Bitcoin price surges despite shaky fundamentals
BTC futures and options data shows that investors may be manipulating prices to pocket short-term profits.
- MicroStrategy added another 660 BTC, worth approx. AUD$35 million (US$25 million), to its balance sheet earlier this week.
- India is all set to levy a substantial 30% tax on any profits realised via crypto transfers, the country's finance minister Nirmala Sitharaman revealed yesterday.
- Experts believe that despite the ongoing surge, investors are still "extremely fearful" of the prevailing market conditions.
After months of continued bearish sluggishness, it appears as though Bitcoin – the world's largest cryptocurrency by total market capitalisation – has finally been able to break out of its ongoing financial rut, gaining approximately 5% over the past week. As a result, the flagship crypto is trading at a price point of AUD$38,648.
While a number of traders believe that BTC may soon regain its all-important AUD$56,000 (US$40,000) psychological threshold, derivatives data seems to suggest otherwise. To elaborate, the futures and options markets are currently exhibiting a lack of confidence from seasoned investors, with many analysts referring to the ongoing surge as "manipulation".
Amidst the confusion, fintech giant MicroStrategy announced that it had made another major Bitcoin acquisition earlier this week, lapping up a cool 660 BTC (worth US$25 million) for an average price of US$37,865 — thus, bringing the company's overall crypto haul to 125,051 tokens as of Monday. MicroStrategy currently owns approximately AUD$5.3 billion (US$3.78 billion) worth of BTC at a standardised purchase value of US$30,200 per BTC.
The firm's above-stated move comes right after the US Securities and Exchange Commission decided to reject its Bitcoin accounting practices, claiming that its use of non-Generally Accepted Accounting Principles (GAAP) methodologies excludes the "impact of share-based compensation expense and impairment losses and gains on sale from intangible assets".
Lastly, even the Central American nation of El Salvador, led by President Nayib Bukele, "bought the dip" on 21 January, accruing a total of 410 BTC for US$15 million.
India to tax crypto income by 30%
As part of India's annual budget presentation, finance minister Nirmala Sitharaman announced that the coming year will see the introduction of a 30% crypto tax on all crypto-centric transfers. During her speech, she was quoted as saying:
"Any income from transfer of any virtual digital asset shall be taxed at the rate of 30%. No deductions in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition."
Furthermore, she also announced that by the end of 2023, India will launch its very own central bank digital currency (CBDC) — called the "Digital Rupee" — as a means of stimulating the nation's economic growth.
Market still in 'fear mode', data suggests
Even as Bitcoin accumulation continues at a record pace globally, respected crypto analyst Willy Woo stated on Peter McCormack's podcast recently that the currency's on-chain metrics clearly show that the market is exhibiting "peak fear" levels. However, he did admit that in spite of all the uncertainty, we are still not in a "bear market".
Disclosure: The author owns a range of cryptocurrencies at the time of writing.