust authorities not to abuse the power bestowed by a CBDC system?

According to the Atlantic Council, ten countries have launched a CBDC, and fifteen are in the pilot stages of one. A combined total of sixty-seven are either researching or actively developing a CBDC project.

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Bitcoin is Still Due for a “Final Washout” says Fundstrat Analyst

Mark Newton – technical strategist at the investment insights firm Fundstrat – is not convinced that Bitcoin has reached its bottom. He claims there is a significant chance of a “final washout” style event that could take the top cryptocurrency as low as $12,500.

One Last Crash?

As Newton explained in a note to Bloomberg on Tuesday, short-term technicals are pointing to an “above average chance” of a washout style prince plunge before Bitcoin bottoms. This level, which he suspects could be between $12,500 and $13,000, “should be an excellent place for intermediate-term buyers to add to longs,” he wrote.

Despite remaining steady throughout the latter part of last week, Bitcoin’s price dipped to $19,827 early on Wednesday. Its price now tightly fluctuates around the $20,000 level – support that Bitcoin bulls hope to continue holding. This follows a failed attempt to break $22,000 on Sunday, which has since been followed by a steady downward retracement in price.

As is typical, altcoins have suffered worse losses. Coins like Solana, Avalanche, and Shiba Inu are all down over 8% over the last 24 hours, according to CoinGecko.

Sentiment across the Bitcoin community is mixed as to where the asset’s price could go next. On Tuesday, popular Twitter price analyst Plan B surveyed his followers on where they believed the bottom would “be in”. The respondents’ answers were fairly distributed, ranging from Bitcoin’s latest bottom of $17,600 to predictions below $10,000.

The most common prediction, however, was that Bitcoin would bottom somewhere between $10,000 and $15,000 – where Newton expects.

Negative Headlines to Resume

Craig Erlam – senior market analyst at Oanda – also believes Bitcoin’s relative calm last week may be short-lived. If so, he expects “the stream of negative headlines over the last couple of months,” to resume.

“I fear more may follow in the weeks ahead and I wonder whether the community does too, given its inability to get any traction above $20,000,” he said.

Such negative headlines include the multi-billion dollar Terra collapse turned global-scandal in May, which has now caught the attention of the global hacking collective Anonymous. Others include the looming insolvency of multiple crypto platforms like Celsius, which have been forced to freeze user withdrawals to fend off liquidation.

The most recent bear market scandal pertains to the crypto exchange CoinFlex, which is now embroiled in a consequential dispute with Roger Ver over who owes money to whom.

FTX CEO Sam Bankman-Fried also suspects more bearish news, recently claiming that multiple crypto exchanges are still “secretly insolvent.”

Holding Back The Bears: Why Bitcoin Must Break $22,500

Bitcoin continues to struggle to hold the $20,000 level even after a recovery coming out of the weekend. This decrease in price has pushed the market further into the bear market. It still trades at very critical levels which will determine the movement for the next couple of weeks. These two main points are the support that formed at $20,000 and the 200-week moving average.

Bitcoin Turning Bearish?

The price of bitcoin at the time of this writing is ranging towards $20,000 with drawdown. Being so dangerously close to this point is critical in the forecast for the price of bitcoin, and this is despite the fact that bulls have already formed support at $20,000.

Related Reading | Outflows Rock Bitcoin As Institutional Investors Pull The Plug, More Downside Coming?

Another critical technical level is the 200-week moving average which the digital asset is currently trading below. Now, this is the first time in history that the price of BTC has ever fallen below the 200-day moving average, registering one of the most bearish trends ever recorded in the market. As such, there is now significant resistance mounting at the 200-week moving average which lies at an average of $22,500.

This makes $22,500 the point to beat if the digital asset has any hopes of reverting to a bull trend. However, resistance is building even below this point. This was seen at $21,500 over the last couple of days as bitcoin had failed to successfully beat this point.

BTC price struggles to hold $20,000 | Source: BTCUSD on TradingView.com

Additionally, the digital asset price falling below the 200-week moving average has triggered more sell-offs in the market. These sell-offs are apparent on centralized exchanges such as Coinbase which have recorded large inflows in the last couple of days.

Sentiment Refuses To Budge

The market sentiment surrounding bitcoin and other cryptocurrencies has been impressively negative in recent times. It has now spent the majority of the month of June in the extreme fear territory as investors refuse to budge on their decisions to not move more funds into the market.

The same sentiment is resonating through institutional investors who have been pulling out of the digital market en masse. Even the decline in price to levels some would consider a ‘discount’ has not done much to combat this negative sentiment. Institutional investor outflows from bitcoin for the previous week had come out to $453 million.

Related Reading | Ethereum Plugs 11-Week Bleed, why $1,500 May Be On The Horizon

Moreover, the interest in shorter-term positions in BTC is gaining more ground. This is evident in the attention that the ProShares Short Bitcoin has received in the last week. More than $18 million had flowed into the ETF in the first week alone.

Bitcoin is currently trending at $20,000 at the time of this writing. If continues on this trend, the next significant support is existent at $16,500 which could be a shock to the market. 

Featured image from Bitcoinist, chart from TradingView.com

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Bitcoin miners are facing harsher conditions despite easier mining difficulty

Despite the decline in mining difficulty, Bitcoin (BTC) miners are facing harsher conditions in the market due to the rising costs of energy and hardware, Coin Metrics’ special State of the Network reveals.

Coin Metrics said that the BTC mining hash rate has been stable despite the price decline.

Hash rate is the computational power required to create new blocks on the Bitcoin network and mine new ones. Since peaking at 220 EH/s in May, the 30-day moving average has dropped to around 215 EH/s.

Mining difficulty is down

Mining difficulty, another critical metric, has significantly declined. Mining difficulty changes every two weeks to ensure that the interval between each block remains 10 minutes.

Difficulty directly affects profitability as it determines the average time between each block. It recently fell by 2.3%, the second-largest decline this year.

Energy cost is affecting miners

While the mining difficulty is down, the energy cost for Bitcoin mining has increased significantly.

The global energy crunch, inflation, and supply chain issues place miners in an unfavorable situation where they pay more for less energy, resulting in lower revenue.

Source: Coin Metrics

Per the report, out of the top ten states by hash rates in the US, only Texas and Nebraska have seen a reduction in their industrial electric rate. Oklahoma and Georgia rates have increased by more than 20% yearly.

But not all miners feel this increase as some have built relationships with their energy providers, which allows them to hedge against the rise.

Bitcoin miners’ sell-off can keep price down

All these issues have pushed many miners to sell their Bitcoin holdings, a move JP Morgan says will only keep the price of the asset low.

According to strategists at the bank, miners accounted for 20% of all reported BTC sales in May and June. If this continues, it will weigh on the price of Bitcoin during the third quarter.

Which miner will survive this crypto winter?

According to an analysis by Arcane analyst Jaran Mellerud, many miners will find it difficult to survive the current market situation.

Which public #bitcoin miners will be the winners and losers of the bear market?

I analyzed their cash flows and balance sheets to find out.

A thread

— Jaran Mellerud (@JMellerud) June 27, 2022

However, he believes that Argo is the best-positioned miner financially to survive the market. Marathon is the weakest because of its upcoming machine payment, which he believes would drain its liquidity.

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