First Mover Asia: Bitcoin Regains Momentum as Investors Shrug Off Banking, Fed Concerns
Good morning. Here’s what’s happening:
Prices: Bitcoin rebounded past $28K a day after an unwelcome – in some corners – U.S. central bank interest rate hike sent the price spinning downward. Will the momentum last?
Insights: Bitcoin addresses with a balance of 1,000 bitcoins are declining. What does it mean?
Bitcoin Shows Its Resilience, Rebounds Past $28K
So much for fears about federal monetary policy, increased regulatory activity and banking unrest.
A day after bitcoin plunged following a disappointing – to some observers – U.S. Federal Reserve interest rate hike, investors sent the largest cryptocurrency by market capitalization floating above $28,000 again, about where it stood earlier in the week when hopes were high for a cessation of central bank hawkishness.
BTC was recently trading at about $28,393, up 3.8% over the past 24 hours. Even that level represented a retreat from loftier air nearer to $29,000 earlier in the day. Bitcoin has risen about 22% this month and more than 65% since January 1.
"The crypto ecosystem is under attack. You're seeing all of those regulation by enforcement attempts, but also the banking crisis that has spread to banks (that) serve the crypto community," Benoit Bosc, global head of product at crypto trading firm GSR Markets, told CoinDesk TV. "As a result, you have this flight to quality to the majors. Bitcoin has benefited the most, and it's rallied significantly ever since those events have started. This been the case with the action of the Fed yesterday in their refusal to really consider any cuts but even refusal to pause in the cycle of hikes."
Bosc said that markets recoiled from comments on Wednesday by Fed Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen who reiterated their concerns about inflation. Powell fell short of guaranteeing that the bank wouldn't raise interest rates again, which some Fed critics have blamed for recent banking calamities, and Yellen would not promise to protect all bank deposits in the event of a wider-spread sector collapse without Congressional approval. In the aftermath, risk assets of nearly all stripes plunged, sweeping up cryptos.
"The first reaction is one that's correlated to all risk assets; it's a little leg down," Bosc said. "But then after that, you do become, you know, you have that store of value, digital gold feature of bitcoin, which is that, you still have inflation. They're fighting it, but it still exists.
He added: "Bitcoin has a limited supply, and so that's a better alternative. You also have issues with stable coins. So bitcoin suddenly seems more stable and safe than those at the moment."
Ether, the second larges crypto in market value, was recently changing hands at $1,810, up 4.6% from Wednesday, same time. Other major cryptos were largely in the green, regaining ground lost the previous day. Stablecoin XRP and TRX, the token of blockchain-based platform Tron Network, recently rose 5.7% and 9.4%, respectively. TRX dropped the previous day after the U.S. Securities and Exchange (SEC) charged its founder with selling and airdropping unregistered securities, fraud and market manipulation. Litecoin continued its recent momentum, rising 7.8%. The CoinDesk Market Index, a measure of overall market performance, was up 4.2%.
Misdeeds continued to buffet the industry as New York federal prosecutors charged Terraform Labs founder Do Kwon with fraud hours after he was arrested by police in Montenegro. On Wednesday, the SEC warned Coinbase that the agency was pursuing an enforcement action against the exchange.
In an email to CoinDesk, Ilya Volkov, CEO of YouHodler, a Swiss-based international fintech platform providing Web3 crypto and fiat service, noted bitcoin's resilience following the Fed decision. "Crypto is an integral part of the global financial markets," Volkov said.
GSR's Bosc was upbeat about crypto's future. "You have just this morning Do Kwon, and this market, just shrugged it off and continued to rise and stabilize at a level that seemed very elevated," he said. "A couple of months ago, it was no one thought we would be there. Those events a couple of years ago would have decimated the market. It's very interesting to see how strong the market is.
He added: "I don't see it as a risk on rally. But it does give me a lot of confidence in this ecosystem, this community and in the chance for adoption a lot faster than people anticipated."
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Institutional Investors Are Holding Back
The number of bitcoin addresses with a balance in excess of 1,000 BTC has been in prolonged, steady decline since March 2022, decreasing 12%.
The metric, which offers insight into institutional investors’ appetite, suggests a reluctance among this important group to add BTC to their coffers at the moment.
Larger ether investors have shown slightly different behavior. Despite the price movements for BTC and ETH having a traditionally tight relationship, their trajectories specific to the number of whales have gone in opposite directions. The number of ETH whales has increased 5% over the identical time period.
5:00 p.m. HKT/SGT(9:00 UTC) Eurozone S&P Global Composite PMI (March)
8:30 p.m. HKT/SGT(12:30 UTC) United States Durable Goods Orders (February)
8:30 p.m. HKT/SGT(12:30 UTC) Canada Retail Sales (MoM/Jan)
In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:
Coinbase Is in the SEC's Crosshairs; Bitcoin Falls Below $28K After Fed Decision
The U.S. Securities and Exchange Commission issued a Wells Notice to crypto exchange Coinbase, which may lead to the SEC suing Coinbase or taking other enforcement actions against it. This came as the SEC sued TRON founder Justin Sun on allegations his projects sold and airdropped unregistered securities and committed fraud and market manipulation. Crypto Council for Innovation head of government affairs Brett Quick and Storm Partners managing partner Sheraz Ahmed joined "First Mover."
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