Bitcoin Fear and Green Index Newsletter. Block 27

Welcome to this week’s issue of Bitcoin Fear and Green Index Newsletter. It is a community-driven effort, and we all hope to see this newsletter grow with quality insight and analytics from community contributors like yourself. Read till the end to learn how you can participate.

This past week, Bitcoin corrected -18% and tested a critical crossroads level. In today’s newsletter, I will cover the current state of Bitcoin, what it did, and what it has to do next in order to regain its bullish momentum. I will also discuss the macro environment and how it could potentially affect Bitcoin’s price in the short to mid-term.

If there is one level that could act as a major crossroads for Bitcoin today, it’s ~$36,000. Not only is this a significant point of control, it’s also the same level that Bitcoin rebounded off after the failed initiatory test of the 21 day EMA. If Bitcoin broke below it then, the 21 EMA test would’ve been rendered unsuccessful, and a revisit to the local bottom around $33,000 would have been inevitable.

The chart above illustrates the different stages that Bitcoin went through with regards to the 21 EMA test. More importantly, it shows us the key levels for Bitcoin, their implications, and how the current correction still hasn’t crossed the bearish line in the sand. While the $38,000-$39,000 zone is acting as the rebound area for capitulation, Bitcoin briefly crossed below it, bounced off ~$36,000, and is now back inside the rebound area. The chart above doesn’t show this, but Bitcoin is currently at ~$38,800. Breaking out of this zone to the upside would have several bullish implications; One key possibility would be the continuation of the rally to a target around $47,000. It’s important to note that the rally becomes invalid if Bitcoin closes a day below $36,000.

S&P 500: Knowing how strongly correlated Bitcoin is with the stock market, it becomes clear why someone who holds Bitcoin would want the S&P 500 to initiate a bullish reversal. Currently, the index is testing the highly critical 300 day MA. The band shown on the chart consists of the 200 and 300 day moving averages. This band essentially represents the sticky zone that the SPX has to break and stay above in order to regain some bullish momentum, and for the fearful market sentiment to shift positive.

NASDAQ: The NDQ’s case is similar to that of the SPX’s. The key separation here is that the NASDAQ is already below its 300 day MA, and essentially, below the aforementioned sticky zone. NDQ is currently testing its Point of Control around 13,700. The immediate targets would have the NDQ bounce back into the sticky zone, rally towards the upper bound of it, and essentially break above the 200 MA and flip it into support.

US Dollar: While the stock market is positively correlated with Bitcoin, the DXY is not. The US dollar, for the most part, has always been negatively correlated with Bitcoin. All the major uptrends for the dollar usually had Bitcoin, and the stock market, take an opposing trajectory. Looking at the DXY chart above shows us how the dollar has been in a bullish trend for the past 3 months. Bitcoin on the other hand, was in a prolonged bear trend during that 3-month period. For someone who’s long on Bitcoin, they’d want to see the DXY fail to hold its 100 day MA, and eventually break below its critical level of support at 94.5. If the dollar continues its upward trend, eventually retesting and potentially breaking major resistance around 98, it would have negative implications for risk-on assets like Bitcoin and stocks.

TA review by @CryptoSultan21

“There are basically two types of people. People who accomplish things, and people who claim to have accomplished things. The first group is less crowded.” - Mark Twain

Fidelity International has launched its first bitcoin exchange-traded product (ETP) in Europe in what is the joint-cheapest offering available for investors in the old continent seeking direct exposure to the bitcoin price, according to a press release sent to Bitcoin Magazine. The Fidelity Physical Bitcoin ETP will list on the Deutsche Börse Xetra today under the ticker symbol “FBTC” and on the SIX Swiss Exchange in the coming weeks. It will carry an ongoing charge figure (OCF) of 0.75%. Fidelity International launched FBTC for its European institutional and professional investors seeking an easy investment avenue for Bitcoin following a Fidelity Digital Assets survey from last year found that seven in ten institutional investors plan to invest in Bitcoin in the near future. “Providing institutional and professional investors access to this innovative asset class at a competitive price point is our priority,” Christian Staub, managing director for Europe at Fidelity International, said in a statement. “FBTC offers clients an institutional quality solution to enter the market in a familiar, simple and secure way.” FBTC will be “physically-backed” by bitcoin held in custody with Fidelity Digital Assets, while Eurex Clearing will provide clearing services and Brown Brothers Harriman will act as the administrator and transfer agent. Fidelity International was originally established in 1969 as the international investment subsidiary of Fidelity Investments, the Boston-based financial services giant with trillions in assets under management (AUM), but spun out as an independent firm in 1980.

U.S. Congressman Warren Davidson (R-OH) introduced legislation entitled the “Keep Your Coins Act” this morning. This comes in the wake of mounting concerns over crackdowns on civil liberties in Canada, as private companies and the Canadian government leverage control of the legacy financial system to disrupt ongoing protests over COVID-19 policies. If passed, the bill would prevent any agency head from prohibiting or otherwise restricting “the ability of a covered user to— (1) use virtual currency or its equivalent for such user’s own purposes, such as to purchase real or virtual goods and services for the user’s own use; or (2) conduct transactions through a self-hosted wallet.”

Colorado will soon start accepting bitcoin as payment for taxes, Governor Jared Polis said in an interview with CNBC. “We expect to accept Bitcoin by this summer” for all of the state’s tax-related purposes, Polis said. Polis added that Colorado plans on enabling bitcoin payments for other state-related fees in the months following the taxes roll out. Soon enough, a Colorado resident might be able to pay for their driver’s license with bitcoin. “We’re a very forward-looking, innovative state,” he said. However, Polis highlighted that the state would immediately convert the Bitcoin received as payment into U.S. dollars to fulfill its obligations and accommodate its current accounting standards. “All of our expenses are in dollars, our budget is approved by legislators in dollars, so when we talk about accepting Bitcoin for payments, they would be converted back into dollars for our purposes,” Polis said. The conversion would be performed by a third-party entity, Polis detailed, which would act as an intermediary between the taxpayer and the government, facilitating the exchange of bitcoin and fiat currency as needed. Polis also said that he thinks protecting the privacy of citizens is a “key role” of the government. U.S. states have been racing to push the most welcoming legislation for bitcoin as they seek to become a hub for innovation in the space by attracting businesses and entrepreneurs to create jobs and empower the local economy.

Bitcoin is now legal in Ukraine as its parliament approved in final reading a bill that caters to the president’s recommendations. However, the country has not made bitcoin a legal tender. “The new law is an additional opportunity for business development in our country. Foreign and Ukrainian crypto companies will be able to operate legally, and Ukrainians will have convenient and secure access to the global market for virtual assets,” Mykhaylo Fedorov, Ukrainian minister of digital transformation, said in a statement. The parliament passed the new Law of Ukraine on Virtual Assets with more than 270 votes, according to an official statement. The bill details requirements that Bitcoin service providers such as exchanges should abide by and determines fines for violations of the law’s provisions, in addition to determining that the country’s National Securities Commission regulates the cryptocurrency market. Ukraine’s Securities Commission will be tasked with issuing permits to Bitcoin service providers and carrying out supervision and financial monitoring of the market, the statement said. Ukraine had introduced a similar cryptocurrency bill in September, but President Volodymyr Zelensky vetoed it in the following month arguing that the country couldn’t afford to create a new regulatory body specifically for Bitcoin and cryptocurrency. President Zelensky then returned the bill to the Ukrainian parliament along with his suggestion to let existing regulators oversee the burgeoning sector. Now, parliament has incorporated his recommendations and passed the amended bill.

Avenue Securities, a U.S.-based securities brokerage firm specializing in serving Brazilian customers, will offer bitcoin trading services beginning next month, according to a Bloomberg report. “That is beyond a shadow of a doubt the project with the biggest demand from our clients,” Roberto Lee, Avenue’s founder, and CEO told Bloomberg. “Our surveys show that about 15% of our almost 500,000 customers will start trading cryptocurrencies on the first day we offer the service.” Brazilians are big into bitcoin and cryptocurrency trading. The country has seen trading volume in the burgeoning market nearly match its stock exchange, B3, as investors pile up into bitcoin. Avenue now wants to cater to that demand, bringing competitiveness in pricing as an attractiveness point to lure investors into its suite of products. According to the report, Avenue will operate with eight liquidity providers to offer no-fee trading for bitcoin and cryptocurrencies, bringing down prices by as much as 8% compared to Brazilian markets that trade in reais, the country’s currency.

Russia’s Ministry of Finance has submitted a draft bill on Bitcoin regulation in the country, weeks after the government approved the concept of creating legislation specifically for cryptocurrencies. “The use of digital currencies as a means of payment on the territory of the Russian Federation will continue to be prohibited,” the Ministry of Finance said in a statement. “Under the proposed regulation, digital currencies are considered solely as an investment vehicle.” The draft bill comes after an intense dispute between the Bank of Russia and the Ministry of Finance, which hold opposing views regarding the optimal future of bitcoin and cryptocurrency regulation in the country. While the ministry has strived to accommodate the burgeoning technology into a legal framework, the central bank has called once and again for a complete ban on the trading and mining of bitcoin. Earlier this month, the Russian government gave the ministry the green light to propose a bill encompassing the regulation of cryptocurrency, effectively discarding the Bank of Russia’s suggestions that the proliferation of bitcoin should not be allowed in the country and outlining an initial plan for the legislation. The decision to move forward with regulation instead of a ban came on the heels of signals sent by Russian President Vladimir Putin, who in late January highlighted the country’s competitive advantages in bitcoin mining – an industry he supports. The bill submitted by the Ministry of Finance provisions several restrictions for Russians interested in investing in bitcoin, including identification requirements, yearly investment limits, and custody arrangements, according to the statement.

California is the latest U.S. state to jump on the bitcoin payments bandwagon. Senator Kamlager filed Bill 1275 to the state’s legislature to add a section to the government code that relates to services provided by Californian agencies to the public. “This bill would authorize a state agency to accept cryptocurrency as a method of payment for the provision of government services,” per the text. The bill joins a growing cohort of U.S. states looking to implement legislation that incentivizes the usage of bitcoin as a medium of exchange. Last week, Colorado Governor Jared Polis pledged that its citizens would be able to use bitcoin and cryptocurrency to pay state taxes by this summer, adding that they are a “very forward-looking, innovative state.“ However, Polis highlighted that the state would immediately convert the cryptocurrencies received as payment into U.S. dollars. Other states are still in the process of studying existing Bitcoin legislation and gauging alternatives for the future. New Hampshire Governor Chris Sununu last week signed an executive order establishing a commission to investigate current Bitcoin-related laws and propose new ones as the state seeks to encourage innovation and attract businesses in the sector.

The Brazilian Senate’s Economic Affairs Committee (CAE) approved a bill to acknowledge and regulate the Bitcoin and cryptocurrency markets in the country, according to an official statement. CAE’s unanimous approval of PL 3825/19 – a bill authored in 2019 by Senator Flavio Arns but jointly crafted with the central bank, securities exchange commission (CVM), and federal tax authority (RFB) – represents an initial step for a bill that attempts to create ground rules for the day-to-day usage of bitcoin in financial transactions and as an investment asset. The bill also provisions tax incentives for the bitcoin mining industry. Business entities that acquire hardware and software for the processing, mining, or preservation of bitcoin and cryptocurrency would be exempt from import taxes, as well as from some transaction taxes that affect local sales. However, only businesses that exclusively use renewable energy sources and are carbon neutral would be eligible for the tax incentives. The bill seeks to regulate the establishment and operation of Bitcoin service providers in Brazil, defining such entities as those who provide cryptocurrency trading, transfer, custody, administration, or sale on behalf of a third party. Iraja said in the statement that the CVM should only handle instances where digital assets are used to raise capital in financial markets. The bill is expected to head to the Senate floor next as per a recently submitted request for it to be processed simultaneously with a second Bitcoin-related bill. The proposal would then go to a vote in the House, the last step before President Jair Bolsonaro can consider signing it into law.

"The time you enjoy wasting is not wasted time.” - Bertrand Russell

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