Ripple price declined recently, but it managed to stay above the $0.3480 support against the US dollar.The price must stay above the $0.3480 support to avoid a downside break in the near term.There are a couple of short term bearish trend lines in place with resistance near $0.3595 on the hourly chart of the XRP/USD pair (data source from Kraken).The pair could start a major downside move if it settles below the $0.3480 support level in the near term.Ripple price is currently consolidating against the US Dollar and bitcoin. XRP bulls might lose control if there is a downside break below the $0.3480 support area.Ripple Price AnalysisIn the past few sessions, we mostly saw range moves below $0.3700 in ripple price against the US Dollar. Earlier, the XRP/USD pair made a few attempts to break the $0.3700 and $0.3740 resistance levels. However, bulls failed to gain bullish momentum above $0.3740 and the price retreated from highs. It broke the $0.3650 support and settled below the $0.3600 level plus 100 hourly simple moving average. The recent swing low was formed at $0.3488 and the price is currently consolidating in a tight range.It is currently trading near a short term bearish trend line at $0.3520 and the 23.6% Fib retracement level of the recent decline from the $0.3696 high to $0.3488 low. An immediate resistance is near the $0.3560 level and the 100 hourly SMA. Besides, there is another short term bearish trend line in place with resistance near $0.3595 on the hourly chart of the XRP/USD pair. It coincides with the 50% Fib retracement level of the recent decline from the $0.3696 high to $0.3488 low.Therefore, a break above the trend line and $0.3600 might clear the path for more gains. The next key resistance could be near $0.3700, above which the price is likely to test the key $0.3740 resistance. On the other hand, the $0.3480 support holds the key. If bulls fail to protect the $0.3480 support, there could be a sharp drop. The next major support is near the $0.3250 level, where buyers are likely to emerge.Looking at the chart, ripple price seems to be approaching the next key break either above $0.3600 or below $0.3480. As long as bulls continue to protect the $0.3480 support, there could be a solid upward move in the near term.Technical IndicatorsHourly MACD – The MACD for XRP/USD is slowly moving in the bullish zone.Hourly RSI (Relative Strength Index) – The RSI for XRP/USD bounced back recently and moved above the 50 level.Major Support Levels – $0.3510, $0.3480 and $0.3250.Major Resistance Levels – $0.3595, $0.3600 and $0.3700.
Archives for April 9, 2019
ETH price corrected lower and found support near the $174 level against the US Dollar.The price found a strong buying interest and it is currently moving higher towards $185.Yesterday’s highlighted important bullish trend line is active with support at $175 on the hourly chart of ETH/USD (data feed via Kraken).The pair is showing positive signs above the $175 level and it could continue to move higher.Ethereum price is holding key support levels versus the US Dollar and bitcoin. ETH is slowly climbing higher and it is likely to continue towards the $184 and $185 levels.Ethereum Price AnalysisRecently, there was a fresh downside correction from the $188 swing high in Ethereum price against the US Dollar. The ETH/USD pair declined below the $184 and $180 support levels. The price even broke the $176 level, but it found a strong buying interest near the $174 level. Moreover, the 61.8% Fib retracement level of the last leg from the $164 low to $188 high acted as a support. The price formed a decent support base above the $174 level and it recently moved higher.It broke the $176 resistance and the 23.6% Fib retracement level of the recent drop from the $188 swing high to $174 low. More importantly, there was a break above a connecting bearish trend line with resistance at $177 on the hourly chart of ETH/USD. It opened the doors for more gains and the price recently tested the $180 level. It seems like the 50% Fib retracement level of the recent drop from the $188 swing high to $174 low is acting as a short term resistance.If the price corrects lower, it is likely to find a decent buying interest near the $176 or $175 levels. Besides, yesterday’s highlighted important bullish trend line is active with support at $175 on the same chart. Therefore, it seems like Ethereum remains well supported on the downside near the $175 and $174 levels. On the upside, a break above the $180 level could push the price towards the $184 and $185 resistance levels.Looking at the chart, Ethereum price is placed nicely in a positive zone above the $174 swing support. Only a close below the $174 level and the 100 hourly simple moving average could start a fresh decline. If not, the price is likely to continue higher towards $185. Above $185, the next stop for buyers could be near $188 or $190.ETH Technical IndicatorsHourly MACD – The MACD for ETH/USD is slowly gaining momentum in the bullish zone.Hourly RSI – The RSI for ETH/USD climbed higher above the 50 and 55 levels.Major Support Level – $175Major Resistance Level – $185
Pete Rizzo is editor for CoinDesk.
Binance, I would argue, is emerging as the case study for growing a cryptocurrency business, a success that’s much needed in a community that spends too much time talking up the potential of its technology and too little time analyzing viable go-to-market strategies that can drive the technological sea change we foresee.
In that regard, I think the market is only just beginning to understand just how visionary Binance is and what its success – in terms of market timing and product impact – says about something we all are striving to find: a model for building scalable and impactful cryptocurrency businesses.
Indeed, at a time when many cryptocurrency startups are going through pivots and layoffs, Binance feels as if it’s hitting its stride, offering a deeper level of new, innovative products that are moving the industry forward in just the right ways at just the right times.
It’s a feat made more complex by the boom-bust nature of the cryptocurrency market, in which opportunities for user growth come and go quick and wherein the great majority of cryptocurrency startups overthink execution and fail to adapt thereafter.
But after observing Binance for over a year now, it’s clear there’s no business that has been as deliberate in taking advantage of the cyclical nature of the cryptocurrency market and its ebbs and flows.
Binance has only been around since 2017, but it has evolved significantly in its short life, in ways that show the impeccable thinking of its company and leadership.
Over the past 12 months, Binance has expertly shifted through three stages:
- It delivered tested technology – a working crypto-to-crypto exchange offering buying and selling services in all but 15 countries – at a time when market conditions made it possible to massively capture users.
- As the market downturn began, and other exchanges lost momentum, it shifted to incentivizing users to adopt value-adding products, such as Binance LaunchPad, which propels the sale of new cryptocurrencies directly through its exchange.
- Now, with its investments in its forthcoming decentralized exchange, it may well be poised to disrupt itself in ways that further legitimize the cryptocurrency industry.
Buckets Of Rain
Focusing on this last idea, it’s safe to say now that in the world of cryptocurrencies, there are two seasons: drought and monsoon.
I like this analogy because it implies its logic viscerally. There are times when acquiring new users (rain) is relatively easy (and when spending capital to acquire new, novice users is advantageous), and there are times (drought) when doing so is fruitless (when the costs of acquiring those users are prohibitively high).
In the case of Binance, its launch time – in the middle of the summer 2017 boom – couldn’t have been better. As the rising tide would lift all boats, it perhaps obfuscated what actually occurred.
A seasoned industry veteran – CZ cut his teeth working at Blockchain and OKCoin, two early cryptocurrency success stories that later succumbed to fatigue – read the tea leaves, and executed a deft go-to-market strategy. Because CZ had spent years building trading systems (in crypto and externally), he was able to raise money via an ICO and deploy a battle-tested technology into an environment hungry for alternative assets (at a time when most exchanges were constrained by U.S.-dollar trading and the regulation in brought).
Here CZ made two decisions whose brilliance is only now becoming apparent.
One, he chose not to allow trading in fiat currencies, thus sidestepping the regulatory issues inherent with government currencies. And two, he built a team that could and did supply the infrastructure necessary to serve the obvious market demand (by quickly and capably adding new crypto markets).
By rapidly adding to the choice of crypto assets that its clients could invest in, Binance scaled to 3 million users in just six months.
An antithesis can be found in Coinbase’s business model. While the San Francisco exchange’s overall user growth was more impressive than Binance’s (they topped 20 million users in 2017), one can’t as easily argue that they evolved the business as well.
Coinbase spent most of the 2017 bubble selling only a handful of assets (four in total), and benefiting from its position as the easiest fiat on-ramp for consumers. It wasn’t until 2018, when the entrance of new users had drastically slowed, that it began launching new assets, though this was largely amidst a period of waning consumer interest.
The end result was that, during the last cycle, Coinbase was essentially an onboarding platform for Binance, meaning users who started at Coinbase and other fiat exchanges were quickly forced, by virtue of its limited asset supply, to look for services elsewhere.
There were few other options and even fewer teams that executed as well.
The Miraculous BNB
But if it was heretical not to enable trading in U.S. dollars, CZ didn’t just stop there.
Another aspect he seemed to implicitly understand was that since competitors could easily replicate his strategy of offering many cryptocurrencies, he would need built-in incentives to keep users on the exchange. Enter: Binance Coin.
Binance Coin (BNB) seemed like an excuse for an ICO at the time, but it’s since been revealed to be a brilliant way to encourage repeat business.
By offering traders a way to speculate on a token that floated on a public market, and by enabling the exchange’s fees to be paid in that coin, Binance seems to have created a virtuous cycle by which its users were incentivized to stay within its platform.
Binance Coin now has an insanely large market cap of $2.3 billion, a number that has been growing a-cyclically in a down market).
(Note: This is not an argument so much for the present valuation of BNB, nor an analysis of what that can or should be, but an acknowledgement that Binance Coin is an innovation that the market should and is in the process of valuing).
Not content to rest on those laurels, Binance has created a network of additional products around BNB coin, such as “LaunchPad,” a service that conducts ICOs payable in BNB, thus further extending and incentivizing its ecosystem. (If you don’t think this is impressive, again, remind yourself this is a company that, despite its now 300+ employees, hasn’t lost its timing).
With incentives so well aligned, other exchanges have been rushing to replicate the model, including Huobi, OKcoin and a slew of other smaller exchanges.
That this is likely to become a staple of the exchange business model seems like a foregone conclusion. Could there seriously be a crypto exchange business that isn’t studying what has been created here and thinking about what it means for their business?
I doubt it, as the need for such solutions can be seen across the exchange sector.
Kraken, for example, raised its recent $100 million funding round largely from its users, the logic being that those who invest in its future will be more likely to stay, thus providing liquidity, product feedback and other valuable input.
The message is clear – cryptocurrency exchanges, some of the largest and most profitable businesses in the industry have a big problem for which they’re willing to consider any and all manner of solutions for, retaining users. Binance, it seems, not only anticipated the problem, but already has a solution.
An Ambitious Future
So, what’s next for the exchange? Will it rest on its laurels until IPO? It doesn’t seem so.
Binance appears set to soon launch a fiat-to-crypto gateway in Singapore, a move that would bring it, finally, under an influential regulator’s purview. It’s the kind of success you’d expect a CEO to tout on Twitter, right?
But bending to convention doesn’t seem to be top of mind for CZ these days. In potentially the most dramatic pivot, Binance is working rapidly toward deploying a decentralized exchange, the Binance DEX, having already put it on testnet in February.
Decentralized exchanges, in which users would be able to trade cryptocurrencies peer-to-peer through a blockchain protocol – without the backing of a single service provider like Binance, are cutting-edge technology. None have been deployed at scale, and it remains to be seen what challenges lie ahead in their execution.
That Binance has embraced his direction, though, should give the market pause – it stands in sharp contrast to those being made by other major exchanges.
At a time when most appear to be adding old guard Wall Street professionals and taking on VC money with the intent on courting institutional money, Binance, it seems, sees a bigger prize in successfully building the next-generation version of the kind of product it originally created – cutting-edge tech that can massively scale for global retail consumption.
Critically, Binance’s lack of VC funding and the freedom that affords means it is better placed than probably any other company to take its embrace of a decentralized exchange to its natural but extreme conclusion: handing over its operation completely to users of the BNB network.
In disrupting itself, Binance could even end up being something even more innovative than an exchange (decentralized or not) – a viable, crypto-native exit strategy.
If that’s the case, the Binance story could even one day offer an alternative to the Silicon Valley narrative that companies should foster user growth only to pursue a conventional exit by going public.
Is all of this an over-read of Binance? Perhaps.
But after the company has amassed such a track record, there’s maybe only one question left – who, exactly, is betting against Binance?
Image via CoinDesk archives
Enterprise blockchain company Digital Asset is working with the International Swaps and Derivatives Association (ISDA) to develop software meant to ease adoption of the trade group’s potentially cost-slashing data standards.
Announced Tuesday night in New York, the reference code library is intended to help developers implement ISDA’s Common Domain Model (CDM) in solutions for trading and managing derivatives. The software is written in DAML, the smart contract language created – and recently open-sourced – by Digital Asset.
“Following our success at the Barclays DerivHack in London last year, we have been working closely with ISDA with the joint goal of standardizing processes across the derivatives industry,” Kelly Mathieson, head of enterprise solutions at Digital Asset, said in a press release. “We are very excited to now make this reference implementation available to users … enabling financial institutions to be in control of their own data.”
Stepping back, the CDM is a broad, ambitious initiative by ISDA, first proposed in 2017, to standardize the ways derivative trade events and processes are represented so that the IT systems of various entities can talk to each other, improving efficiency and trimming costs. U.K.-based megabank Barclays has estimated the CDM could save the financial sector $3 billion a year.
While CDM is not a blockchain-specific project, such data standardization is seen as a prerequisite for distributed ledger technology (DLT) to reap much of a benefit for the financial industry. Indeed, Barclays, a DLT trailblazer, has championed the effort, setting up an internal CDM adoption working group about a year ago. In June, ISDA published an initial digital representation of the CDM, so that the association’s members can access and test it.
Making things simpler
Digital Asset’s reference code library will help simplify and standardize the generation of derivative “life cycle” events (everything that happens over the course of a trade, from agreeing on terms to amending the contract to termination) defined in the ISDA CDM, the company said.
“This may otherwise involve a number of complex steps. For example, generating payments involves rolling out a calculation schedule and applying date adjustments, before calculating day-count fractions and interest amounts as defined in the ISDA CDM,” Digital Asset explained in a press release.
The reference code library will be available under an open-source license, and the specification will be compiled, or translated, “to executable libraries in other languages,” the company said. The ISDA CDM is now available in DAML on the ISDA’s Rosetta portal, along with Java and JSON.
A spokesperson for Digital Asset said ISDA is not paying the company to develop the reference application.
One of the most prominent startups in enterprise DLT, New York-based Digital Asset is best known for its former CEO, Wall Street veteran Blythe Masters, and its ongoing assignment to replace back-office systems for the Australian Securities Exchange.
Image of Digital Asset’s CTO Shaul Kfir via CoinDesk Archives
The recent Bitcoin rally through months-long resistance at $4,200 has re-ignited the crypto market’s bullish fervor. After nearly a year and a half of bear market, a potential bottom may be in and it’s causing bulls to become more confident that the worst is behind us and a new bull run is close to starting.
Bitcoin (BTC) has been able to continue maintaining stability in the lower-$5,000 region after experiencing some large and overwhelmingly positive volatility over the past couple of weeks. This price action has allowed most major cryptocurrencies to see major price gains that harken back to the massive gains seen in late-2017, with many cryptos surging 50% or more.Although this type of positive price action has typically been preceded by large retracements, one analyst believes that Bitcoin has further room to climb, which means that most cryptos may be able to continue recovering.Bitcoin (BTC) Stable Above $5,200 At the time of writing, Bitcoin is trading up marginally at its current price of $5,230 and is only down slightly from its daily highs of $5,300.While looking back towards Bitcoin’s November drop that sent it from over $6,000 to the low-$3,000 region, BTC is still well below this price level, which may prove to be the point at which BTC faces strong resistance that requires significant buying pressure to push it above.DonAlt, a popular cryptocurrency trader on Twitter, spoke about Bitcoin’s current price action in a recent tweet, explaining that he does not believe BTC will retrace in the near-future and that it still has further room to climb.“$BTC consolidated for 150 days at 6000 before breaking down. Once it did it went down more than 50% in a month. $BTC consolidated for 130 days at 4000 before breaking up. We’re currently up 25%. I don’t really see the rush to short. Even if we get rejected it’ll take a while,” he explained.$BTC consolidated for 150 days at 6000 before breaking down.
Once it did it went down more than 50% in a month.$BTC consolidated for 130 days at 4000 before breaking up.
We’re currently up 25%.I don’t really see the rush to short.
Even if we get rejected it’ll take a while. pic.twitter.com/esXIvTyv1n— DonAlt (@CryptoDonAlt) April 8, 2019DonAlt further added in a separate tweet that he expects BTC to form a fresh trading range between roughly $4,560 and $5,690, which will likely persist until the end of April.“And no I’m not putting out hopium. New swing positions at this price level, in general, are incredibly risky. Be it long or short. I personally think BTC will form new range to fill in the void from the 6000 breakdown. I’d be surprised to see any major moves till end of April,” he said.And no I’m not putting out hopium.
New swing positions at this price level, in general, are incredibly risky.
Be it long or short.I personally think BTC will form new range to fill in the void from the 6000 breakdown.
I’d be surprised to see any major moves till end of April. pic.twitter.com/qk5tigyuGu— DonAlt (@CryptoDonAlt) April 8, 2019Fresh Load of China FUD Doesn’t Impact the MarketsEarlier today, news broke that the Chinese government is continuing to put pressure on the cryptocurrency industry and is now looking at restricting or eliminating cryptocurrency mining.Although this does appear to be negative on a surface level, it is important to note that this is simply one of many actions China has taken against the crypto markets in recent times – many of which have had nearly no impact on the markets.Mati Greenspan, the senior market analyst at eToro, even believes that this revelation could be bullish for the crypto markets, as it will eliminate that cheap electricity that Chinese mining groups use to mine Bitcoin, which would be net positive for Bitcoin’s price.“If this ban does end up happening its more likely to push BTC prices up than down. The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price. It would also serve to kill the FUD that Bitcoin mining is centralized.”If this ban does end up happening its more likely to push BTC prices up than down.The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price.It would also serve to kill the FUD that Bitcoin mining is centralized.https://t.co/OhVh8fUaXv— Mati Greenspan (@MatiGreenspan) April 9, 2019As the week continues on, traders and analysts alike will likely garner more insight into where the upper and lower bounds of Bitcoin’s next trading range will exist.Featured image from Shutterstock.
Firefox has collaborated with a privacy firm called Disconnect to stop unwanted browser-based cryptomining and fingerprint-tracking. Firefox has compiled a list of websites that serve cryptomining scripts. Firefox will block such scripts by default in future versions.
Firefox Blocks Fingerprinting and Cryptomining
At least one of the websites on this list was not intended initially as a means of “stealing” user resources. Coinhive had several scripts which are supposed to use cryptocurrency mining as an alternative way to pay for things like content, or as an alternative to existing human verification protocols. However, the company’s services were abused to the extent that Chrome blocked them last year. They discontinued their service last month.
Firefox writes of their decision to block such sites:
“Another category of scripts called “cryptominers” run costly operations on your web browser without your knowledge or consent, using the power of your computer’s CPU to generate cryptocurrency for someone else’s benefit. These scripts slow down your computer, drain your battery and rack up your electric bill.”
Firefox further says:
“We plan to enable these protections by default for all Firefox users in a future release.”
The second-most used browser’s blocking of the technology is in contrast to Google’s blocking, which blocked all such sites by default about a year ago.
Pay with Proof-of-Work: A Good Idea Not Useful in a World of Scammers
The ability to use CPU power (proof-of-work) as a means to pay for things is among the earliest of the ideas that propelled Bitcoin into existence. Adam Back’s Hashcash idea was that placing a value on the cost of computations would create an incentive to thwart abuse of resources. Hashcash could be used for things like spam e-mail:
“For example, if there is a cost associated with sending each email this may be sufficient to limit the scale of email abuse perpetrated by spammers […].”
Most cryptomining scripts, admittedly, have nothing to do with the prevention of spam or enabling users to spend their CPU cycles instead of money. Instead, the technology has been abused to subvert people’s computer resources for the benefit of disingenuous webmasters.
Fingerprinting is a tracking method which works even when cookies are cleared, but Firefox has recently made efforts to prevent it from being successful. Both fingerprinting and cryptomining will combatible in upcoming versions of Firefox, beginning with Beta 67. Users who install nightly versions or update to 67 can enable the protections under the “Privacy and Security” section of Firefox’s settings.
PayPal announced last week that it would no longer process payments associated with academic essay-writing services, intended to give wealthy, lazy students in the UK a way to get qualified without working for it. Although the move might benefit the UK education system, it could cause the loss of jobs for thousands of academics living in the third-world – unless they discover Bitcoin soon.Reports state that even before the news that PayPal would no longer facilitate payments associated with essay-writing platforms, the company had made it difficult for those living in countries such as Kenya. Of course, Bitcoin does not make you prove who you just because it thinks a payment is “abnormal” for whatever reason.PayPal’s Censorship Highlights Once Again the Need for BitcoinLess than a week after NewsBTC reported on PayPal’s new fee structure potentially alienating merchant users and driving them towards crypto, another example of the company censoring transactions has come to our attention. As announced last week, the global payments giant will no longer work with companies that unite academic writers with students wanting to pay their way through a degree.The move, according to a report in the Kenyan Tribune, has been influenced by the British Education Secretary, Damian Hinds, lobbying the firm last month. This, according to an extensive exposé by UK newspaper The Daily Mail, was prompted by 46 vice chancellors from various British universities demanding a ban on essay-writing website in the interest of protecting the integrity of UK institutions.PayPal refuses serve third-world essay-writers providing work for UK students.Although the move by PayPal might well help reduce the numbers of students obtaining degrees fraudulently, it also creates a powerful incentive for third-world academic writers who depend on such work to explore alternative payment methods – chief amongst these, given that the issue is essentially one of financial censorship, is Bitcoin.In a lengthy post, a Kenyan academic writer explains just how big the essay writing industry has become in their home nation. Thousands of university graduates, unable to find work elsewhere, rely on high levels of income they can generate through producing texts for lazy, first-world students. The author of the piece details how they are paid more than $1,000 each month for their services, which in Kenya, is higher than the average professional wage.Even prior to the latest news that PayPal would be withholding services to those believed to be writing essays for students to pass off as their own, the author of the post states that the company would frequently make it difficult for writers to be paid for their work. Examples of this include withholding supposedly large transfers (even as low as $2,000) from professionals until the company had performed various identification checks on individuals. The author believes that such checks were based on an assumption by PayPal that such a sum of money represented a large amount in Kenya and therefore, it must be associated with crime – something, which if true, is hugely discriminatory against those living in third-world nations.With such relatively large sums of money on the table, it seems likely that any further crackdown by the UK on essay-writing services would just drive those producing dissertations to create their own websites offering services directly for Bitcoin. In fact, the latest move by PayPal might be incentive enough for them to look for less restrictive alternatives already. Related Reading: Is Largely Unbanked Africa Primed for Bitcoin Adoption?Featured Image from Shutterstock.
CCN received a “consumer warning” this morning from a crypto tax preparation firm. The warning outlines two aspects of crypto tax that the firm believes have been done wrong by other outfits – namely Bitcoin exchange Coinbase and Intuit, the creator of TurboTax. As regards Coinbase, the firm writes:
“The online tax guidance provided by Coinbase implies that airdrops are taxable as ordinary income—which is reported on Line 21 of Schedule 1 of Form 1040—rather than as capital gains that only become taxable when the positions are sold.”
Bitcoin Exchange Coinbase Clarifies Crypto Tax Guide
We reached out to Coinbase, and they felt this was a mischaracterization of what they actually published. In fact, the Bitcoin exchange only mentions the word “airdrop” once in their tax guidance document. It seems there may be a misunderstanding on the part of the firm. Coinbase refers to payments received in cryptocurrency and say:
“When you’re paid in crypto by an employer, your crypto is classified as compensation and will be taxed according to your income tax bracket.”
In real terms, this doesn’t speak to airdrops. A Coinbase spokesperson said of this characterization:
“Coinbase does not give tax advice, and we do not provide a service to customers whereby we ‘determine how much they owe the IRS’. Comments in the Tax Guide are only intended to be an informational starting point. We encourage customers to seek the assistance of a tax professional. We plainly and clearly state our position on the website. […] If you perform a service to earn crypto, the IRS has indicated that it will consider that service to be taxable at ordinary rates. […] Our website states that if you are ‘paid’ in crypto, including in the form of an airdrop, the payment is taxable. We do not state on the website that ‘all’ airdrops are taxable as ordinary income.
In the case of TurboTax, the report says that Intuit’s product wrongfully disallows more than 250 entries for crypto sales – although the IRS had allegedly issued clear guidance stating that every sale should be noted.
Do You Have to Report Every Crypto Transaction on Your Taxes?
CCN reached out to Sean Ryan and Perry Woodin of Node40, a firm which produces crypto tax preparation software for CPAs and individuals. Node40’s software compiles all sales and transactions through exchange APIs and manual entries, enabling the user to correctly generate tax forms.
They said this PR stunt references a press release from Intuit from last year, where Intuit said they would be supporting cryptocurrencies. TurboTax only supports 250 entries, but Woodin and Ryan aren’t sure if that’s a problem or not.
The bulletin from the tax preparation firm, CryptoTaxPrep.com, references guidance from the IRS that supposedly says:
“Unlike other stocks, bonds or other capital assets, which taxpayers receive a Form 1099-B for, every cryptocurrency transaction MUST be reported individually due to no 1099-B being issued.”
Ryan told us:
“Neither side is entirely wrong. […] If you’re getting paid in an airdrop, then yes, it’s income. We don’t see this as Coinbase saying that if you receive an airdrop out of the blue that you’re liable for it. […] The important thing for anyone to understand is that there is no answer yet. It’s more of an opinion. The IRS hasn’t given clear guidance on airdrops yet. […] The IRS is saying that cryptocurrency is property, and as you move property, whether moving it, trading it, or receiving it, those are all events that have to be tracked. The gains and losses on these transactions are what they’re most interested in.”
Most People Use More Than One Bitcoin Exchange
As to the issue with Inuit’s TurboTax product, Ryan says that the real problem is that Intuit is only working with one exchange.
“Form 8949 makes the most sense. Whether or not the IRS is requiring something like that, we don’t know. I don’t see where the IRS has said you have to use an 8949. […] The major problem I see with Intuit is not whether they have a limitation of 250 transactions or not, I see the limitation as them only working with Coinbase.”
“Most people do not just have Coinbase. Most people have more than one exchange and at least one wallet. When you start going down that path, and you miss things outside of what your software can do, say TurboTax. It can only work with Coinbase. Well, if you work with Coinbase and Gemini and you have a Trezor, you could import your Coinbase information, but you’re missing your Gemini information and you’re missing your Gemini information. That’s not the fault of Intuit. I can see how it might be misleading to a taxpayer. I think the real limitation of Intuit is that they’re only working with one exchange.”
Ryan also says that high-frequency Bitcoin traders and users should certainly talk to a tax preparer that specializes in cryptocurrency. Finding a tax professional with a deep understanding of the crypto-space is critical for people who want to make “defensible” decisions in their tax filings.
Bitcoin’s recent surge from $4,000 to over $5,300 has sent shockwaves throughout the crypto markets, as it has led many individual cryptocurrencies to clock in gains of 50% or more, while others have more than doubled from their monthly lows.Another impact that this price surge had on the markets is sparking a renewed interest in Bitcoin futures, as the CME Group’s Bitcoin contract trading volumes have surged to record highs in the first few days of April alone.Bitcoin Futures Volumes Hit All-Time-HighsAccording to a recent report from Bloomberg, CME Bitcoin futures set a fresh all-time-high on April 4th, with 22,542 contracts – equivalent to 112,710 BTC – being traded, worth a mind-boggling $546 million.The massive trading volume incurred on CME may renew interest in cryptocurrency futures from competitors, as Cboe Global Markets, who sparked the Bitcoin futures movement, recently made a statement explaining that it would be not be listing any additional contract options, and that it would be “assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading.”This announcement, which came about late-last month, led many in the cryptocurrency industry to believe that the persisting bear market had dried up interest in Bitcoin futures contracts, but the recent surge in trading volume for CME’s Bitcoin futures contracts signals that interest in futures contracts for the largest cryptocurrency is stronger than ever.Asia Behind Latest CME Bitcoin Futures SurgeAccording to the report, the sudden influx of trading volume on April 4th stemmed from Asia, which accounted for 12,634 contracts – over half of the total amount of contracts traded on that day.Joseph Young, a popular figure within the cryptocurrency industry, spoke about the latest revelation regarding the CME futures trading volume surge and its roots in Asia, noting that Asia’s interest in crypto may continue to surge as over-the-counter (OTC) purchases of Bitcoin surge in the crypto-unfriendly China.“CME bitcoin futures recorded $546 million in volume on April 4 and most of it came from Asia according to Bloomberg. With China seeing strong OTC bitcoin buys (as reported by @cnLedger), it seems like the overall interest in crypto in Asia is rising fairly rapidly,” Young explained in a recent tweet.CME bitcoin futures recorded $546 million in volume on April 4 and most of it came from Asia according to Bloomberg.With China seeing strong OTC bitcoin buys (as reported by @cnLedger), it seems like the overall interest in crypto in Asia is rising fairly rapidly.— Joseph Young (@iamjosephyoung) April 9, 2019The report that Young is referring to is a recent claim from Chinese cryptocurrency news outlet, cnLedger, that explains that Chinese citizens are increasingly turning towards OTC trading to acquire Bitcoin, while also circumventing the government’s restrictions on purchasing the nascent technology.“Chinese markets reveal strong buys. OTC (Over-The-Counter) trades, the almost only way to buy bitcoin with fiat in China, showing considerable $ premium (1 USDT = 7 CNY) over the official rate of 1 USD = 6.7 CNY,” they noted.1/ Chinese markets reveal strong buys. OTC (Over-The-Counter) trades, the almost only way to buy bitcoin with fiat in China, showing considerable $ premium (1 USDT = 7 CNY) over the official rate of 1 USD = 6.7 CNY. pic.twitter.com/bd0n0DGFVU— cnLedger (@cnLedger) April 8, 2019It is highly likely that the latest surge in Bitcoin futures contract trading volume will generate renewed interest in futures contracts from CME’s competitors, and act as a signal to the entire crypto industry that interest in the markets is still alive and well.Featured image from Shutterstock.