First Mover Asia: Bitcoin Opens the Week Testing $25K

ALSO: Hong Kong unveils its crypto licensing framework for Virtual Asset Service Providers in June, but the regulation will not allow retail investors to trade digital, contrary to what a recent tweet suggests. The regulation focuses on accredited, professional investors.

AccessTimeIconFeb 20, 2023 at 2:54 a.m. UTC
Updated Feb 21, 2023 at 2:46 p.m. UTC
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Good morning. Here’s what’s happening:

Prices: Bitcoin tests $25,000, and here's what has to happen for it to break $30,00.

Insights: The June arrival in Hong Kong of a framework for Virtual Asset Service Providers, such as exchanges, will not give retail investors access to crypto. But will that change?

Prices

Here's How Bitcoin Hits $30,000

1,133
−4.6 0.4%
$24,364
−295.1 1.2%
$1,682
−11.3 0.7%
S&P 500
4,079.09
−11.3 0.3%
Gold
$1,847
+6.3 0.3%
Nikkei 225
27,513.13
−183.3 0.7%
BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)

Happy Monday. While the U.S. is off for Presidents’ Day, bitcoin was recently trading at $24,226, and ether $1,689, both in the red at close to 2% and 1.5% respectively in the past 24 hours, as Asia begins the work week.

In the last week, bitcoin has gained over 11% while ether gained 9%. Layer 1 protocols including Solana, Polkadot, and Polygon have also made double-digit gains, up 20%, 19%, and 18.5%, respectively.

DOGE is up 5% on week and SHIB is up 4%, having seen their gains from an Elon Musk tweet last week tested by the market. Floki, named after Musk’s dog, is down 7% on-day but still up 108% for the week.

Joe DiPasquale, CEO of crypto fund manager BitBull Capital, says that $23,000 is bitcoin’s new support level and the next week is critical if bitcoin is to hit $30,000.

“It was critical for bitcoin to reclaim $23,000 if we were to see more upside action,” he told CoinDesk in a note. “With February coming to an end, another bullish monthly close may be what the market needs for bitcoin to test $30,000.”

DiPasquale thinks we’ll see the market consolidating if not going up, with a limited downside in the short term.

Looking to the next week, Coinbase is scheduled to post earnings and investors are expecting lukewarm results. With regulators in the U.S. looking to cut off crypto’s banking access, Coinbase executives will probably have a lot to say on the topic.

Let’s see if crypto’s upward rally can hold.

Biggest Gainers

Asset Ticker Returns DACS Sector
Solana SOL +5.3% Smart Contract Platform
Polkadot DOT +3.8% Smart Contract Platform
Shiba Inu SHIB +1.9% Currency

Biggest Losers

Asset Ticker Returns DACS Sector
Loopring LRC −4.1% Smart Contract Platform
Terra LUNA −1.6% Smart Contract Platform
Dogecoin DOGE −1.5% Currency

Insights

No, Hong Kong Won’t Be Allowing Retail Traders Access to Crypto on June 1

An earlier version of this story appeared Feb. 17 on CoinDesk.

Hong Kong is warming up to crypto, and a licensing regime for Virtual Asset Service Providers (VASP) – the local term for crypto exchanges – begins on June 1.

Does this mean crypto will be "fully legal" in the city for everyone, as a tweet suggests? Not at all.

While the situation may change later, for now the VASP framework for licensing exchanges, which just finished a multiyear consultation, allows them to provide access only to accredited professional investors. Retail investors are excluded.

The Hong Kong government has indicated that the Securities and Futures Commission (SFC), its securities regulator, may consider retail access to virtual asset services in the future, after further consultation.

In January, Reuters reported the SFC is in the process of considering which cryptocurrencies to offer to retail investors should the door eventually be opened to them. CEO Julia Leung is quoted as saying that only “highly liquid” assets will be on the list, and the choices will be very limited at first.

The city's authorities see June 1 as an opportunity, saying "Brand Hong Kong" is much more highly regarded worldwide than, say, Seychelles or St. Kitts and Nevis. The regulator is expanding its headcount to deal with an anticipated flurry of license applications.

“We’re able to bring together investments globally,” Christopher Hui, secretary for Financial Services and the Treasury (FSTB), said in an earlier interview with CoinDesk. “We can manage and also channel these investments in a well-regulated and also sustainable manner.”

Hong Kong’s credibility comes from its “rule of law, regulation, commercial modus operandi,” Hui said, and this translates well from traditional finance to crypto.

Others in Hong Kong, however, see things differently.

"For those platforms operated outside of Hong Kong, we see little incentive to incorporate in Hong Kong, establish an office here, go through the strict licensing requirements, as the local market is small," Leo Weese, co-founder of the Bitcoin Association of Hong Kong, wrote in a 2021 post. "Local institutional investors will be able to interact with foreign platforms through their foreign subsidiaries."

Still, he's optimistic the new regulations "can reintroduce clarity and stability after years of uncertainty," Weese said in an interview. "It is important that individuals are granted the easy access to bitcoin they have become accustomed to in the past 12 years."

Those individuals, the retail investors, are bound to be excited by the chance to use a local Hong Kong entity to trade. After all, there is no capital gains tax in Hong Kong, and Japan shows what happens when retail investors are able to trade in a regulated environment. Post-FTX, Japanese traders seem to be living in a parallel world, where their tokens were stored with a custodian and funds are being returned.

But it's not quite the retail investors' turn yet in Hong Kong. That's still a work in progress.

Important events

2:00 p.m. HKT/SGT(6:00 UTC) Eurozone Consumer Confidence (Feb)

9:00 p.m. HKT/SGT(13:00 UTC) Australia S&P Global Services PMI (Feb)

11:30 p.m. HKT/SGT(15:30 UTC) Reserve Bank of Australia Meeting Minutes

CoinDesk TV

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

The U.S. Securities and Exchange Commission (SEC) sued Terraform Labs, the company behind the failed TerraUSD stablecoin, and its co-founder Do Kwon on Thursday. Coinbase Chief Policy Officer Faryar Shirzad and former CFTC Chairman Timothy Massad weighed in, as the SEC alleges that Terraform and Kwon misled investors on a number of issues. Plus, Arca Head of Research Katie Talati reacted to bitcoin (BTC) falling after touching its highest level since August.

Headlines

OpenSea Goes Zero-Fee, Creator Royalties Optional: The top NFT marketplace’s policy shift stems from competition with popular zero-fee marketplace Blur.

Celsius Failed to Record Some 7,000 Intercompany Transfers Worth Billions Leading Up to Bankruptcy: A lack of record-keeping could make it impossible to "fully reconstruct" the bankrupt crypto lender's multi-billion-dollar intercompany claim, court filings show.

Unlike Merge, Ethereum's Shanghai Upgrade Could Bring Ether Price Volatility: Institutional liquidity provider OrBit Markets suggests buying an ether volatility swap to profit from an expected increase in price turbulence after the Shanghai upgrade.

Arbitrum Native Decentralized Exchange Camelot Growing Massively in February: The price of GRAIL, the native token for Camelot, has soared 520% since Feb. 1, per CoinGecko.

Japan Will Launch Pilot for Issuing Digital Yen in April: The move comes after more than two years of proof-of-concept experiments by the BoJ.

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