Bitcoin

Will Investors Leave the Country?

Published

3 hours ago

October 17, 2024

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Italy is considering a dramatic raise to its capital gains tax on Bitcoin (BTC) and other cryptocurrencies from 26% to 42%. The move could place it among the countries with the highest crypto taxation rates in Europe.

This decision, part of Italy’s 2025 budget plan, aims to address fiscal shortfalls by leveraging the fast-growing digital asset market.

Italy Risks Crypto Flight With 42% Bitcoin Capital Gains Tax

Italy’s Deputy Economy Minister Maurizio Leo announced the tax hike at a Wednesday conference. He said increasing the capital gains tax by 16% would bolster public services amid budgetary constraints. The government hopes that the added revenue will help address the country’s fiscal challenges, particularly funding public services and healthcare.

The plan also includes scrapping the revenue thresholds for Italy’s Digital Services Tax (DST), a measure targeting large digital platforms. Previously, the DST applied only to companies generating over €750 million (or approximately $815 million) in global revenue. However, this will no longer be the case if the proposed bill passes.

It is worth noting that Italy’s proposed 16% increase in capital gains tax contradicts what Prime Minister Giorgia Meloni recently wrote on X (formerly Twitter).

“…we [the Council of Ministers] approved the budget law, an intervention that puts citizens, families, and the relaunch of our Nation at the center. As we promised, there will be no new taxes for citizens. In addition, we will make the tax cut on workers structural, and 3.5 billion from banks and insurance companies will be allocated to Healthcare and the most vulnerable to ensure better services that are closer to everyone’s needs. With this Government, Italy looks to the future with a budget law that puts the work and well-being of Italians first,” Prime Minister Meloni shared.

The prospective capital gains tax has sparked significant controversy among investors and industry leaders, with largely negative reactions. The general sentiment is that it could stifle the country’s growing financial sector, especially in crypto.

Specifically, many argue that the move could push crypto investors out of Italy, potentially leading to capital flight. This occurs when investors move funds abroad to avoid taxes or inflation, seek better returns, or prepare for possible emigration.

The same happened in India in 2022, where heavy taxes on digital assets adversely affected crypto trading volumes. The government imposed a 30% capital gains tax on profits from digital assets starting in April 2022. Additionally, losses from one asset could not be used to offset taxes on profits from other assets, further impacting traders.

At the time, some overseas platforms saw signups surge to as many as 450,000, as Indian investors sought alternatives to avoid the country’s high taxes. This created a domino effect, with many shifting to foreign platforms. Given this precedent, there are concerns that Italy could face a similar exodus of crypto activity if heavy taxation policies are enforced.

“Time to leave Italy,” Lorenzo, a popular user on X, quipped.

Therefore, the risk to the local crypto industry is considerable as the bill awaits going into the voting stage. The proposed tax hike also comes at a time when Italy’s broader financial policies are in the limelight. In 2022, Italy imposed a 26% tax on cryptocurrency profits exceeding €2,000 (or $2,172). This marked a significant shift in the country’s approach to digital assets.

Against these backdrops, the latest proposed increase could make Italy one of the least attractive European nations for cryptocurrency investors. From a global context, this capital gains tax proposal would place it in a unique position in Europe. Italy could also lose its position in the region in terms of trading volume metrics.

Estimated crypto trading volume across European countries. Source: CoinWire Analysis

Noteworthy, the Italian parliament will vote on the proposal later this year. If approved, this tax policy could come into effect in 2025, potentially reshaping Italy’s position in the global cryptocurrency market.

Tether’s CEO Paolo Ardoino is particularly vocal about Italy’s proposed bill, condemning the measure as detrimental to innovation. Ardoino criticized Italy’s plan, suggesting that it would hinder the country’s ability to attract new technological ventures.

“How dare the subjects use the Bitcoin as protection/optionality towards Italian financial policies,” Ardoino noted.

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What is Matt Hougan’s Bitcoin Price Prediction For 2025?

Published

9 hours ago

October 17, 2024

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Matt Hougan, Bitwise’s Chief Investment Officer, has forecast a significant price surge for Bitcoin and Ethereum in 2025.

During a YouTube interview, he outlined the reasons behind this bold prediction.

3 Reasons Why Bitcoin Could Reach $200,000 by 2025

Hougan shared three key factors for his bullish outlook. These stem from the US elections, large amounts of sidelined capital, and the long-term impact of Bitcoin ETFs. On the political front, Hougan argued that either a pro-crypto President, Donald Trump, or a neutral President, Kamala Harris, could have a positive—or at least non-negative—impact on Bitcoin.

US Presidential Election Winner Odds. Source: Polymarket

At the time of writing, Trump’s chances of becoming president reached 58.9%. Bitcoin prices have also surpassed $67,000, as investors believe that Trump will introduce policies that could drive significant market growth.

Moreover, Hougan revealed that many major investors have yet to enter the market. They are waiting for more political and regulatory clarity. However, if Bitcoin continues its upward trajectory, these investors may feel compelled to jump in sooner rather than later.

“The election represent uncertainty, and so investors are sitting on the sidelines, waiting. They realized that crypto is not going away. They realized that it’s moving into the institutional sort of part of the world, but they thought they could wait and delay. I think if this rally continues, if [Bitcoin] trips up towards $70,000, then, it becomes a self-fulfilling prophecy. People would realize they have to get on the train.” Hougan said.

Additionally, Hougan also emphasized the long-term potential of Bitcoin ETFs. As a former CEO of ETF.com, he believes the $20 billion inflow in the first year of Bitcoin ETFs represents a major success. Similar to gold ETFs, Bitcoin ETFs are still in their early stages.

Bitcoin ETF vs Gold ETF. Source: Bastion Trading

The latest data shows that, despite being in existence for less than a year, Bitcoin ETFs’ Assets Under Management (AUM) are already over 52% of that of Gold ETFs.

“Before I came to Bitwise six and a half years ago, I was the CEO of etf.com, so this is my neck of the woods. The thing that crypto should realize about ETFs is that they are multi-year stories. If you look back at the Gold ETF, which launched the most successful ETF launch of all time…I think the same thing is going to happen for Bitcoin ETFs. We’re still really at the earliest stage.” Hougan said.

When asked about his Bitcoin price forecast, Hougan predicted that BTC would reach a new all-time high by the end of the year. Moreover, he affirmed that Bitcoin could hit $200,000 in 2025.

Hougan is also optimistic about Ethereum. He says that while it is currently undervalued due to the rise of competing blockchains, it remains the top platform for DeFi applications, stablecoins, and tokenization. With regulatory and technological advancements, Ethereum could also set a new record high by 2025.

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Bitcoin ETF Inflows Hit $1 Billion in 3 Days—BlackRock Leads

Published

1 day ago

October 16, 2024

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Bitcoin ETFs (exchange-traded funds) surpassed $1 billion in total net inflows over the past three trading days. BlackRock leads these positive flows, providing institutional investors with continued access to BTC through this financial instrument.

Amid positive market sentiment, BTC is trading above $67,000, with the potential to reclaim its all-time high of $73,777.

Bitcoin ETF Inflows Breach $1 Billion Mark In 3 Days

Total net inflows for spot Bitcoin ETFs in the US soared to an impressive $1.18 billion over the last three trading days. Meanwhile, the cumulative total net inflow metric surged to record a new high of $19.73 billion. Monday, October 14, saw the largest daily total net inflows, coming in at $555.86 million.

The renewed interest was seen across the past week, where crypto investment inflows reached $407 million. This reversed early October’s $147 million negative flow amidst rising US election focus.

Meanwhile, BlackRock remains at the forefront of this wave of institutional interest for Bitcoin investments. Alongside Fidelity, the two asset managers jointly attracted nearly $760 million over the last three days, data on Farside shows. On Tuesday, October 15, BlackRock led the inflows, recording up to $288.8 million in positive flows.

Read more: What Is a Bitcoin ETF?

Bitcoin ETF Flows Against Issuers. Source: Farside

The soaring inflows align with Bitcoin’s nearly 13% price surge since Friday. Standard Chartered analysts predict that this momentum could drive Bitcoin to reclaim its all-time high as the US election approaches. CoinShares researchers echoed this view, attributing the rising interest to US politics rather than monetary policy.

BlackRock’s dominance in the Bitcoin space is unsurprising, given the firm’s pivot to cryptocurrency. Alongside MicroStrategy’s Michael Saylor, BlackRock remains one of Bitcoin’s strongest advocates. During the Q3 earnings call, CEO Larry Fink revealed that IBIT reached a $23 billion market in just nine months, fueled by billions in investments.

Read more: Who Owns the Most Bitcoin in 2024?

Despite the enthusiasm around Bitcoin, Ethereum-related products do not show the same sentiment for BlackRock. Challenges range from few entries to net outflows for some offerings, suggesting a focus of interest on Bitcoin. Robert Mitchnick, head of digital assets at BlackRock, ascribed this to a more complex investment narrative surrounding Ethereum.

“We believe in the potential of Ethereum, but we know it takes time for investors to grasp the full extent of this asset,” Mitchnick said during his speech at the Messari Mainnet conference in New York.

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Blockstream Raises $210 Million for Bitcoin Layer-2 Solutions

Published

1 day ago

October 16, 2024

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Bitcoin infrastructure firm Blockstream announced a $210 million funding round. Fulgur Ventures led this substantial cash inflow, which will primarily focus on Layer-2 Bitcoin Development.

Blockstream will also allocate some of these funds towards mining infrastructure and direct Bitcoin purchases, but according to its press releases, these goals appear secondary.

Blockstream’s Fundraising Rally

Bitcoin infrastructure company Blockstream announced an end to its most recent convertible note financing round on October 15. This fundraising round, led by Fulgur Ventures, raised a total of $210 million. These new funds will primarily go towards Layer-2 (L2) development, mining infrastructure improvements, and direct Bitcoin purchases.

“This fundraise is pivotal in our journey to bridge Bitcoin with broader finance. We’re excited to bring on Michael Minkevich as COO, and to have Fulgur Ventures’ support in advancing Bitcoin finance,” said CEO Adam Back via social media.

Blockstream first opened its operations in 2014. The firm has remained fairly under the radar as of late, but several points have raised Blockstream’s notoriety. For example, Back was prominently featured as a “key crypto figure” interviewed in the recent HBO documentary to unmask Satoshi Nakamoto.

Additionally, this was not Blockstream’s only major fundraising drive in the second half of 2024. The firm opened a series three funding round for its BMN2 security token in September after raising $7 million in a previous round this July. This round, however, is substantially larger, and the partnership with Fulgur suggests a particular focus on L2 technology.

“We believe in Bitcoin as a next generation politically neutral monetary system, the foundation for decentralized finance of the future. While Bitcoin is an efficient settlement layer, it needs a Layer-2 solution for everyday transactions,” claims Fulgur’s website.

Blockstream’s two L2 solutions, Liquid and Greenlight have slightly different specialties, but both are interoperable with Lightning Network. Liquid alone boasts $1.8 billion in assets issued, and Greenlight runs over 150 thousand live Lightning nodes.

Although Blockstream mentioned two additional goals, mining infrastructure, and direct Bitcoin purchases, its press release sparsely mentions these secondary goals. So far, all of Blockstream’s media announcements have painted these L2 projects as the main focus. Any specifics on the firm’s secondary goals remain elusive.

Additionally, BeInCrypto reported that Bitcoin L2 solutions have attracted large amounts of funding lately. The L2 projects collectively raised $94.6 million in Q2 2024.

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