Well, we’ve made it through the bloodbath of January and February, and March was only slightly better. Bitcoin and other cryptocurrencies have continued their recent struggles as Q1 comes to an end. The total market cap of the cryptocurrency world sits around $300 billion, with Bitcoin dominating 45% of the market share.
March has seen investors become skeptical of altcoins and move more of their holdings over to Bitcoin for stability. Now with tax season coming to an end, we should see a bit more money flowing into the cryptocurrency market, potentially helping fuel the next move upward in the market.
However, many investors, individual and institutional, are waiting at the moment to hear how regulators in the U.S. and around the world are going to handle cryptocurrencies. Once formal regulations start to be announced, the uncertainty might fade and attract more investment into the cryptocurrency market.
Bitcoin: With prices stabilizing at the moment around the $8,000 threshold, Bitcoin is down ~30% since the start of March. The good news is that Bitcoin rallied from the low around $6,000 and seems to have support here at the $7,500-$8,000 level.
Ethereum: Ethereum saw some devastating price action in the market this month, with a near 50% nosedive in the middle of March. Prices are still recovering, sitting around the $450 level. But that’s still a heavy 50% decline throughout the month.
Ripple: Ripple started the month with a small spike in the market on March 1st to roughly $0.95, then made another notable jump on March 6th to $1.07. However, throughout the month, Ripple has been subject to minor dips and has found its final spot at the end of the month around $0.55, leading to a ~40% price decrease in March.
The major social media platforms have all joined forces in March to ban paid and sponsored advertising from their networks. Facebook made the move in January to protect users and their money from the risky nature of cryptocurrencies and ICOs. Google followed suit this month when they updated their financial services policy. All cryptocurrency related advertising through AdWords will be banned starting June 2018. Twitter is the latest to jump onboard, recently announcing they will get rid of ICO ads for token sales and cryptocurrencies that aren’t listed on certain cryptocurrency exchanges. It seems like the social media and advertising giants are reacting to uncertainty in the regulatory space for cryptocurrencies. Until national and international authorities announce some sort of regulation this year, we can expect companies like this to take a ‘wait-and-see’ approach.
President Trump signed an executive order making it illegal for citizens or residents in the US to buy, sell or transact Venezuela’s ‘national’ cryptocurrency, the Petro (along with any other future cryptocurrency issued by the country). Venezuela developed the Petro as a cryptocurrency backed by their chief export oil, in order to avoid US sanctions against the country. The executive order gives the Treasury Department, specifically the Financial Crimes Enforcement Network (FinCEN), authority to regulate and prohibit related transactions. Here is yet another regulatory agency bringing cryptocurrencies under their jurisdictional reach. 2018 should see much more development on the regulatory side as the year moves along.
With tax season in full force in the US, the Internal Revenue Service (IRS) is reminding taxpayers that cryptocurrency transactions must be reported as income gains or losses on their tax returns. Taxpayers who fail to properly report their cryptocurrency transactions run the risk of being liable for penalties and future interest. Because the IRS defines cryptocurrencies as property, transactions are subject to the same reporting requirements as other forms of property, like buying or selling a car or home. Many cryptocurrency experts frown upon these requirements and instead see cryptocurrency transactions as a like-kind exchange (like a 1031 exchange). But taxpayers should heed the IRS advice and properly report their taxable income.
Crypto Around the World
Two government employees of Crimea’s Council of Ministers were fined and subsequently fired for mining Bitcoin on the Council’s internal network. The employees were also charged with abuse of power because their cryptocurrency mining efforts consumed high amounts of electricity. This incident is becoming more and more common as cryptocurrencies rise in value and mining efforts become lucrative. We expect to see more of these stories across the globe where people are stealing other’s computing power and energy resources for their own mining efforts.
The Chinese government has been notably supportive of blockchain developments and is working on their own blockchain-as-a-service (BaaS) platform. The platform is called Blockchain Registry Open Platform (BROP) and is being developed by China Banknote Blockchain Technology Research Institute, backed by the People’s Bank of China. The primary purpose of the BaaS platform is storing static data on the blockchain and effectively recording all changes to the data. China expects to leverage the platform among government agencies for sharing user information and streamlining authentication processes to prevent fraud in the supply chain sector. This could have major impacts on sensitive supply chain processes, like in the food and beverage industry. Among their private industry leaders like Tencent, JD.com, and Baidu developing blockchain applications, the Chinese government is trying to keep up in the fast-paced world of blockchain technology.
France is trying to develop an attractive regulatory environment for cryptocurrency and blockchain startups to encourage new companies in the space to set up their legal structure in the European country. The goal is for France to become a global leader in the blockchain sector as an ICO hub. France’s finance minister Bruno Le Maire has boasted that the impending regulations will offer blockchain startups new opportunities and freedoms to raise funds through token generation events. As most ICOs are looking too friendly jurisdictions like the Cayman Islands or Switzerland, France’s developing regulations could cause a shift of ICOs moving over to Europe.
Quebec is widely known for its inexpensive hydropower and has been used heavily in recent months for cryptocurrency mining operations. However, the Canadian province has put a temporary stop on accepting new mining operations due to the massive energy demands by existing cryptocurrency miners. The Minister of Energy and Natural Resources is examining the employment impact of cryptocurrency miners, as they have high energy demands but don’t generate nearly as many job opportunities as other industries. Officials are drafting new guidelines before accepting new applications that are requesting thousands of megawatts of electricity to run their mining operations. This is a major trend to watch throughout the year as mining operations seek cost-effective locations to remain profitable.
March saw a flurry of activity throughout the cryptocurrency world. Overall, the global crypto market is still down from the price peak late last year and into the new year. Cryptocurrencies still face many challenges, but the uncertainty and volatility provide an incredible opportunity for investors and traders.