Hello as always, and welcome to today’s edition of Overbit Insights.
To kick off today’s edition, we take a look at some of the market sentiment going into the long holiday weekend with the US holiday of Memorial Day on Monday.
According to reports, it seems bitcoin bulls are not too thrilled with the prospect of an extended weekend. "There's going to be a bloody crypto weekend," bluntly put it Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co.
Lamoureux says that weekends for crypto have become notoriously treacherous "because liquidity dries up" and "if there is blood in the water, sharks will pressure this lower and kill the weak competition that was in trouble."
Though, Lamoureux is far from the only one fearful of Memorial Day weekend. Even billionaire and crypto-famous investor Barry Silbert posted to Twitter that he hopes Bitcoin takes the weekend off.
Even CoinTelegraph went as far as saying that Bitcoin could fall to $20,000 or below. At the time of writing, Bitcoin sits just under $34,000, so that would make for another 30% drop off from current levels. Though Bitcoin is still up almost 30% year-to-date, another decline from these levels, when already down more than 45% from its April highs, would undoubtedly accelerate a significant selloff.
Though far from financial advice, it certainly seems like the smart move this weekend, especially after such a significant trend reversal, would be to watch how price action develops from the sidelines.
To close out today’s edition of Overbit Insights, we hop over to Washington, D.C., with news yet again of the U.S. government and cryptocurrency tax regulation.
According to a pair of documents released on Friday, President Joe Biden's 2022 budget proposal includes various additional crypto reporting requirements.
The Biden administration's first budget, released on Friday, includes two proposals that would give the Treasury Department more authority over the types of information financial firms must provide to the IRS. The plan would reportedly apply to returns filed after December 31, 2022.
"The use of crypto assets for tax evasion is becoming increasingly common. Taxpayers can deal with offshore crypto exchanges and wallet providers without leaving the United States because the business is totally digital. "As an explanation for the proposal, the Treasury Department memo stated.
The second proposal, to implement a "Comprehensive financial account reporting" structure for tax compliance purposes, would require financial institutions to report data on user accounts, with a breakdown on different types of transfers exceeding a de minimis threshold of $600. The memo stated that this would cover crypto-asset exchanges and custodians.
"Reporting requirements would apply separately in cases where taxpayers buy crypto-assets from one broker and then transfer the crypto assets to another broker, and businesses that receive crypto assets in transactions with a fair market value of more than $10,000 would be required to report such transactions," the proposal stated.
Crypto markets have been notorious for being the ‘wild west’ since their inception, but there are no doubt governments are launching every effort they can to try and reign in (and probably tax) this economic activity.
Thanks as always for reading Overbit Insights - we hope you found it insightful. Catch us as always next week.