Crypto Market Forecast: Week of June 5th 2023

The Bitcoin price (BTC) fell by 0.2% since last week, to ~US$27.2K. Ether (ETH) climbed by 3.0% to ~US$1.9K. Binance-coin (BNB) similarly dropped by 0.8%to ~US$308.

Bitcoin miners are feeling relief with the news that a proposed ‘Digital Assets Mining Energy’ (DAME) tax was defeated in the United States. DAME would have imposed a 30% tax on the cost of electricity used for mining starting in 2026 after a 10% tax commencing in 2024.

DAME was part of President Biden’s proposed budget for the 2024 fiscal year, but the tax was eventually cut from the bill. A White House blog article frames the proposed tax as a way of funding social services while “[encouraging crypto mining] firms to start taking better account of the harms they impose on society”.

Riot Platforms’ Pierre Rochard announced over Twitter that the bill’s final text appeared to have “no mention of bitcoin mining”. At least for now, the news may be considered favorable news for Bitcoin and contribute (somewhat) to its general acceptance – a win, even if only temporarily.

Last week, we mentioned briefly the unpopularity of CBDCs, citing a 2020 Genesis Mining survey. Since then (on Wednesday of last week), the CATO Institute released the results of its own recent poll. As the numbers show, Americans strongly oppose the federal government launching a central bank digital currency (CBDC). For example, 68% responded that they would oppose a CBDC “[even if] the government abolished all U.S. cash so no one could use dollar bills”. From a look at the poll questions, it is clear that Americans are worried about the possibility of cyber attacks, privacy, and the potential for social engineering of behavior and financial censorship. CATO concludes that “While some groups (Democrats, black Americans, younger people) are more likely to be supportive of a CBDC than others, majorities still oppose adopting a CBDC”. Overall, only 16% of Americans support a CBDC, 34% (over twice as many) oppose it, while 49% don’t know.

It isn’t just cryptocurrency enthusiasts, human rights activists and the like concerned about the risks of CBDCs. The potential downsides have been highlighted by several US representatives, senators, and even central bankers in the United States and Canada. Fed Governor Christopher Waller has argued, for example, that a CBDC “would come with a number of costs and risks, including cyber risk and the threat of disintermediating commercial banks, both of which could harm, rather than help, the U.S. dollar’s standing internationally,” and Fed Chairman Jerome Powell cautioned that “We would not want a world in which the government sees, in real time, every money transfer that anyone makes with a CBDC.”

Crypto news for the weeks ahead

June 13

The Consumer Price Index data for May 2023 will be released – one of the indicators the Federal Open Market Committee (FOMC) watches when considering interest rate hikes.

June 14

The FOMC will be meeting. Futures markets are strongly leaning towards a prediction of another 25 bps hike.

June 30

The US Bureau of Economic Analysis’ (BEA’s) release of March’s Personal Consumption Expenditures (PCE) numbers will be released. This is one of the primary indicators used by the FOMC when considering interest rate levels.

Top 10 Crypto Summary

With the exception of XRP (XRP), BNC’s top 10 digital assets by market cap finished off nearly flat (again). XRP’s price finished the week with a climb of nearly 13%. XRP has seen bullish behavior since mid-May when a federal judge in the SEC’s case against Ripple (alleging it sold unregistered securities) made a ruling that looked to be in Ripples favor. DOGE finds itself just outside the top 10 list again (at 11th place), awaiting Elon Musk to tweet it back into relevance.

Bitcoin Price Chart

GLASSNODE’s latest report looked at buy-sell behavior over time, noting that newer (less seasoned) buyers have more of a tendency to buy high and sell low, while the long-term holders (“LTHs”, the “smart money”) learn the ropes and eventually learn to do the reverse, thereby realizing profits. GLASSNODE’s report focuses on LTHs presently in their first Bitcoin market cycle, arguing that these rookie HODLers “tend to acquire and hold onto expensive coins through the entire bear market…only to capitulate precisely at the cycle low, with remarkable accuracy”.The price of Bitcoin (BTC) rose by 4% in the last week, to ~US$27.9K. Ether (ETH) finished the week off up by 3.4%, currently at ~US$1.9K. Binance-coin (BNB) rose by just 0.9% to ~$312.