Weekly Newsletter[Block#835,187]
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A. Bitcoin Ecosystem
1. Bitcoin has already surpassed gold in investor portfolio allocation
2. Nayib Bukele reveals El Salvador’s bitcoin address
3. BlackRock’s Bitcoin ETF nears 200K bitcoin, passing Michael Saylor’s MicroStrategy
4. Bitcoin surge sees crypto trading volumes exceed the stock market in South Korea
B. Regulation
1. Biden resurrects 30% crypto mining tax in new budget proposal
2. South Korea preparing tax system to avoid cryptocurrency tax evasion
C. Macroeconomy
1. US job market offers mixed picture as Fed deliberates on policy
2. BOJ is expected to end negative rate policy next week
3. ECB keeps rate high but signals expectation of lower inflation
D. Bitcoin Tech Development
1. Trustless onchain betting on potential soft forks
2. Notable code and documentation changes
A. Bitcoin Ecosystem
1. Bitcoin has already surpassed gold in investor portfolio allocation
JPMorgan analysts said that, when adjusting for volatility, Bitcoin’s allocation in investor portfolios has already outpaced that of gold. Specifically, bitcoin has a 3.7 times greater allocation compared to the bullion. They highlighted a potential Bitcoin ETF market size could reach $62 billion if gold is used as a benchmark.
Reference:
https://u.today/bitcoin-btc-surpasses-gold-in-investor-portfolios-jp-morgan
2. Nayib Bukele reveals El Salvador’s bitcoin address
President Nayib Bukele of El Salvador made a headline by announcing the existence of a piggy bank secret chamber, which stores over 5,689 bitcoin. The wallet address is 32ixEdVJWo3kmvJGMTZq5jAQVZZeuwnqzo. Many social media users commended El Salvador and Bukele’s approach to bitcoin and his transparency. “Pretty incredible to see a president tweeting about bitcoin nation-state self-custody. It’s no wonder bitcoiners feel welcome in El Salvador,” one wrote. “The leadership and vision of President Nayib Bukele have transcended boundaries. We are witnessing the beginning of a new era. El Salvador is advancing by leaps and bounds towards leadership in the cryptocurrency market, especially with bitcoin,” another opined.
3. BlackRock’s Bitcoin ETF nears 200K bitcoin, passing Michael Saylor’s MicroStrategy
In less than two months of existence, the BlackRock iShares Bitcoin ETF ($IBIT) has accumulated more bitcoin than MicroStrategy ($MSTR). According to the fund’s latest disclosure, $IBIT held 230,617 bitcoin as of March 15. Meanwhile, the most recent public statements from MicroStrategy show the company as of Feb. 26 held 193,000 bitcoin. It’s possible that MicroStrategy has added to that total since, as the company last week priced a $800 million capital raise with intentions to use the funds to purchase more bitcoin. Massive demand for the new spot ETFs is the key reason for bitcoin’s more than 60% price surge this year.
Reference:
https://www.coindesk.com/markets/2024/03/10/blackrocks-spot-etf-nears-200k-bitcoin-passing-michael-saylors-microstrategy/
https://www.ishares.com/us/products/333011/ishares-bitcoin-trust
4. Bitcoin surge sees crypto trading volumes exceed the stock market in South Korea
Rising bitcoin prices have revived a crypto trading frenzy in South Korea, with volumes on local exchanges crossing those in the local stock market last week. Local media reported that trading volumes on South Korea-based crypto exchanges totaled a record 11.8 trillion won (KRW) on Sunday, or $9 billion at the going USD-KRW exchange rate. These topped Friday’s South Korean stock trading volume of 11.47 trillion won, or $8.7 billion. This figure is the combined transaction amount of Korea’s five largest won markets, including Upbit (8.8 trillion won), Bithumb (2.7 trillion won), Coinone (176.4 billion won), Gopax (55.2 billion won), and Korbit (32 billion won).
B. Regulation
1. Biden resurrects 30% crypto mining tax in new budget proposal
United States President Joe Biden has revived the idea of a 30% tax on electricity used by miners in his budget proposal for 2025. In a U.S. Department of the Treasury document titled “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” the administration highlighted that current laws do not address digital assets apart from broker and cash transaction reporting. Because of this, the administration wants to impose an excise tax — taxes levied on goods like fuel — on digital asset mining. If implemented, mining companies must report the amount and type of electricity they use. In addition, firms must report the value of the electricity used if they purchase it externally. Meanwhile, Miners who lease computational capacity would be mandated to report the value of the electricity of the company that leased them the capacity. The value would then serve as the tax base.
Reference:
https://cointelegraph.com/news/crypto-mining-tax-united-states-budget
2. South Korea preparing tax system to avoid cryptocurrency tax evasion
The growth of bitcoin as investment vehicles is getting the attention of tax enforcers. The National Tax Service of South Korea is preparing to implement a virtual asset tax system that will receive the data from cryptocurrency holders and process it to have a gross panorama of the taxes they need to pay. According to local media, GTIC, a consulting firm, has been selected to lead the development and implementation of this system, and it has begun a consulting project on the subject for the next four months. After several revisions to the local regulatory framework, Virtual Assets Service Providers (VASPs) must report customers’ transaction data to the National Tax Service. Nonetheless, the service has no automated way of analyzing and managing this information.
Reference:
https://news.bitcoin.com/south-korea-preparing-tax-system-to-avoid-cryptocurrency-tax-evasion/
C. Macroeconomy
1. US job market offers mixed picture as Fed deliberates on policy
The US government releases a monthly employment report based on two surveys: a survey of establishments; and a survey of households. For the establishment survey, it found that, in February, 275,000 new jobs were created, more than investors had anticipated. On the other hand, the job increases in the previous two months were downwardly revised by a combined total of 167,000 jobs. Still, at 290,000 for December and 229,000 for January, job growth was relatively strong. There was especially strong growth in healthcare and social assistance, leisure and hospitality, local government, and construction. There was moderate growth for retail trade as well as transportation and warehousing. Job growth was very modest in financial service indusrty. Manufacturing employment fell. Moreover, employment continues to grow faster than the long-term ability of the labor market to generate new jobs. This means that the job market remains tight.
Reference:
https://www2.deloitte.com/us/en/insights/economy/global-economic-outlook/weekly-update.html
2. BOJ is expected to end negative rate policy next week
The Bank of Japan is expected to end its negative interest rate policy on Tuesday on substantial wage hikes by big firms in this year’s wage negotiations, the Nikkei newspaper reported on Saturday. The BOJ began coordinating both within and outside the bank Friday on ending its negative interest rate policy, the economic daily said. Japan’s biggest companies agreed to raise wages by 5.28% for 2024, the heftiest pay hikes in 33 years, the country’s largest union group said on Friday. This year’s wage hikes “are of a level that even reflationists who are cautious about modifying monetary policy would accept a change in policy,” the Nikkei cited one BOJ source as saying.
Reference:
https://www.reuters.com/markets/asia/boj-end-negative-rate-policy-next-week-says-nikkei-2024-03-15/
3. ECB keeps rate high but signals expectation of lower inflation
The European Central Bank (ECB) left its benchmark interest rate unchanged at an historically high level of 4.0%. However, the ECB also downwardly revised its forecast for inflation this year, thereby signaling a likelihood that rates will be lowered sometime in the coming months. Christine Lagarde, President of the ECB, said “we are making good progress towards our inflation target and we are more confident as a result. But we are not sufficiently confident. We clearly need more evidence and more data. We will know a little more in April, but we will know a lot more in June.” In Europe, as in the United States, the biggest obstacle to reducing inflation to the 2.0% target is the labor market. In both Europe and the United States, service price inflation remains elevated.
Reference:
https://www2.deloitte.com/us/en/insights/economy/global-economic-outlook/weekly-update.html
D. Bitcoin Tech Development
1. Trustless onchain betting on potential soft forks
ZmnSCPxj posted to Delving Bitcoin a protocol for giving control over a UTXO to a party that correctly predicts whether or not a particular soft fork will activate. For example, Alice thinks a particular soft fork will activate and she’s interested in acquiring more bitcoins; Bob is also interested in acquiring more bitcoins but does not think that fork will activate. They agree to combine some amount of their bitcoins, at a ratio they both agree upon (e.g. 1:1), so that Alice receives all of the combined bitcoins if the fork activates by a certain time and Bob receives all of the combined bitcoins if it does not. If, before the deadline, a persistent chainsplit occurs where one chain activates the fork and the other forbids it, Alice receives the combined bitcoins on the activated chain and Bob receives the combined bitcoins on the activation-forbidden chain. The basic idea has been proposed before but ZmnSCPxj’s version deals with the specifics expected for at least one potential future soft fork, OP_CHECKTEMPLATEVERIFY. ZmnSCPxj also briefly considers the challenges of generalizing the construction to other proposed soft forks, particularly those that upgrade an OP_SUCCESSx opcode.
2. Notable code and documentation changes
LND #8136 updates the EstimateRouteFee RPC to accept an invoice and a timeout. A route for paying the invoice will be selected and a payment probe will be sent. If the probe successfully completes before the timeout is reached, the cost of using the chosen route will be returned. Otherwise, an error will be returned.
LDK #2916 adds a simple API for converting a payment preimage into a payment hash. An LN invoice includes a payment hash; to claim a payment, the ultimate receiver releases the preimage corresponding to that hash (and each hop along the path uses the preimage it receives from its downstream peer to claim the payment from its upstream peer). Since a hash can be derived from a preimage (but not vice versa), receivers and forwarding nodes may only store the preimage. This API allows them to easily derive the hash on demand.
