Bitcoin BTC market cap rises, but retreat from $30,000 continues
Good morning. Here’s what happens:
Prices: As Asia’s trading day begins, bitcoin falls 4% to $27,981 and ether falls 2.45% to $1,824
Insight: The West will still lead Crypto’s future, but the East will play a big role, claims the co-founder of Taipei-based Woo Network, Jack Tan.
Bitcoin opens the trading day in Asia at $27,981, down 4.9% over the past 24 hours, while Ether is down 3.8% at $1,824.
Despite this slow retreat from $30,000, co-founder and CEO of research platform The Tie Joshua Frank pointed out in a recent appearance on CoinDesk TV’s All About Bitcoin that there are still many positive market indicators for bitcoin.
Bitcoin’s market cap dominance is increasing again, approaching June 2020 peaks, he noted, but liquidity remains a challenge.
“I think a lot of institutions are excited about bitcoin. I think the risk-off narrative is resonating right now. Just like it did in 2021,” he said, explaining that a lack of liquidity remains a challenge for the market, but leads also to bitcoin’s overall performance.
“Bitcoin is outperforming due to several reasons, including market consolidation, low trading volume and banking uncertainty,” he said. “In the short term, Bitcoin is more correlated to gold. However, the US regulatory environment is unenthusiastic and negative towards crypto, which contributes to low liquidity.
As the week continues, traders will look for US vacancies on Tuesday and news from the Fed on interest rate moves on Wednesday.
By: Jack Tan, co-founder of Woo Network
Crypto companies may have to relocate from the US due to stifling regulations.
However, Western founders and teams can continue to dominate innovation by looking east, where governments are embracing new technology.
These countries and jurisdictions have adopted more crypto-friendly laws and created a welcoming business environment for firms in the digital asset space. The mix for Western companies with talent and other resources can be potentially powerful.
Regulation has become a central issue in the cryptoasset space as the US responds to several debacles that have undermined confidence in crypto. The Biden administration recently changed its stance on crypto from neutral to negative through its White House Council of Economic Advisers, which said “crypto-assets do not appear to offer investors any fundamental value to date.”
Emigration of talent, capital
Major crypto players no longer look to the US for leadership and have sought other jurisdictions to grow from. For example, Ripple CEO Brad Garlinghouse said the crypto industry has “already started” to move outside the United States, while crypto exchange giant Coinbase, whose once positive view of the United States, regulation has soured, may start a foreign trade desk. AndCircle opens a new office outside the US.
It is hard to imagine them going to the EU because even the G7, an intergovernmental political forum made up almost entirely of Western countries, is outlining tougher regulations for digital assets. A French bill, for example, states that companies must meet additional rules on internal control, cyber security and conflicts of interest.
Regulators are more supportive in Asia’s financial centers. Japan has recently relaxed its token listing requirements. Hong Kong announced it was open to crypto firms, Thailand said it would waive taxes for initial coin offerings (ICOs), and Dubai’s regulatory body hopes to become a global crypto hub.
The East is also playing a bigger role in cultivating crypto innovation by stimulating higher crypto adoption rates. The East dominates research firm Chainalysis’ top 20 global crypto adoption index, including Vietnam, the Philippines, India, Pakistan, Nepal, Indonesia and China.
In addition, money flows into the region. China’s third largest state-owned insurance institution – Pacific Insurance Investment Management Hong Kong Branch – and Waterdrop Capital unveiled blockchain venture capital and POS token revenue enhancement funds, respectively. Dubai-based Cypher Capital is looking to raise over $100 million for a new venture capital fund to target “Asian tech tycoons.” HashKey Capital, instrumental in moving crypto forward in Hong Kong, has closed its third $500 million blockchain funding focused on growth opportunities in emerging markets.
How could the West still dominate?
A more open regulatory environment, faster crypto adoption and flow of funds to the region does not necessarily mean that the East has dominant market players in the crypto space. And Western countries still have relatively stronger economies, cultivating exceptionally brilliant talent through an ingrained culture of innovation, and the strongest financial markets.
Westerners have founded the most innovative companies in the crypto space. For example, Ethereum founder Vitalik Buterin and Binance founder Changpeng Zhao were raised and educated in Canada. The founders of Coinbase, Grayscale, OpenSea, Gemini, Kraken, Uniswap and Chainalysis are mostly from the US and educated in the US.
The West dominates the top 10 rankings of the most innovative economies measured by the Global Innovation Index, including Switzerland, the United States, Sweden, the United Kingdom, the Netherlands, Germany, Finland and Denmark. We expect that innovative crypto projects will continue to originate from these places.
The crypto space needs support from the financial and fintech centers, and the majority of the top-ranked ones are still from the West. In the Global Financial Centers Index released last month, 14 of the top 20 financial centers are from the West, including New York, San Francisco, London, Los Angeles, Boston and Washington DC.
The importance of a robust risk and reward framework
Having worked in the financial industry all my professional life, I have witnessed how innovations are borne by crises and deeply stressful situations. Innovation is often messy..
Companies and authorities forget this, and often it is the managers who adopt policies that lean too strongly towards protecting the status quo by limiting risk. We’ve seen once innovative companies like Kodak and IBM lose their edge as they focus more on stability and the bottom line for shareholders. Meanwhile, scrappy startups with vision, talent and nothing to lose sometimes succeed—provided they can operate in nurturing environments.
An East-West partnership could be the crypto model of the future.
Another major bank has been taken over by federal regulators, resulting in the second largest bank failure in US history. Jason Brett, CEO of Key Bridge Advisors and former US regulator at the FDIC, along with tastycrypto Head of Digital Assets Ryan Grace, joined “First Mover” to discuss how the crypto markets are reacting after most of First Republic Bank’s assets and deposits now will be acquired by JPMorgan Chase. Additionally, CoinDesk’s Managing Editor for Global Policy and Regulation Nikhilesh De shared a recap of CoinDesk’s Annual Consensus Conference.
