First Mover Asia: Is Germany Really the Most Crypto-Friendly Jurisdiction? Maybe Not; Bitcoin Gains

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.

As of press time, the largest cryptocurrency was changing hands at $41,300, still well off the high around $48,000 a few weeks ago.

“The macro landscape is looking positive in my opinion,” wrote Marcus Sotiriou, analyst at the U.K.-based digital asset broker GlobalBlock in a newsletter.

Sotiriou said he thinks the economy will have a soft landing despite many analysts forecasting a recession. He is bullish on bitcoin and equities even though the Federal Reserve might jack up interest rates by 0.5 percentage point next month – double the 0.25 percentage-point increases seen in recent years.

Last week, crypto funds suffered outflows for the second straight week, with some $97 million of redemptions, possibly due to "bitcoin becoming increasingly interest-rate sensitive."

According to Glassnode, a large amount of bitcoin supply has been accumulated between the $38,000 and $45,000 price range, as reported by CoinDesk's Damanick Dantes in Market Wrap. That suggests price-insensitive traders hold much of bitcoin's supply above the $40,000 price level.

"Traders have still yet to make high conviction bets to the upside or downside," according to analysts from the investment research firm FundStrat.

Coin Metrics, a blockchain analysis firm, noted that Bitcoin is approaching the halfway point between the original blockchain's third and fourth reward halvings. (They happen every 210,000 data blocks, or roughly every four years; the next one is tipped to happen on May 4, 2024.)

In traditional markets, U.S. stocks rose as analysts noted that investors had become too bearish, the 10-year U.S. Treasury yield rose to 2.94%, the highest since 2018.

Elsewhere in crypto, CoinDesk's Tracy Wang reported that the prolific decentralized finance (DeFi) developer Andre Cronje appears to be back in crypto after abruptly quitting the industry last month.

What’s the first thing you associate ‘EU’ with when it comes to business? Devastatingly high taxes and a fierce bureaucracy.

So it's of some surprise when Germany recently took top spot away from Singapore as the world’s most crypto-friendly jurisdiction, according to a ranking by CoinCub.

The rationale? No taxation on crypto if you sell it after a year of holding. If you sell it (over 600 Euros, or $648) prior to that one-year point, you are taxed under the usual capital gains regime.

To be sure, this is a very good thing for long term HODLERs. If you are long on bitcoin and want to stack sats, this tax regime will treat you very well.

However, this doesn’t work very well for decentralized finance (DeFi). Decentralized exchanges, yield farming, liquidity mining… all of this relies on rapid trades and transactions. It's what underpins this fancy new machine, which has over $100 billion in value currently locked in.

So a DeFi trader in Germany is going to have a nasty tax bill come tax time. Figuring out the tax liability is difficult, when the average month of a DeFi trader is a complex and intricate web. Crypto derivatives trading — which pumps through hundreds of billions of dollars a day in volume — is also subject to the usual capital gains tax too. Germany’s crypto friendliness quickly slips away if you look at it under this rubric.

Bitcoin (BTC) returned above $40,000, which is the midpoint of its three-month long price range. Still, the cryptocurrency faces initial resistance at $43,500, which could stall the current upside in price.

The relative strength index (RSI) on intraday charts is approaching overbought levels, similar to what occurred in late-March, which preceded a pullback in price. On the daily chart, however, the RSI is neutral, which means buyers could remain active at support.

For now, BTC continues to hold support above $37,500 – a key level that has kept the recovery phase intact. Further, a series of higher price lows since Jan. 24 indicates a slowdown in selling pressure, albeit with 20% price swings.

Previous Post Next Post