Good morning. Here’s what’s happening:

Prices: Bitcoin traded higher alongside U.S. stocks, reaching $41,360.

Insights: Germany might not be as crypto-friendly as its top ranking implies.

Technician's take: Bitcoin's recovery phase remains intact, albeit within a wide trading range.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.

Prices

Bitcoin (BTC): $41,386 +1.4%

Bitcoin Price Rises for Second Day on Hopes for Soft Landing

By Bradley Keoun and Angelique Chen

Bitcoin (BTC) continued its recovery from a five-week low of around $38,700 on Monday.

Recently, the largest cryptocurrency by market value was changing hands at $41,300, still well off the high around $48,000 a few weeks ago.

“The macro landscape is looking positive, in my opinion,” wrote Marcus Sotiriou, analyst at the U.K.-based digital asset broker GlobalBlock in a newsletter.

Sotiriou thinks the economy will have a soft landing despite many analysts forecasting a recession. He is bullish on bitcoin and equities even though the U.S. Federal Reserve might jack up interest rates by 0.5 percentage point next month – double the 0.25 percentage-point increases seen in recent years.

Last week, crypto funds suffered outflows for the second straight week, with some $97 million of redemptions, possibly due to "bitcoin becoming increasingly interest-rate sensitive."

According to Glassnode, a large amount of bitcoin supply has been accumulated between the $38,000 and $45,000 price range, as reported by CoinDesk's Damanick Dantes in Market Wrap. That suggests price-insensitive traders hold much of bitcoin's supply above the $40,000 price level.

"Traders have still yet to make high conviction bets to the upside or downside," according to analysts from the investment research firm FundStrat.

Coin Metrics, a blockchain analysis firm, noted that Bitcoin is approaching the halfway point between the original blockchain's third and fourth reward halvings. (They happen every 210,000 data blocks, or roughly every four years; the next one is scheduled to happen on May 4, 2024.)

"Halvings are the core feature of Bitcoin’s programmatic monetary policy," Coin Metrics wrote.

In traditional markets, U.S. stocks rose as analysts noted that investors had become too bearish, and the 10-year U.S. Treasury bond yield rose to 2.94%, the highest since 2018.

Elsewhere in crypto, CoinDesk's Tracy Wang reported that the prolific decentralized finance (DeFi) developer Andre Cronje appears to be back in crypto after abruptly quitting the industry last month.

Markets

Insights

No, Germany Isn’t the World’s Most Crypto-Friendly Country

What’s the first thing you associate "EU" with when it comes to business? Devastatingly high taxes and a fierce bureaucracy.

So it's of some surprise when Germany recently took top spot away from Singapore as the world’s most crypto-friendly jurisdiction, according to a ranking by CoinCub.

The rationale? No taxation on crypto if you sell it after a year of holding. If you sell it (over 600 euros, or $648) prior to that one-year point, you are taxed under the usual capital gains regime.

To be sure, this is a very good thing for long-term HODLERs. If you are long bitcoin and want to stack sats, this tax regime will treat you very well.

However, this doesn’t work very well for decentralized finance (DeFi). Decentralized exchanges, yield farming, liquidity mining, all of this relies on rapid trades and transactions. It's what underpins this fancy new machine, which has over $100 billion in value currently locked in.

So a DeFi trader in Germany is going to have a nasty tax bill come tax time. Figuring out the tax liability is difficult, when the average month of a DeFi trader is a complex and intricate web. Crypto derivatives trading – which pumps through hundreds of billions of dollars a day in volume – is also subject to the usual capital gains tax, too. Germany’s crypto friendliness quickly slips away if you look at it under this rubric.

Crypto has naturally gravitated to hubs like Singapore because of the lack of capital gains tax. Singapore is an island city with no natural resources, so in order to jump-start its development as a hub it created a tax-friendly regime to encourage trade.

With no capital gains tax there’s no need to worry about the length of holding when experimenting with new protocols. You’re just able to trade.

Granted, Singapore has made some moves that would be considered "anti-crypto," but this still doesn’t mean the country should be considered crypto unfriendly.

The Monetary Authority of Singapore (MAS) discourages crypto trading by the general public because it knows that if enough people get rekt after leveraging their retirement savings, they will complain to politicians who will ask for more oversight and control – this oversight and control just isn’t in the DNA of a financial hub like Singapore.

But despite this discouragement, the lack of capital gains tax still exists and anyone that wants to trade can go right ahead. Singapore also discourages other behavior like drinking alcohol and smoking tobacco, and accompanies both with hefty vice taxes. No such vice tax exists for crypto.

Technician's take

Bitcoin (BTC) returned above $40,000, which is the midpoint of its three-month long price range. Still, the cryptocurrency faces initial resistance at $43,500, which could stall the current upside in price.

BTC was trading around $41,200 during the New York trading day, and was up 2% over the past 24 hours.

The relative strength index (RSI) on intraday charts is approaching overbought levels, similar to what occurred in late-March, which preceded a pullback in price. On the daily chart, however, the RSI is neutral, which means buyers could remain active at support.

For now, BTC continues to hold support above $37,500 – a key level that has kept the recovery phase intact. Further, a series of higher price lows since Jan. 24 indicates a slowdown in selling pressure, albeit with 20% price swings.

Momentum signals on the weekly chart are still positive, which could point to additional upside toward the $46,710 resistance level over the intermediate term.

Important events

10:30 a.m HKT/SGT(2:30 a.m. UTC) International Monetary Fund Global Outlook Press Conference

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Headlines

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