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In response to Libra appearance in the EU, its own cryptocurrency can be created; VanEck and SolidX decided to withdraw the application for Bitcoin ETF. The central banks’ policy can lead Bitcoin to $ 20,000.
The Head of the French Ministry of Finance announced the need for EU countries to create their own EU digital currency. This proposal was made at a meeting of European ministers responsible for economic development. According to Bruno Le Maire, such an innovation will reduce the cost of transnational trade operations and enhance cooperation between countries.
Bruno Le Maire introduced Libra digital currency as an example. It was stated that this project is able to greatly facilitate trade operations. At the same time, he called for a ban on Facebook coins circulation on the territory of the community. They can not only change the balance of power in the international financial arena, but also encroach on state sovereignty.
It is expected that at IMF October meeting, countries will actively discuss the prospects of creating national cryptocurrencies. Moreover, the European Union clearly will not be the leader in this discussion. In addition to Libra cryptocurrency, the PRC authorities are also engaged in cryptocurrency development. They have repeatedly stated that they have all technical capabilities to transfer the financial industry to blockchain.
In addition, Bruno Le Maire spoke about measures to create a tax system for cryptocurrency trading. According to the plans of the government, obligation to pay a tax on cryptocurrency trading will arise at the time of digital money exchange for fiat one. That is, in fact, purchase and sale operations will not be subject to control until the funds are converted.
This suggests that the authorities do not see the risk in cryptocurrency and blockchain, but they are concerned about the ability of companies and governments of other countries to violate the financial independence of the region. A similar position is held in Germany. It announced plans to adopt a law prohibiting the use of private cryptocurrencies in the near future. At the same time, last month, the German Ministry of Finance recognized bitcoin as legal tender.
After repeatedly transferring the approval of the application from VanEck and SolidX to the approval of the Bitcoin ETF fund, the companies decided to withdraw their application from SEC. It was expected that the Securities and Exchange Commission will conduct a regular review in mid-October, but now it will not take place. However, Bitwise Asset Management, which has also applied, is not going to follow the competitors’ path.
Experts see the reasons for the decision by VanEck and SolidX in a number of factors. So, the analogue of Bitcoin ETF launched by them for institutional investors was not in demand by the market. In the first week of trading with this contract, the turnover was only about $ 40,000, that is, about 4 BTC. In such circumstances, it makes no sense to intensify the development of a new financial instrument.
After the booming demand in spring and the beginning of summer, bitcoin slowed down its growth. Its price has stabilized around $ 10,000 and shows minimal volatility. Over the past week, BTC/USD pair was in a narrow range of 9,829-10,507, which indicates a short-term loss of interest in bitcoin speculation.
The assumption of a decrease in speculative interest is confirmed by the market reaction to the news on the application withdrawal. Previously, each SEC solution’s postponement led to increased volatility, but now the chart practically did not respond to the message from news agencies. Bitcoin price has stabilized and is no longer dependent on SEC opinion. It seems that investors have stopped believing in a positive bitcoin ETF decision.
VanEck and SolidX declined to comment on their decision. However, Teddy Fusaro, Bitwise Director, sees nothing extraordinary. He recalled that SEC could accept innovative financial instruments for years. Therefore, it is necessary to continue working on the technologies development and tell the regulator on industry’s progress.
Arthur Hayes, the Director of BitMEX cryptocurrency exchange, is confident that easing the monetary policy of the Federal Reserve will lead to an increase in bitcoin to $ 20,000 and higher. In his opinion, the regulator is losing control over the financial system and is actively printing new money. Due to the sharp increase in REPO rate on the interbank market, Fed carried out an operation in order to provide liquidity, actually pumping the market with cheap money.
By this, the regulator did the same actions that he had last resorted to during the financial crisis of 2008. The appearance of cheap dollars in the investors’ hands forces them to look for new ways to place funds, and cryptocurrency as a stable asset is perfect for this operation.
Travis Kling, the Head of cryptocurrency fund, believes that bitcoin is now more reliable than gold because of its great liquidity and decentralization. Central banks are actively depreciating national currencies, which will provoke growth in cryptocurrency market in the near future.
The opinion of American experts echoes the study of Michelmores LLP. According to the British company, about 3% of UK residents invested in cryptocurrency. However, this figure rises to 20% when it comes to wealthy millennials. People born at the end of the 20th century who have investments of more than $ 31,000 are much more actively invested in bitcoin and other digital assets.
A survey conducted by the eToro platform showed that 40% of wealthy American millennials are willing to invest in bitcoin and other coins when a crisis occurs. That is, digital assets have at least twice potential for growth. In the event of force majeure in the market, buyers are ready to consider cryptocurrencies as a refuge able to compete with gold. There is a suspicion that this is exactly why the American authorities are extremely wary of the new dollar’s rival.