Thanks for joining us to read this week's edition of Overbit Weekly Round Up, where we take a step back from the weekly madness of the market and try to point to overarching stories. With Bitcoin, XRP, and other cryptocurrency markets are experiencing a small retrace after a massive rally, we look away from the markets and into regulation. More specifically, the U.S. Internal Revenue Service (IRS).
For the second year in a row, the IRS is warning of underreporting by IRS cryptocurrency investors and users. According to a report on Monday by CryptoTrader.tax, "dozens of individuals" have received notices on unreported crypto taxes dating back to 2018. These same tax notices were sent out last year to some cryptocurrency exchange users as well.
The big takeaways from this story are that crypto is becoming mainstream enough to garner attention from the tax body of the United States. This interest shows they are taking crypto, and the money made from it, very seriously, and it's not just the united states, regulatory bodies around the world are looking closely at the financial implications of crypto on their taxpayers as well.
Moving on from the IRS, we pivot towards Japan. According to a recent report by CoinTelegraph, the CEO of Japanese financial services giant Monex - Oki Matsumoto - has been welcome to the idea of a central bank digital currency (CBDC). Earlier this year, the Bank of Japan announced plans to begin testing a CBDC during 2021. More details have come out about the Bank of Japan's plans, more specifically how the private sector will play a 'prime role, at least in the testing phase'.
Matsumoto seems optimistic about the potential of a CBDC, according to Reuters. He even spoke to non-state issued cryptocurrency, having this to say "CBDCs will significantly enhance the interoperability of cryptocurrencies. It would make the cryptocurrency market more lively.". In essence, Matsumoto says if the Bank of Japan has a CBDC, all the cryptocurrency companies, like exchanges, could plug much more easily into the traditional finance system. This certainly wouldn't be the first time Monex has expressed interest in cryptocurrency, as they have previously received press for buying the hacked exchange Coincheck, as well as applying to join Facebook's Libra Association last year. Once again, we continue to see massive payments companies embracing the future of cryptocurrency.
Closing out this week's edition, we take a look at the U.S. dollar and its economic situation as a whole. On Wednesday, 25 November, the U.S. dollar managed to defend nearly 3-month lows, as Bitcoin stands just shy of its 2017 all-time high. It seems the brief rally in risk-on assets is on pause, thanks to less-than-ideal figures released from the United States. First-time claims for jobless benefits increased last week, with many pointing to the recent surge of coronavirus once again taking a toll on the economy.
Some people like Shaun Osborne, chief currency strategist at Scotiabank, believe that the dollar will rise through the next few days of Thanksgiving, "as positions are squared up ahead of what is effectively a long weekend". As we advance, though, he believes there is a "deeply entrenched, bearish psyche" surrounding the greenback, in spite of any progress on vaccine development or the dovish Treasury Secretary Nominee Janet Yellen.
In the end, it's hard to say which way things are going to go, but with Bitcoin at record highs, and USD bouncing off record lows, we'd encourage traders to keep an eye on this continuing, inverse correlation. Other than that, thanks for reading, and we'll be sure to keep you up-to-date on any new trends at Overbit.com.