Weekly Report

28th April 2021

Expected Change on Tax Policy

Abstract: Trading volume decreased. Market is worried about US tax rise. ETH outperformed the market. Alt season is likely to continue after market bounces back.

    • Market cap decreased. Last week, the total market capitalization of cryptocurrency dropped significantly to below US$2 trillion, from US$2.15 trillion to US$1.90 trillion. BTC price plunged below US$48,000 and then bounced back to above US$50,000.
    • Top 100 cryptocurrencies mostly fell in price. Last week, 17 out of the top 100 cryptocurrencies went up while 83 went down.
    • BTC computing power increased, compared to the average computing power in the previous week. Weekly average computing power reached 151.62EH/s, up by 2.3%.
    • BTC network activities slowed down while Ethereum activities increased. Average number of BTC transactions reduced by 5.0%, active addresses decreased by 3.6% and the average transaction size increased by 5.1%. On Ethereum, average number of transactions was up by 9.9%, active addresses increased by 19.0% and the average on-chain transaction size was 16.1% higher.

    Digital Currency Market Capitalization Change:

    Source: HashKey Capital Research, Coin360

    • Exchange trading volume dropped by 7.7%. Last week, the trading volume of the 10 observed exchanges by HashKey reduced by 7.7% on a weekly basis. Decrease of 7.7% in Binance, 15.0% in Bitfinex, and 9.7% in Bitstamp were recorded while Coinbase’s volume increased by 0.7%.
    • Open interests in futures lowered to US$19 billion. Last week, the weekly trading volume in the BTC futures market fell by 4.7%, with open interests reduced to US$19 billion.
    • BTC stablecoin rose to 73.1 billion in supply. Last week, USDT supply increased by 1.9 billion, USDC supply decreased by 60 million and BUSD supply increased by 1.6 billion.
    • Tax policy was expected to change. Crypto market plunged last Friday but bounced back since Monday. ETH outperformed BTC. BTC’s market share continued to drop.  According to CoinMarketCap, it lowered to 51% from 70% at the beginning of this year. The plan to increase the tax on long-term capital gains from 20% to 39.6% for high-income earners by the US government would also affect large crypto investors. Hence, the market reacted to the possible sell-off. However, some argue that assets can be reallocated into DeFi and therefore, there will not be large-scale sell-off. No matter what tax shelters are applied, tax rise has negative impacts in the long term while the short-run shock may be less significant. The Monday market reveals that Alt season may still exist.

    Bitcoin Futures Daily Trading Volume:

    Source: HashKey Capital Research, The Block