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However, an agreement reached between lawmakers and the country’s finance minister reportedly put an end to any plans to postpone the enactment of the crypto tax law.
South Korea’s crypto tax regime is one of several stringent regulations enacted by the government in recent years that may shape the country’s cryptocurrency market in the future.
The mandatory licencing requirement for South Korean crypto exchanges went into effect in September, forcing several smaller platforms to close down.
Decoupling from macro market movements and the United States dollar, Bitcoin is once again looking like the gold alternative that investors want — all while altcoins slip away.
With “Uptober” still only in its second full week, Cointelegraph takes a look at what might lie in store for BTC price action over the coming days.
Altcoins lag ahead of “Bitcoin season”
Things are looking rosy as the week begins for Bitcoin traders — last week’s four-month highs are back and beaten.
With the exception of a curious anomaly on exchange Bitstamp, which saw a momentary wick down to $51,000, a quiet weekend preserved previous gains.
Now seemingly lining up an attack on final resistance below all-time highs of $64,500, BTC price action is delighting market participants.
— Michaël van de Poppe (@CryptoMichNL) October 11, 2021
However, there is another factor at work behind Bitcoin’s strength — one that could preserve further upside in the short term.
Altcoins are underperforming, prompting predictions of a “Bitcoin season” before some form of alt season reappears later. According to reports, this may not happen until 2022.
Each 1% = roughly a 10% drop vs BTC ratios
Volatile week ahead w/etf not conductive to high alt exposure
— Pentoshi Won’t Dm You. hates Dm’s. DM’s are scams (@Pentosh1) October 10, 2021
The situation is particularly visible in Ether (ETH), the largest altcoin by market capitalization, now at its lowest against BTC since the start of August.
“ETH/BTC breaking down, while Bitcoin consolidating,” Analyst Michaël van de Poppe summarized late Sunday.
“I’m assuming Bitcoin continues, while altcoins are not getting the game yet.”
Van de Poppe nonetheless added a contentious cycle price peak for ETH/USD of up to $20,000, with a timeframe of Q1 next year.
“You are here”
It takes a lot to please Bitcoiners when it comes to BTC price action.
As any longtime inhabitant of Crypto Twitter will know, even the most unexpected moves in BTC/USD can only satisfy sentiment for so long before investors demand more.
Last week was no exception: Bitcoin gained $3,000 in minutes, $5,000 in an hour, and reached four-month highs, but commentators complained about being “bored” days later.
The weight of Bitcoin expectations in 2021 — the year following the third halving and thus the deadline for a halving cycle price top — is palpable.
The extent to which the BTC price can rise is hotly debated, and while some argue that $200,000 or even $300,000 is “programmed,” others are already losing faith, claiming that this cycle cannot be like the previous two.
Comparing post-halving years, on the other hand, appears to deliver a nearly unanimous verdict on Bitcoin’s chances — the main rise to a blow-off top has yet to begin.
September’s dip below $40,000, for example, echoes similar events in 2013 and 2017. These came immediately before lift-off, acting as the “ultimate” bear trap.
Overlaying 2021 price performance onto that from 2017 likewise produces uncanny similarities.
All of these findings, according to popular trading account TechDev, point to this year’s peak being an order of magnitude higher than the previous one. Whether technical or not, the analyst contends that a six-figure high is almost logically guaranteed.
Meanwhile, the parallels are nothing new, with various sources charting the degree of price conformity to previous post-halving years throughout 2021.
One day, $31 billion settled
Throughout the 2020–2021 bull run, much attention has been paid to Bitcoin’s network fundamentals, but there is more.
With the hash rate and difficulty almost fully recovered and nearing all-time highs, new data shows that other aspects of Bitcoin are also breaking records.
This week, it’s all about network capacity and scaling — all on-chain, before the Lightning Network even comes into play.
As noted by analyst Kevin Rooke, a single day last week saw Bitcoin handle over $30 billion of value.
“$31 billion. That’s how much value was settled on the Bitcoin blockchain in a single day this week,“ he commented.
“It’s a new all-time high for Bitcoin, and a 40x jump in settlement value since 2020 began.”
The impressive transformation has been accompanied by consistency in cost — Bitcoin transaction fees remain low.
Questions over GBTC
The countdown to a decision on a Bitcoin exchange-traded fund (ETF) continues to excite this week — but is an approval already “priced in?”
While the Securities and Exchange Commission has pushed back the deadline for deciding the fate of spot-based Bitcoin ETFs to November, futures-backed ETF products will be decided this month.
The latter have elicited both praise and criticism, while the fate of existing institutional Bitcoin instruments, most notably market heavyweight the Grayscale Bitcoin Trust, remains uncertain (GBTC).
GBTC continues to trade at a significant discount to spot against a rapidly rising Bitcoin price, and this trend has only deepened in recent weeks.
Should ETFs get the go-ahead, analysts argue that ever more capital will flow into them, long ahead of Grayscale itself converting its funds to ETFs.
For macro analyst Lyn Alden, the chances of the so-called “Grayscale premium” returning to even neutral territory seem slim.
“I doubt it, but it’s not impossible for it to happen if there is a huge bitcoin rally and no ETF available at the time,” she responded when asked in a social media discussion on the weekend.
Bitcoin’s performance exceeded the base case that I wrote about it in 2020, partly due to the GBTC neutral arbitrage trade which pulled forward temporary extra demand.
— Lyn Alden (@LynAldenContact) October 9, 2021
Alden was updating research from last year in which she had highlighted the role of GBTC in Bitcoin price action. The relative absence of the phenomenon now, she said, is conversely positive for the sustainability of BTC price performance.
For those concerned that the return to four-month highs has been accompanied by market instability, think again.
According to sentiment gauge the Crypto Fear & Greed Index, the latest BTC price uptick is firmly rooted in sustainable growth.
This contrasts with the norm — moves to highs, and especially near all-time highs, tend to see the Index reach “extreme greed.” This in turn suggests an unsustainable market that is easy to destabilize, sparking a price correction.
So far, while near $57,000, Fear & Greed measures only 71/100 — “greed” rather than “extreme greed” and still far from the classic top area of 95/100 and higher.
October has nonetheless produced major changes in sentiment. On Sept. 30, for example, just two weeks ago, the Index measured 20/100 — “extreme fear.”