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BT Daily News: IMF-FSB Joint Paper To Form Global Crypto Rules, and more

Global crypto rules will be derived from a synthesis paper jointly produced by the International Monetary Fund (IMF) and the Financial Stability Board (FSB), India has officially announced as President of the G20 group of nations.

The announcement came after three days of G20 meetings in India, in which creating a global regulatory framework for crypto was announced as a priority issue.

The synthesis paper will be submitted during India’s G20 Presidency that ends in September 2023, CoinDesk quoted Union Minister of Finance Nirmala Sitharaman as saying.

The World Bank has stated that views of all developing countries should also be included in any (crypto) policy framework,” Sitharaman added.

As a result of the collapse of several major crypto companies, including FTX, and a global contagion, Reserve Bank of India (RBI) Governor Shaktikanta Das has said that perceptions around crypto assets had changed. Crypto assets are now widely accepted as risky, Das has said.

1. Bitcoin Mining Difficulty To Reach All-Time High

The difficulty of mining Bitcoin is set to exceed the 40 trillion mark for the first time, rising by an estimated 10 per cent from 39.16 trillion to 43.2 trillion.

Miners will receive reduced BTC production in the next 12 days, or approximately 2,016 blocks, due to the increased difficulty in mining, Binance News reported.

Mining difficulty refers to how many iterations miners must perform to obtain its hash. Higher the difficulty, the lesser is the profitability. The difficulty metric is updated every two weeks, and difficulty is increased when more miners enter the Bitcoin network.

Mining difficulty has been climbing steadily over the past few months due to the price resurgence of Bitcoin.

2. Colombia’s Legal System Experiments In Metaverse

A Colombian court held its first legal trial in the metaverse, with the court magistrate saying it felt “more real than a video call.”

A Reuters report said that the Magdalena Administrative Court of Colombia held a two-hour hearing of traffic dispute case in the metaverse on February 15, 2023.

The participants appeared as avatars in a virtual courtroom, with the magistrate dressed in black legal robes. Columbia became one of the first countries in the world to test legal proceedings in the metaverse, the report said.

Cathy Hackl, author of Into the Metaverse: The Essential Guide to the Business Opportunities of the Web3 Era, said that the “physical world side” of the metaverse will arrive in 10 years, and then “how we socialise will be profoundly affected by the metaverse”.

3. Macro focus flips to central bank liquidity

In a refreshing change to the previous two weeks, U.S. macroeconomic data releases will be more subdued at the start of March.

As Cointelegraph reported, however, analysts are increasingly eyeing counterpart releases from Asia as a potential BTC price influencer.

Central bank liquidity injections — running contrast to the Federal Reserve — remain a key topic.

Global liquidity - projected to rise in 2023, but recently has pulled back,” popular commentator Tedtalksmacro tweeted on the day.

- China injected ~$450Bn into money markets during December + January - US liquidity has flat lined, government liquidity has outpaced Fed QT recently. Markets are a product of liquidity * risk appetite.”

Tedtalksmacro nonetheless highlighted a potential countertrend in the form of Japan’s central bank, the Bank of Japan (BoJ), which he warned may yet resort to financial tightening to tame inflation.

On Friday last week, Japanese core inflation printed at the highest level since 1981 --> fueling speculation that the BOJ will need to tighten after years of extremely easy monetary policy,” he noted.

Comparing U.S. macro asset performance to crypto following the January Consumer Price Index (CPI) data print, meanwhile, he added that crypto assets remained “stubborn” despite others beginning to move higher.

Analysis platform Mosaic Asset focused on the potential for the Fed to hike benchmark interest rates more than expected at its March meeting.

With no signs that the economy is slowing and yet another inflation report running hotter than expected last week…that’s ratcheting up pressure on the Federal Reserve to keep hiking rates quicker and longer than markets are expecting,” it wrote in the latest edition of its updates series, “The Market Mosaic,” on Feb. 26.

You can see that reflected in the odds of the next rate hike’s magnitude, where market implied estimates currently favor another 0.25% increase. But views are quickly shifting to the possibility of 0.50%, with more on the way while rates stay higher for longer.”
According to CME Group’s FedWatch Tool, the odds of a 0.5% hike instead of the 0.25% seen in February currently stand at 27.7%.

4. Sellers see first week of net losses in 2023

While Bitcoin may be up over 40% year-to-date, the road to recovery for the average hodler remains a fragile one.

That is the conclusion of the latest data from research firm Santiment, which shows that last week’s mixed BTC price action still managed to deliver net realized losses among sellers.

Ether saw the same phenomenon play out, marking the first week in 2023 where sellers lost out.

Bitcoin & Ethereum are both having more traders sell at a loss than at a profit this week, the first such week so far in 2023,” Santiment commented.

Historically, once the crowd is exiting their positions more frequently at a loss, bottoms are more likely to form.”

Sellers’ bad luck contrasts with the strategy still firmly in place for long-term holders, who continue to add to their BTC positions.

According to on-chain analytics firm Glassnode, hodlers’ net position change reached a new four-month high this weekend, reflecting the rate at which accumulation is occurring.

In addition, the percentage of the BTC supply which has now been dormant for at least five years is now higher than ever before at 28.24%.
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