First Mover Asia: Most Cryptos Stay Flat Like a Windless Lake, but a Popsicle Makes Waves.
Plus: Sam Reynolds questions the logic of calls to ban crypto, arguing that it has little chance of causing problems in traditional finance.
Good morning. Here’s what’s happening:
Prices: The action was in Popsicle's ICE token against mostly flat trading for crypto markets including bitcoin.
Insights: Crypto has yet to cause a fiat financial crisis. So why is there talk of banning it? asks Sam Reynolds.
The heat is elsewhere as bitcoin hibernates
By Brad Keoun
Cryptocurrencies were barely budging in early Asia hours, even after a decent day of gains in U.S. stocks on Wednesday.
The benchmark CoinDesk Market Index (CMI) of digital assets was down 0.3% over the past 24 hours. Bitcoin was trading flat, just above $16,800.
"Bitcoin isn't getting much of a boost from the positive risk-on environment that is running through Wall Street," Edward Moya, senior market analyst at the foreign-exchange brokerage Oanda, wrote Wednesday in a note.
The hot action was in the decentralized finance (DeFI) protocol Popsicle Finance's ICE token, which tripled over the past 24 hours after the controversial yet prolific blockchain developer Daniele Sestagalli said he was returning to the project after a hiatus.
Crypto has yet to cause a fiat financial crisis. Why the talk of bans?
By Sam Reynolds
Without a doubt, the digital asset industry is in the depths of a market that looks a lot like 2008. One could even say that the elaborate DeFi protocols with questionable collateralization accelerated the market decline, in the same way that exotic derivative vehicles like collateralized debt obligations (CDO) made the 2008 crisis worse.
But the damage is limited to crypto. There’s no evidence to suggest that some form of contagion has materialized that has spread over to the TradFi markets. Certainly, macroeconomic factors like interest rates and the strength of the dollar have impacted crypto, but so far this is a one-way street.
The establishment sees it differently.
In a recent speech, India's central bank Governor Shaktikanta Das forecasted that the next financial crisis would start with crypto and thus, it should be banned.
"Our view is that it should be prohibited because if you try to regulate it and allow it to grow, please mark my words, the next financial crisis will come from private cryptocurrencies," CoinDesk reported Das as saying. "They have no underlying value. They have huge inherent risks for our macro economic and financial stability. I [have] yet to hear any credible argument about what public good or what public purpose it serves."
Sherrod Brown (D-Ohio), the U.S. Senate Banking Committee chairman, made a similar argument during a recent appearance on the television news program "Meet the Press" but was able to (correctly) say that this would be difficult as it would simply force crypto to move entirely offshore.
The financial crisis both are referring to is a loss of state control of money. This was also a theme in the white paper for China’s central bank digital currency (CBDC).
While India has liberalized capital controls in recent years, they still exist. It maintains strict control over the nation’s money supply under the auspices of fighting inflation – which could be lethal for an emerging market with a large percentage of low earners.
For lawmakers in both countries, it would be easier if crypto just "went away." Even after a year where there was a trifecta of calamity — Terra, Three Arrows Capital and FTX — bitcoin is still at $16,800, and the broader crypto market cap is just north of $800 billion.
Crypto has weathered the storm that macroeconomic events and black swans brought upon it. Although it continues to be in the crosshairs of regulators, its problems have yet to cross the chasm into traditional finance (TradFi). If they really want to ban crypto, they are going to need to try a bit harder.
3:00 p.m. HKT/SGT(7:00 UTC) United Kingdom Gross Domestic Product (QoQ)
9:30 p.m. HKT/SGT(13:30 UTC) United States Gross Domestic Product Annualized (Q3)
7:30 a.m. HKT/SGT(23:30 UTC) Bank of Japan Monetary Policy Meeting Minutes
In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:
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