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Bitcoin and other cryptocurrencies experienced a decline as traders anticipated Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Economic Symposium. The price of Bitcoin dropped by 1.5% over the past 24 hours, falling below $26,100. This decline continued a trend from the previous week when Bitcoin reached its lowest levels since mid-June, dropping below $25,500.
The market's anticipation was palpable, with Yuya Hasegawa, an analyst at crypto exchange Bitbank, noting the market's keen interest in Powell's speech. Cryptocurrencies, much like traditional stock indexes, are sensitive to Powell's remarks, especially given the ongoing discussions about interest rates.
The Federal Reserve's decision to increase rates to control inflation has been a significant factor behind the selloff in both stocks and cryptocurrencies in 2022. Elevated interest rates impact assets like Bitcoin because higher rates on cash or risk-free Treasuries make riskier investments less appealing. The crypto market has been particularly sensitive to shifts in rate expectations, with concerns about the Fed's ability to manage inflation without causing an economic slowdown. Powell's speech was closely watched by investors, with many in the crypto community hoping for clarity on the Fed's future direction.
Beyond Bitcoin, other major cryptocurrencies like Ether, Cardano, and Polygon also experienced declines. Ether, the second-largest cryptocurrency, fell by 1%, while Cardano and Polygon dropped by 2% and 3%, respectively. Memecoins like Dogecoin and Shiba Inu also saw declines.
Elsewhere:
- Miners Rejoice: The U.S. Treasury Department has unveiled a new rule that requires cryptocurrency service providers to hand over user's asset information to the Internal Revenue Service (IRS). Assets include cryptocurrencies including Bitcoin and Ethereum, as well as NFTs. In an effort to enhance crypto tax compliance Form 1099-DA aims to simplify tax calculations for crypto users. Crypto brokers, exchanges and payment service providers all fall under the remit but miners remain exempt. The Treasury Department anticipates the rule to take effect for brokers in the 2025 tax year but is welcoming public feedback on the proposal until 30 October 30. Public hearings will be held on 7-8 November.
- PayPain: After launching earlier this month, PayPal's stablecoin PYUSD is struggling to gain traction. Its issuer, Paxos, holds 90% of its circulating supply. Two decentralised exchange pools host PYUSD but have under 50,000 tokens in total. Currently, there are only 233 PYUSD holders.
- Dropbox Blames Miners: Dropbox is discontinuing its unlimited storage due to customers using it for crypto mining, personal storage pooling, and reselling storage. Storage caps will now be placed on its top-tier. customers purchasing a Dropbox Advanced plan with three active licenses will receive 15TB, with 5TB for each additional active license. "We found a growing number of customers were buying Advanced subscriptions not to run a business or organization, but instead for purposes like crypto and Chia mining," the firm stated.
- JP Morgan ❤️ Crypto: JP Morgan's analysis of bitcoin futures on the Chicago Mercantile Exchange (CME) suggests the recent sell-off in crypto could be coming to a close. Analysts at the firm stated long-position liquidations are “largely behind us” and “as a result, we see limited downside for crypto markets over the near term.”
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