Following a recent court ruling in Illinois that classified Bitcoin and Ether as commodities, Nigerian stakeholders are calling on the Nigerian Securities and Exchange Commission (SEC) to adopt a similar approach. This move aims to provide a tailored regulatory framework that reflects the unique characteristics of these digital assets.

Importance of Clear Guidelines

Lucky Uwakwe, chairman of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), emphasized the need for clear guidelines on crypto asset classification.

“The Nigerian SEC should make rules that define the asset class of crypto assets or break respective crypto into asset classes and explain to the public how such crypto qualifies to be called securities or commodities,” Uwakwe told.

He noted that while the US SEC and the Commodity Futures Trading Commission (CFTC) agree on classifying Bitcoin and Ether as commodities, the distinction between proof-of-stake (PoS) and proof-of-work (PoW) protocols could affect the classification of specific crypto assets.

Advocacy for Individual Scrutiny

Oladotun Wilfred Akangbe, chief marketing officer at Flincap, highlighted the multifaceted nature of cryptocurrency and the varied interest from multiple Nigerian governmental bodies, including the CBN, SEC, FIRS, and NSA. Akangbe stressed the need for distinct regulatory approaches for Bitcoin and Ethereum compared to other cryptocurrencies.

“Foundational cryptocurrencies such as Bitcoin and Ethereum have become very valuable commodities, and assets are priced in them,” Akangbe said.

He suggested that the SEC should primarily focus on using cryptocurrencies as fundraising instruments, such as initial coin offerings (ICOs).

Local crypto analyst Rume Ophi argued that each cryptocurrency is unique and should be scrutinized individually to determine whether it qualifies as a security or a commodity.

Path to Comprehensive Regulation

The stakeholders’ recommendations are crucial as Nigeria seeks to establish a comprehensive regulatory framework for digital assets. By considering Bitcoin and Ether as commodities, the Nigerian SEC can provide much-needed clarity and stability in the market, encouraging innovation while ensuring regulatory compliance.

This approach aims to position Nigeria at the forefront of the global financial landscape by providing a robust and clear regulatory environment for digital assets.

A UK-based Bitcoin organization is urging the new Labour government to implement a Bitcoin mining strategy to address the growing local electricity demand. Bitcoin mining offers various potential uses beyond network security, such as powering machine learning and large gaming setups. Bitcoin Policy UK advocates using Bitcoin mining to support sustainable grids and renewable electricity generation.

Bitcoin Mining and Renewable Energy

A report released by Bitcoin Policy UK on July 10 highlights that the Bitcoin mining industry, a major electricity purchaser, could help make the intermittent supply of power from renewable grids more robust and viable. The report emphasizes that Bitcoin mining provides a completely elastic demand for spare renewable energy, setting a floor price and monetizing otherwise unused energy.

The organization argues that Bitcoin mining could operate without government subsidies or payments, using stranded or wasted energy. The report suggests that Bitcoin mining is the perfect technology to address the viability issues of the UK’s energy ambitions, noting its absence in the UK market on a large scale.

Examples and Potential

In Texas, Bitcoin mining is already used as a flexible load, with miners providing an interruptible load that can be shut off instantly to respond to grid demand and repowered afterward. The report claims this approach could solve the commercial viability issues of the UK’s energy security strategy targets, assuring renewable energy providers of a buyer for all the energy they produce.

Government and Industry Response

Bitcoin Policy UK is pushing for this new strategy following the UK elections on July 4, which resulted in a Labour government. The new government announced plans to establish a National Wealth Fund worth £7.3 billion to support green industries. The local crypto community has called for a more consistent policy on crypto.

Freddie New, co-founder and head of policy at Bitcoin Policy UK, expressed hopes for policies that protect and preserve the rights of UK citizens who hold Bitcoin. He noted that the previous government aimed to turn the UK into a “crypto hub” but fell short due to poorly conceived regulation. New highlighted the untapped potential of the Bitcoin mining industry for stabilising and monetising sustainable power grids and reducing methane and biogas emissions if co-located on farms or near landfills.

Bitcoin Policy UK looks forward to collaborating with the new government on Bitcoin-related policies, aiming to leverage Bitcoin mining to enhance the UK’s renewable energy grid and ensure energy security.

The German government has transferred over 3,000 Bitcoin within one hour, bringing the total BTC volume moved by the authorities in the last 24 hours to a five-figure amount. These transactions are part of a broader sell-off trend initiated on June 19, despite opposition from some members of parliament.

Call for Strategic Reserve

German lawmaker and Bitcoin advocate Joana Cotar has urged the government to halt its rapid disposal of state-owned Bitcoin. Cotar argues that retaining Bitcoin could serve as a strategic reserve currency, providing protection against the risks associated with the traditional financial system. She believes that maintaining BTC in the country’s treasury could aid in diversifying assets, promoting innovation, and hedging against inflation.

Arkham Intelligence data showing the last four hours of transactions made by the German Government wallet. Source: Arkham Intelligence

Heavy Bitcoin Movements

In the last 24 hours, the government-controlled wallet, currently holding 35,488 BTC worth over $2 billion, has seen significant activity. The address received 4,340 BTC, of which over 3,000 BTC have been transferred to exchanges or unknown addresses. This activity follows a series of transactions since June 19, which saw more than half of the received BTC being moved out of the wallet.

Political Disagreement on BTC Strategy

On July 4, Cotar issued a statement urging the government to reconsider its strategy of selling BTC, describing the move as “counterproductive.” Despite her appeal, the government proceeded to sell another $172 million worth of Bitcoin later that day. The wallet in question, which previously held over 42,200 BTC worth $2.4 billion, has now reduced its holdings to just over 35,400 BTC valued at $2 billion.

Additional Market Sell Pressure

The market sell pressure is further compounded by the recent announcement from the defunct crypto exchange Mt. Gox. The exchange has begun repaying its BTC and Bitcoin Cash debts, adding to the ongoing sell pressure. Nobuaki Kobayashi, the trustee overseeing the repayments, confirmed that the process is being carried out in accordance with the Rehabilitation Plan. A recent update from MtGoxBalanceBot indicated that over 47,000 BTC of the trustee’s known addresses, which hold a total of 94,400 BTC, have been moved.

Bitcoin and other risk assets might gain from a weakening job market and rising unemployment in the United States, the world’s largest economy.

The U.S. unemployment rate rose to 4.1%, exceeding the anticipated 4.0%, marking its highest level since December 2021. In June, the U.S. economy added 206,000 jobs, surpassing the expected 191,000 but significantly lower than the revised 218,000 jobs added in May, according to the Bureau of Labor Statistics’ nonfarm payroll data released on July 5.

BTC/USD, YTD chart. Source: TradingView

A weakening labor market in the U.S. could positively impact Bitcoin’s price, according to Jag Kooner, head of derivatives at Bitfinex.

“If the NFP report shows weaker-than-expected job growth, it could increase expectations for future rate cuts, which might bolster Bitcoin prices as investors seek alternative assets in anticipation of a looser monetary policy”.

Bitcoin’s Price Struggles

Bitcoin’s price has been in a downtrend for over a month, falling below the significant $60,000 mark. On July 5, Bitcoin dropped over 10.5% within 24 hours, reaching a more than four-month low of $53,550. According to Bitstamp data, the last time Bitcoin traded at this level was in February 2024.

BTC/USD, 1-week chart. Source: Rekt Capital

While some traders worry that the bull cycle has ended, analysts like Rekt Capital see the current correction as consistent with past Bitcoin corrections. Rekt Capital noted in a July 4 post,

“This pullback is -21% deep & 45 days long. In this cycle, average retrace depth is -22% & average retrace duration is 42 days. In terms of retrace depth, this is almost an average retrace. In terms of retrace duration, this is an above-average pullback.”

Bitcoin ETF Flows Lagging

Institutional inflows from U.S. spot Bitcoin exchange-traded funds (ETFs) have been lagging. The U.S. ETFs are set to log their third consecutive week of net negative inflows, with over $315 million worth of cumulative net outflows so far this week, according to Dune data.

Bitcoin ETF net weekly flows. Source: Dune

Kooner suggests that Bitcoin ETF flows might see an uptick if the weakening labor market drives expectations of potential interest rate cuts.

“Bitcoin ETF flows might see an uptick if market participants believe that economic uncertainty will drive the Fed towards eventual rate cuts, enhancing the appeal of Bitcoin as an inflation hedge. However, significant inflows would depend on broader market sentiment and risk appetite,” Kooner said.

Despite these possibilities, Kooner also notes a recent lack of inflows and “dip-buying” purchases.

Bitcoin sought a rebound as the market digested the start of Mt. Gox reimbursements. Data from Cointelegraph Markets Pro and TradingView tracked a 3.8% rebound in Bitcoin (BTC) prices from lows of $55,550 on Bitstamp, marking the lowest levels since late February.

Bitcoin Bull Market: “Rocky Road Ahead”

Market observers, while surprised at the latest downside extent, attributed the decline to the start of transfers from wallets affiliated with the Mt. Gox rehabilitation proceedings. Popular trader Daan Crypto Trades commented, “The first transfers have begun. The market sold off again following these transfers. Now comes the time where we’ll figure out how much is getting sold and how the market absorbs it. Rocky road ahead but after this massive supply overhang is cleared, that’s great for the space in the long run.”

BTC/USD 1-hour chart. Source: TradingView

The total funds involved in the distribution to Mt. Gox creditors exceed $8 billion in Bitcoin and Bitcoin Cash. Despite the sell-off, BTC/USDT continued to respect a broad downward trending channel, a sign seen as encouraging by some market participants.

Challenging Times for Bitcoin Holders

Even bullish voices within the trading community acknowledged the challenging times for Bitcoin holders. “Bitcoin’s higher timeframe market structure is being put to the test,” noted popular trader Jelle. He highlighted the importance of the three-day chart and emphasized the need for BTC to close above $57,000 to maintain a bullish structure.

Ichimoku Cloud and BTC Price Monthly Close

The latest weekly candle further pressured the bull market from the perspective of the Ichimoku Cloud indicator. At $56,150, the price fell below the Kijun Sen trendline on weekly timeframes, with the candle sandwiched between it and the upper trendline, Tenkan Sen.

BTC/USDT chart. Source: Daan Crypto Trades/X

Commenting on the setup, popular trader Titan of Crypto suggested that a close below Kijun Sen on monthly timeframes would require a rethink of the overall bullish market structure. “From Ichimoku’s perspective, unless a monthly candle closes below Kijun and confirms with the following monthly candle, Bitcoin remains bullish,” he stated in a recent X post.

The market continues to closely monitor the impact of Mt. Gox reimbursements and overall market sentiment as Bitcoin attempts to regain stability and upward momentum.