CoinLoan Weekly: Market rally, tax refund on staked crypto, spot Bitcoin ETF delayed
After trading over $38,000 and sinking to $36,438.72, Bitcoin entered a recovery phase. Its price bottomed out and rallied on Friday, February 4, reversing the losses of the past few days. It rose over $41,000 and stayed in a tight range over the weekend.
The Fear & Greed Index has jumped from 20 to 45, a considerable improvement from the recent bearish extremes. Trading volume across major exchanges is growing, and the negative sentiment has subsided.
As of now, BTC is trading at $42,683.22, with a 24-hour change of +2.6%. Over the past week, it has gained 12.4%.
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Ethereum bottomed out on Friday, mirroring the dynamics of BTC but outperforming it. Although it is still over 37% below its all-time high, the upward trend is robust.
This is not the first time ETH has outpaced BTC after its recovery. This pattern has been observed since late 2021. Compared to a low of $2,531.51 on Monday, January 31, the cryptocurrency has gained over $500.
As of this writing, ETH is trading at $3,083.80, with a 24-hour change of +2.4% and a 7-day recovery of 18.1%
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Ripple had the most impressive recovery, as it gained nearly $0.19 following a surge on Friday. The uptick on Monday, February 7, the uptick was also stronger than BTC and ETH.
Currently, XRP is trading at $0.776090, with a 24-hour change of 15.8% and a 7-day change of +28.4%. Over the past week, the altcoin has outperformed Ethereum by over 10%, and it is 16% ahead of Bitcoin.
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IRS to refund income tax on staked crypto: why it matters
The IRS has agreed to refund income tax and statutory interest on staked crypto. Joshua and Jessica Jarrett from Nashville, who paid tax on 8,876 Tezos tokens, may get $3,793 in total. This could become a landmark event for crypto holders.
The Jarretts reported the coins on their 2019 federal income tax return as other income. Subsequently, they submitted an amended form but did not receive a timely response. The couple filed a legal complaint in May 2021, and the IRS offered to issue a full refund. However, Joshua Jarrett wants to continue on in the trial to get a formal ruling.
According to the civil lawsuit, tokens obtained through PoS constitute new property. Therefore, they may not be taxed until sold — that is converted into a readily accessible form of wealth under the US tax law.
However, as per the latest instructions from IRS, a crypto transaction includes receiving new virtual currency as a result of mining and staking activities. The refund does not indicate a reversal of its stance, and there is still no government guidance.
The bench trial is scheduled for March 2023, and the court ruling will only be a binding precedent in the Middle District of Tennessee. However, crypto enthusiasts hope that the IRS will change its handling of taxation in the future.
SEC postpones decision on Grayscale's Bitcoin spot ETF
The U.S. Securities and Exchange Commission (SEC) is not ready to list and trade the first Bitcoin ETF — (CRYPTO: BTC) ETF by Grayscale Bitcoin Trust. The notice published on Friday, February 4, cites possible share manipulation, fraud, and liquidity issues. The regulator has requested public comments on the proposal.
Grayscale is the biggest digital asset manager in the world. GBTC, which tracks the Bitcoin price, is its core product. On October 19, 2021, the corporation applied to convert GBTC shares into a spot Bitcoin ETF.
The SEC delayed its decision on the matter. It also postponed ruling on a similar proposal from Bitwise on February 2. However, the regulator is receptive to futures-linked products. In 2021, it cleared the way for Bitcoin ETFs from Valkyrie Investments, ProShares, and VanEck. According to Bloomberg Intelligence analyst James Seyffart, the delay came as no surprise. He expects the final decision to be made around July 6 but notes that rejection is likely.