13th September 2023 > > Glassnode & India.

tl;dr

Glassnode raises some liquidity concerns. India’s surprising embrace of cryptos could teach the UK a thing or two.

Market Snap

Market Wrap

It’s been a month since we lost the 3-handle and in that time, we have rarely strayed far from $26k. The resignation of Binance US President and CEO Brain Schroder has been a pricing non-event despite the efforts of naysayers on X claiming otherwise. Don’t get me wrong – there are issues around Binance, not least the immaturity displayed by founder and CEO Changpeng “Call me CZ” Zhao. I mean, who awards themselves a nickname? That’s not how it works, fella.

Occasional Series – Jeremy Hunt (though you and I know that is not his real name)

With breathtaking chutzpah, Hunt (did I spell that right?) has announced that he is investigating whether bonus accruals should be included in the calculation of the “triple lock”.

Journalists have been briefed that this could save £600mm pounds per annum.

Which would undoubtedly be a nice sum if it was deposited into our personal bank accounts, even if shared amongst just a few of us.

But let’s be clear.

This sum of money is less than 5bps of government spending per year. This is the equivalent of an average UK taxpayer saving £13.98 per year, or £1.15 per month, or slightly less than 4p per day.

Yep, FOUR PENCE per day.

As a young lad I was often told to save the pennies, and the pounds will look after themselves (an outdated and quaint phrase which will have to be amended to cents and euros after the next general election).

But if this is all that Hunt (did I spell that right?) can contribute to a crucial spending and tax debate, I think we are at the end of the road for this sadly deluded government of no principles and no beliefs.

Curious Cryptos’ Commentary – Glassnode

The latest Glassnode report (https://insights.glassnode.com/the-week-onchain-week-37-2023/) has two main messages.

The first is suggested by the title of their latest missive – “Liquidity Drought”, driven by the ever-decreasing amounts of cryptos held at centralised exchanges, and the ongoing redemptions of stablecoins, the most used intermediary for moving between cryptos.

Meanwhile, long-term holders of BTC continue to increase their bags, with a corresponding decrease in short-term speculative plays, further reducing liquidity.

The only offset to this imbalance is that nearly 90% of the short-term cohort are now underwater with $26k-$28k being the range when a lot of these unconvinced buys will turn neutral. Presumably these coins are available for sale within that range, providing a barrier to short-term price growth.

If those coins can clear, a dramatic supply side shock cannot be ruled out.

Curious Cryptos’ Commentary – India

The G20 celebrating Putin (by ignoring Russia’s war crimes in the joint communique issued at the end of the proceedings) made it seem unlikely to me that there was anything of substance to this latest shindig.

But wait.

We do have something to be pleased about.

Taking its cue from the joint IMF/FSB report prepared specifically for this latest iteration of a jolly for world leaders (https://www.curiouscryptos.com/post/9th-september-2023-imf-and-tangem), India has declared it is formulating a crypto regulation policy which denies the possibility of “banning” cryptos.

This is a surprising change. India has traditionally taken a very crypto-sceptic stance. I guess the lure of crypto tax-dollars being forsaken by the US and the UK is too tempting to ignore.

India has got this right.

…

The legislation is planned to be ready to be rolled out within six months, which is a rapid turnaround, an attitude and outcome that we are sorely lacking in the UK.

The aims of the new regulations are these:

1. “Setting up advanced Know Your Customer (KYC) for crypto companies, which covers the Foreign Account Tax Compliance Act and existing Anti-Money Laundering standards.

2. Crypto platforms would be required to release proof-of-reserve audits on a real-time basis to regulators.

3. A uniform taxation policy across the nations.

4. Crypto exchanges could gain the same status as authorized dealers (similar to banks) under the guidelines of the Reserve Bank of India (RBI).

5. Key positions may be mandatory, such as Money Laundering Reporting Officer for crypto platforms.”

Apart from the nonsense of point three (dream on dreamers, Republic of Ireland and Lichtenstein will exercise an EU veto) the other four objectives are simply excellent.

If only some of our important politicians had ties to India, they might emulate that extraordinary country’s much admired entrepreneurial attitude and culture, rather than encourage their colleagues to wallow in pointless PR exercises of saving 4p per day.