Bitcoin Faces Challenges in Asia as U.S. Regulators Grapple: Analysis from First Mover

First Mover Asia: Bitcoin Holds Firm Below $30K as Sam Bankman-Fried Returns to Incarceration

First Mover Asia: Bitcoin Demonstrates Resistance to CPI Effects

First Mover Asia: Bitcoin Tempts $30K as Investors Eagerly Await ETF Approval

Good morning. Here’s what’s happening:

Prices: Bitcoin has experienced a downward trend for two consecutive days, with its value dropping below $28,000 at one stage. The chief researcher of Canadian crypto asset manager 3iQ attributed this decline to regulatory issues in the United States and highlighted that "market liquidity is still predominantly focused in Asia."

Insights: CoinDesk columnist Daniel Kuhn argues in The Node that European legislators have laid a promising regulatory foundation for digital assets by implementing MICA and a separate rule related to cryptocurrency. In contrast, efforts in the United States have been disjointed and counterproductive.

Prices

Bitcoin (BTC) $28,113 −777.4 ▼ 2.7%	Ethereum (ETH) $1,936 −9.2 ▼ 0.5%	CoinDesk Market Index (CMI) 1,231 −17.2 ▼ 1.4%
S&P 500 4,129.79 −24.7 ▼ 0.6%	Gold $2,013 +18.2 ▲ 0.9%	Nikkei 225 28,657.57 +50.8 ▲ 0.2%

BTC/ETH prices per coincryptous as of 7 a.m. ET (11 a.m. UTC)

 

Bitcoin Decline Due to U.S. Regulatory Woes

Bitcoin has been significantly burdened by the regulatory challenges surrounding cryptocurrency in the United States.

Mark Connors, the head of research at 3iQ, a Canadian crypto asset management firm, expressed in a series of text messages that BTC's fall from its seemingly secure position above $30,000 was unexpected.

"The Kabuki theatre that unfolded in Washington this week suggests Asia and other jurisdictions will continue to gain market share from the U.S., Connors wrote to CoinDesk, adding: "Coinbase’s decision to get licensed in Bermuda to launch an exchange as early as next week shows that U.S. digital asset companies are now voting with their feet. So this week we had both price and regulatory volatility, with only one clear loser, the U.S. economy."

The leading cryptocurrency in terms of market capitalization recently saw a drop in value, with a trading price of approximately $28,100, reflecting a 2.7% decline over the past 24 hours. On Thursday, Bitcoin briefly fell to $27,991 on Coinbase, which was the lowest price point since April 9th. The downward trend persisted for two days, starting on Wednesday, following a hot inflation report in the United Kingdom and a massive sell-off on Binance. Currently, BTC is down by roughly 10% from its recent high of nearly $31,000, and investors are more apprehensive than optimistic about the future trajectory of cryptocurrency assets.

Connors noted that "market liquidity remains heavily tilted to Asia, so he was "not surprised to see bitcoin's downswing start as markets in that part of the world closed. "Remember, last May and June dislocations occurred in a similar window," he wrote.

Ether's current market value is approximately $1,936, which reflects a slight decrease and is a significant drop from its recent high above $2,100 following the Shanghai upgrade. Other prominent cryptocurrencies are experiencing a decline, with many showing deeper shades of red. XRP, the token of the XRP Ledger open source public blockchain, and ARB, the native cryptocurrency of the Arbitrum layer 2 blockchain, have both fallen by over 3.5%. The CoinDesk Market Index, which serves as an indicator of the overall performance of the cryptocurrency market, has recently seen a decline of 1.3%.

Equity markets experienced a moderate decline, with the Nasdaq Composite, which focuses on technology, and the S&P 500, which has a significant technology component, both experiencing a 0.8% and 0.6% drop, respectively. Gold remains stable and is currently trading at a comfortable price point above $2,000, indicating that investors continue to hold strong preferences for assets that maintain their value regardless of economic circumstances.

Despite several major banks reporting promising first-quarter earnings, investors are still keeping a cautious eye out due to the decline of several critical economic indicators, which may be a sign of an impending recession. Recent employment data has shown a decrease in the previously booming job market, and on Thursday, the National Association of Realtors released their monthly report, indicating the most significant drop in home prices since 2012 and a rise in mortgage rates.

Meanwhile, Connors wrote that "more volatility" was likely in store, "but not the YTD ‘upside’ volatility we have seen so far in 2023."

"We may be entering a period of consolidation as U.S. regulation dims hopes and prompts regulatory reboots by many players. Both are counteracting the long running and structural tailwinds for BTC" that the company highlighted in its 2023 Outlook.

Asset	Ticker	Returns	DACS Sector
Dogecoin	DOGE	−6.3%	Currency
Decentraland	MANA	−5.0%	Entertainment
Cardano	ADA	−4.7%	Smart Contract Platform

 

Insights

Why the EU Has MiCA and the U.S. Has Securities Law Confusion

The European Parliament has taken a significant step by officially passing the landmark regulatory framework for Markets in Crypto-Assets (MiCA), after several years of deliberation and at least two official delays. Alongside the MiCA framework, EU legislators also approved a separate crypto-related regulation called the Transfer of Funds, which imposes more stringent surveillance and identification requirements for cryptocurrency operators, according to a report by CoinDesk's Jack Schickler.

Described by the European Commission's Mairead McGuinness as a "world first" and hailed by Green Party lawmaker Ernest Urtasun as the "end of the Wild West era for crypto assets," the new rules are a significant step towards regulating the cryptocurrency industry. These laws, which will be enforced at the state-level, still need to be officially approved by the EU Council, a supra-governmental body. However, the approval is largely considered a formality as the Council had already approved the law's text last year. The laws are expected to take effect next year.

The following text is an extract taken from The Node, a daily digest of the most significant stories in the world of blockchain and cryptocurrency news, published by CoinDesk. For the complete newsletter, you can subscribe to it here.

MiCA is regarded by many as a critical milestone for the crypto sector. It represents the initial major effort to establish a comprehensive framework of regulations for crypto firms, enabling them to ascertain in advance the scope of their permissible actions and obligations if they wish to function within the trading bloc of 27 member nations. The European Union is striving to establish a global benchmark, although it is also concerned about the effectiveness of MiCA within the EU if comparable regulations are not embraced worldwide.

CoinDesk has published several summaries of the legal structure, but, to summarize briefly, MiCA necessitates that crypto companies, such as wallet providers and exchanges, acquire EU licenses and adhere to anti-money laundering and anti-terrorism financing measures to serve customers based in the EU. Certain individuals have expressed concerns regarding the reporting requirements, which are likely to undermine the privacy of crypto users in the guise of protecting customers and ensuring national security.