On Tuesday, August 10th, the Infrastructure Bill, which aims to spend over US$1 Trillion dollars over the next 10 years, was approved by the Senate. This Bill, which includes $550 billion of new spending for all states, has now moved to the House of Representatives for one of tis final hurdles. As we have discussed in the past, this infrastructure bill has a clause in it that drew controversy from the crypto community due to a “pay-for” that anticipates raising $28 billion from a broadened crypto tax provision. (coindesk)
The provision expands the definition of a “broker,” leading to concerns the Internal Revenue Service might seek to impose broker information reporting requirements on non-broker entities such as miners. This has led to an outcry among the crypto community which triggered thousands of enthusiasts and crypto economists to write politicians in order to amend this clause. The amendment did not happen and it is unclear if it will be changed now that the bill has reached the House of Representatives.
We are a bit skeptical about the financial effect that this bill can have over the overall price performance of cryptocurrencies, but at the time of writing, the trend in the crypto world has been extremely bullish. Bitcoin is priced at around $46,300.00 and it seems that the increase will not stop here. Ethereum is at $3,220 with a 16% surge during the last 7 days. It will be interesting to see what the impact of the bill will have on the price of coins, but having this clause with the aim to regulate and monitor the trading of crypto for tax purposes, has given cryptocurrencies more importance and has definitely unified the crypto community and proved how strong and engaged it is.
Adoption is increasing rapidly. As of now we have retail investors in the space, institutional investors, and missing ingredient is government investment. But now that politicians are studying and taking a closer look at what cryptocurrencies really are, and how they could benefit the overall economy if managed intelligently, I would not be surprised if their outlook on this technology changes rapidly… We shall wee.
Another great price and adoption indicator is the numbers that we are seeing from Coinbase. The trading and exchange platform behemoth posted $1.9 billion in transaction revenue in the second quarter, in its second-ever earnings report as a public company. Analysts had estimated the exchange would post $1.57 billion in transaction revenue. The U.S.’ largest cryptocurrency exchange grew to 8.8 million monthly transacting users (MTUs) and 68 million total users in the quarter, versus analyst estimates for 6.7 million monthly users and 62.8 million total users. The exchange’s take rate – or retail trading revenue divided by retail trading volumes – was 1.24%, up from 1.21% last quarter. (as per coindesk). These figures are eye-popping and shows the confidence that potential investors have in the market. We need to keep in mind that Coinbase, the largest exchange in the United States, is not the only platform and that most platforms are seeing and uptick in accounts being created and trading volume. The above numbers were registered during the second quarter, when the price of BTC plummeted from around $59,000 to $35,000, which leads to believe that during a positive market, adoption will increase more rapidly or at least continue a steady growth.
Additionally, Inflation has played a crucial role in the crypto adoption pace. The July inflation numbers were reported today and CPI came in at 5.4% for the second month in a row, along with core inflation coming in at 4.3%. Everyday more people are waking up to the reality of how detrimental inflation is and how the devaluation of the dollar is robbing us quietly.
Inflation may accelerate with the quantitative easing required to foot the Infrastructure Bill. People are up and realizing that a hedge against inflation is a must and that crypto, so far, has proven to be one of the best options to make your capital work for you, avoid inflation, and participate in the future of financial technology.
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