• Bitcoin price trading remains mundane above $45,000 while upside limited under $47,000.
• Closing the day above the 200-day SMA would cement the bulls’ influence in the market.

Bitcoin price slipped marginally under $45,000 during the American session on Thursday. The move was accentuated by the loss of the 200-day Simple Moving Average (SMA). However, the bulls woke up quite fast and pulled BTC upward.

Meanwhile, the flagship cryptocurrency trades at $45,245 as buyers work extremely hard to secure the position on top of the 200-day SMA. Note that closing the day above this level confirms that bulls are mainly in control, and despite that despite the sluggish price action, Bitcoin’s most probable direction is upward.

Is Bitcoin Uptrend Still Viable?

The daily chart shows that a bullish formation is incoming and could bolster Bitcoin significantly upward. Realize that as the 50 SMA closes the gap to the 100 SMA, the odds of another leg up rise.

It is worth mentioning that the 50 SMA crossing above the 100 SMA is not a golden cross pattern. However, it is a bullish formation all the same and can trigger buy orders that may bring Bitcoin closer to $50,000.

BTC/USD Daily Chart

On the upside, sellers recently drew the line at $47,000, challenging Bitcoin’s bid for $50,000. If this barrier cracks, buyers will quickly take down the resistance at this level to pave the way for gains above $50,000. Bitcoin bulls are unlikely to rest until the recovery explores highs heading to $55,000, a move that may stretch the gains to $60,000.

Many analysts expect Bitcoin to close the year, trading around $100,000, including Fundstrat’s Tom Lee. In his latest prediction, Lee said that Bitcoin would recover and discover new price levels alongside the global economy as fears toward COVI-19 go down across the world.

Currently, traders should pay attention to the 200-day SMA support, which, if defended, will allow bulls to focus on lifting above $50,000. Nonetheless, losing this crucial support and closing the day below may trigger sell orders as the MACD flips bearish.

Bitcoin Intraday Levels

Spot rate: $45,245

Trend: Bullish

Volatility: Low

Support: The 200-day SMA

Resistance: $47,000

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Tether (USDT) now has an advantage over USD Coin (USDC). As a result, Circle’s dollar-pegged stablecoin, USDC, lost one of its largest leveraging stances to its main competitor, USDT.

Coinbase, one of the prominent players in crypto exchange, has made a crucial change on the USD Coin page. The crypto exchange placed the change on its website.

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This was in response to an audit that exposed that a few USDC’s reserves were not held in cash. The audit discovery contradicts the statement that every USDC has a corresponding backing of one dollar in a bank account.

Coinbase Brings New Changes By Bringing USD Coin Into Public

From the recent change, the entry statement on the USD Coin webpage is also affected. Coinbase visitors now get a new welcome statement saying that USDC has backing by fully reserved assets.

In addition, the statement now says that every USDC is backed by one dollar or an equivalent asset with fair value. Also, it mentions that the backing is held in accounts under US-regulated financial institutions.

USD Coin has more than $28 billion and is rated as the eighth-largest digital asset. Furthermore, it is the second-largest stablecoin, coming closing behind Tether that takes the top. Tether’s latest Consolidated Reserves Report reveals that the cryptocurrency has about $63 billion assets in its custody.

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From its time of launch, USDC operates as a stablecoin fully backed by US dollars. Conversely, Tether, its major competitor, has been involved in multiple legal fights with regulators. The contributory factor is the hidden commercial paper that claims about half of its total reserves.

Nevertheless, the audit of Grant Horton, a multi-national tax advisory company, comes the discovery about the true backing for USDC. The audit reveals that only 61% of USDC’s reserves are in cash and cash equivalents. Also, some reserves that accrued to 9% are in commercial paper forms.

USD Coin thrives in the green zone as the market gets ready for a bullish run | Source: USDCUSD on TradingView.com

From the definition of the audit reports, cash consists of deposits with banks and Government Obligation Money Market Funds. It further defined cash equivalents as securities that have a 90-day original maturity period or less.

Furthermore, Yankee certificates of deposit and U.S. Treasuries were discovered to be part of USDC reserves from the audit. These included reserves have no full backing by US dollars held in a bank account. Bloomberg explained that Coinbase changed USD Coin webpage wording when the crypto exchange received the audit report.

Reacting to the recent report, Andrew Schmitt, Coinbase spokesperson, said that there’s the backing of $1 or its equivalent fair value asset for each USDC. He explained that the redemption of 1 USDC remains $1 for users. Also, he mentioned that the company has additional information on its website for a clearer understanding of USDC reserves.

On its part, the partnering company with Coinbase that oversees USDC, Circle, made a recent announcement. The company discloses its plan of becoming a full-reserve national digital currency bank in the U.S.

The company’s CEO, Jeremy Allaire, affirms the company’s readiness to comply with all regulatory and risk management requirements.

Through his announcement, Allaire expresses his expectation for USDC rising to hundreds of billions of dollars. Also, he said the stablecoin could move to support more economic activities and be a prominent tool in financial and commercial advancements.

Featured image from CoinCodex, chart from TradingView.com

Is Crypto Loan Safe?

A crypto loan is only as safe as you make it, and that goes for traditional loans as well. You need to ensure that you are not taking on too high of interest payment and that you have a steady income to pay off the loan, and ensure that your personal finances would not take a dramatic hit if your collateral were to get liquidated.

Generally speaking, as long as you follow these steps and are financially responsible, crypto loans can be as safe as traditional loans! It provides many incentives for people to get them, as holders of digital assets may not want to sell their crypto to get access to cash, which would incur capital gains taxes in many jurisdictions around the world.

How Do Crypto Loans Work?

Now, you can get cash by offering your assets as collateral. However, one of the best features of crypto loans is the rapid speed at which you can acquire what you are looking for. Banks typically draw the process out over a very long time, which causes many people to not even go for loans in the first place.

On exchanges like Binance, or any CeFi exchange, you must submit KYC (Know Your Customer) information so that they can pass this information onto your countries tax collecting agencies. However, people feel inclined to get loans on DeFi protocols because they do not need to report KYC information.

Unlike traditional loans, crypto loans do not take a look at a credit score, meaning more people have access to crypto loans than conventional loans, mainly those who have been deemed not credit worthy by banks and those who simply do not even have bank accounts. Instead, users use their own digital assets as collateral for the lender to hold until the loan has been paid off. What this does mean is that there is a liquidation risk.

Crypto loans also differ from traditional loans in the way in which loans collect interest. Traditional loans collect interest statements monthly, whereas crypto loans collect micro-interest daily or even hourly in some cases. Also, because crypto is so volatile and prone to price swings based on news and spot buys, loans are typically available for shorter time frames, such as between 7 and 180 days.

When borrowing cryptocurrencies on platforms like Binance, you must remember that there is always a liquidation risk. When you put, for say, ETH up as collateral, you are betting that the price of ETH won’t fall below a certain amount and that certain amount is determined by how much you borrow and how much collateral is put upfront.

Other outside factors when using a CeFi exchange like Binance is that the health of the company can change overnight, and your collateral and other assets may not be safe if the company went insolvent, and this is why many people have opted to put their trust in DeFi platforms like AAVE or Compound. They are betting on the code within the protocol to be strong and keep performing smart contracts.

Taxes on Crypto Loans

In terms of repaying loans, it is quite easy, and you just need to follow a set of instructions that are sent by the CeFi exchange. If you do not repay the loan, you will be taxed, as your collateral will be liquidated, which triggers the taxable event. The last way you could incur taxes on yourself is if the collateral drops below the amount in which you need the asset to stay above. However, simply using cash received from the loan is not taxable as long as the loan continues to be paid off according to schedule.

Because of this, it is important to understand tax implications if you were to default on your loan or if your collateral fell below the liquidation mark. Crypto loans can be a great way to access cash without triggering taxable events, but that is only if you repay the loan on time with the schedule and if your collateral continues to hold its value and stay above liquidation thresholds.

Conclusion

Crypto loans are an innovative new solution to traditional loans, but of course, they come with their unique risks, which you must understand before acquiring a loan. They allow anyone and everyone to take out loans as long as they put forth collateral, and the best thing about them is that if you default, or if you get liquidated, nothing impacts your credit score! So if you are feeling a little risk-on and need some extra cash to finance a purchase, you should consider crypto loans on both DeFi and CeFi platforms, but of course, only put up what you can afford to lose as collateral!