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Cryptocurrency

Global Crypto Market Cap Plunged by 48% Since May to $1.32T, Still a 76% Increase YTD

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After a fantastic performance in the first quarter of 2021 and reaching an all-time high in May, the value of the global crypto market dipped significantly in the last month two months.

According to recent data, the combined value of all crypto coins plunged by 48% since May reaching $1.32trn last week. However, this figure still represents a 76% increase year-to-date.

Bitcoin’s Market Cap Up by 13% YTD, Ethereum Soared by 190% Despite Crypto Price Crash

The year 2020 was a fantastic year for crypto investors, with the combined value of all digital coins circulating in the crypto space surging by 300% YoY to $758bn. This was even above the market cap reached in 2017, considered as the break-out year for Bitcoin and other digital coins.

However, 2021 witnessed even more impressive growth, with many of the major crypto coins reaching their all-time highs. The CoinMarketCap data show the global crypto market cap soared by 130% in the first three months of 2021 jumping to over $1.8trn. Two months later it hit an all-time high, with the combined value of all crypto coins soaring to $2.5trn on May 12.

However, two weeks later, this figure almost halved to around $1.3trn. The unexpected pullback in Bitcoin and other cryptocurrencies came as a flurry of negative headlines and catalysts, from Tesla CEO Elon Musk to a new round of regulations by the Chinese government, causing a massive hit for the entire sector.

Statistics show that Bitcoin’s market cap dropped by 44% since May reaching $617bn last week. However, this still represents a 13% increase since the beginning of the year.

The market cap of Ethereum, as the world`s second-largest cryptocurrency, soared by 190% YTD, despite the recent crypto price crash. In January, the combined value of all Ethereum coins amounted to $84.7bn. After reaching an all-time high of $497bn in May, this figure dropped to $245bn last week.

Tether Witnessed the Biggest Growth Among the Top Three Cryptocurrencies

However, the CoinMarketCap data show Tether witnessed the most significant market cap growth among the top three cryptocurrencies. In January, the market cap of the world’s most used stable coin amounted to $21bn. By the end of March, this figure jumped to $40bn and continued rising. Last week, it stood at $62.2bn, a massive 196% increase YTD.

Besides impressive market cap growth, Tether also ranked as the most traded coin in the crypto space. Statistics show the world’s most widely used cryptocurrency, hit $2.3trn in monthly trading volume, almost double than Bitcoin and 2.5 times more than Ethereum.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Cryptocurrency

Nigeria’s SEC to Enforce Weekly, Monthly Reports from Crypto Service Providers

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The Securities and Exchange Commission (SEC) has announced a new regulatory framework requiring Virtual Assets Service Providers (VASPs) to submit weekly and monthly trading statistics.

This move is part of a broader effort to monitor and regulate Nigeria’s burgeoning crypto market, according to a document released by the SEC titled “A Framework on Accelerated Regulatory Incubation Program for the Onboarding of Virtual Assets Service Providers (VASPs) and other Digital Investments Service Providers (DISPs).”

The framework aims to bring more structure to the country’s crypto ecosystem by amending existing rules on digital asset issuance, offering platforms, exchanges, and custodians.

The SEC’s initiative is seen as a significant step toward enhancing oversight and ensuring compliance within the rapidly evolving digital asset space.

Accelerated Regulatory Incubation Program

The Accelerated Regulatory Incubation Program (ARIP) will provide a special window for onboarding VASPs. The SEC has outlined specific reporting requirements for participants in the ARIP, including:

  • Weekly and monthly trading statistics.
  • Quarterly financials.
  • Compliance reports demonstrating adherence to the SEC’s conditions.
  • Reports on key issues such as misconduct, fraud, or operational incidents.
  • Actions taken to address customer complaints and emergent risks.

A Growing Market

Nigeria boasts one of the largest peer-to-peer (P2P) crypto markets globally. According to blockchain analytics firm Chainalysis, crypto transactions in the country amounted to $56.7 billion between July 2022 and June 2023, averaging $1.09 billion weekly.

Industry and Regulatory Insights

Senator Ihenyen, lead partner and head of blockchain and virtual assets practice at Infusion Lawyers, emphasized the importance of regulating digital assets for economic and security reasons.

“Nigeria can no longer afford to keep pushing digital assets underground for obvious economic and security reasons,” Ihenyen said.

He noted that the Central Bank of Nigeria’s (CBN) recognition of the SEC’s regulatory role marks a positive shift for the sector, with regulators now working together to ensure consumer protection and investor safety.

Comparisons have been drawn with regulatory practices in South Africa, where a similar approach has been adopted to meet Financial Action Task Force (FATF) standards on anti-money laundering and counter-terrorism financing for digital assets.

“Execution is what will make the difference,” said an industry expert. “We’ve never been lacking in regulations.”

Government and Industry Reactions

Earlier in July, Wale Edun, Nigeria’s minister of finance and coordinating minister of the economy, urged the SEC to address the complexities of crypto regulation.

“The SEC board should be willing to accept the challenge of regulating these new areas, particularly crypto, as they are fast-moving complex areas,” Edun stated.

The Senate Committee on Capital Markets also emphasized the need for crypto regulation to ensure accountability and protect investors’ funds.

Osita Izunaso, chairman of the committee, pointed out, “The issue of cryptocurrency must be regulated because Nigerians are trading in crypto. Since Nigerians are trading in crypto, why are we not regulating it? Where is the money going if we don’t regulate activities in the crypto market?”

Compliance and Challenges

The new regulatory framework aims to facilitate the onboarding of entities willing to engage in virtual asset activities and enhance the SEC’s understanding of digital asset business models.

However, some industry insiders have raised concerns about the practicality of certain requirements, such as the need for a physical presence for crypto companies.

Chimezie Chuta, founder and coordinator of the Blockchain Nigeria User Group, highlighted the potential benefits of regulation for tax revenues.

However, others worry about over-regulation. “We are now like banks that are over-regulated. Between 2020 and now, we have had new regulations and changes to existing rules, but where has that taken us to?” questioned a Lagos-based crypto player.

As Nigeria’s crypto market continues to evolve, the SEC’s new regulatory framework represents a crucial step towards ensuring transparency, accountability, and consumer protection in the digital assets space.

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KuCoin Announces New 7.5% VAT on Transaction Fees for Nigerian Customers

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KuCoin has announced the implementation of a 7.5% Value-Added Tax (VAT) on transaction fees.

This new regulation will take effect on July 8th, 2024, impacting all users whose Know Your Customer (KYC) information is registered in Nigeria.

KuCoin, one of the world’s leading cryptocurrency exchange platforms, revealed this update in a statement addressed to its Nigerian users.

The tax will be applied exclusively to transaction fees, not the overall transaction amount.

For example, a user buying 1,000 USDT worth of Bitcoin will incur a fee of 1 USDT at the standard 0.1% fee rate.

The new VAT at 7.5% will apply to this fee, resulting in an additional charge of 0.075 USDT.

Consequently, the net amount available for the transaction will be 998.925 USDT.

KuCoin clarified that the VAT would cover all types of transactions on its platform. The move aligns with recent regulatory updates and demonstrates the company’s commitment to complying with local tax laws.

The announcement has garnered mixed reactions from the Nigerian cryptocurrency community. Some users express concern over the added cost to their transactions, while others recognize it as a necessary step towards greater regulatory compliance and legitimacy for cryptocurrency trading in Nigeria.

KuCoin encourages affected users to seek assistance through their Telegram group or by contacting the online support team for further guidance on the new tax regulations.

As Nigeria continues to evolve its regulatory framework for digital assets, this development underscores the importance for traders to stay informed about local laws and their potential impacts on trading activities.

The KuCoin team expressed their gratitude for users’ cooperation and understanding, reiterating their commitment to providing a secure and compliant trading environment.

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Bitcoin Eyes Gains with Seasonal July Boost After Slump

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After several months of declines and rangebound trading, Bitcoin (BTC) bulls have reason to cheer as the largest cryptocurrency is poised for a potential seasonal upswing this July.

Historical data and recent market movements suggest a positive outlook for Bitcoin, following a period marked by billions in sales, upcoming selling pressure, and outflows from exchange-traded funds (ETFs).

Since April, Bitcoin has been trading within a narrow band of $59,000 to $74,000, weighed down by market dynamics and peak negative sentiment among retail traders.

However, July has historically been a bullish month for Bitcoin, and early indicators show a possible reversal of recent trends.

On the first day of July, U.S.-listed ETFs recorded nearly $130 million in inflows, their highest since early June.

This influx comes after a significant $900 million outflow in the previous month, signaling renewed investor confidence in the cryptocurrency.

“Bitcoin has a median return of 9.6% in July and tends to bounce back strongly, especially after a negative June,” said Singapore-based QCP Capital in a recent Telegram broadcast.

“Our options desk saw flows positioning for an upside move last Friday into the month-end, possibly in anticipation of the ETH spot ETF launch. Many signs point to a bullish July.”

Historical data supports this optimistic outlook. Over the past decade, Bitcoin has gained an average of more than 11% in July, with positive returns in seven out of the ten months.

A 2023 report by crypto fund Matrixport highlighted significant July returns in recent years, with gains of around 27% in 2019, 20% in 2020, and 24% in 2021.

Seasonality, the tendency of assets to experience regular and predictable changes that recur annually, appears to be a driving factor.

These seasonal cycles can be influenced by various factors, such as profit-taking around tax season in April and May, leading to drawdowns, and the generally bullish “Santa Claus” rally in December, which reflects increased demand.

As the cryptocurrency market enters July, Bitcoin traders and investors are optimistic about a potential rally. While the market remains cautious of underlying pressures, the historical trends and recent inflows suggest a favorable environment for Bitcoin’s resurgence.

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