Bitcoin Scratches Back Above $20K; Singapore Bank Head’s Speech Reflects Growing Crypto Hostility
Good morning. Here’s what happens:
Prices: Bitcoin is holding above $20K after falling below the threshold earlier on Tuesday.
Insight: A recent speech by the head of Singapore’s central bank reflects a lack of understanding of cryptocurrencies.
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Prices
●Bitcoin (BTC): $20,009 -1.2%
●Ether (ETH): $1562 +1.5%
●S&P 500 daily close: 3,986.16 -1.1%
●Gold: $1,735 per troy ounce +0.7%
●Ten-year Treasury yield daily close: 3.11% +0
Bitcoin, Ether and Gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the spot price for COMEX. Information on CoinDesk indices can be found at coindesk.com/indices.
Bitcoin regains $20,000
By James Rubin
The labor market remained warm. Investor tension was still high.
Bitcoin responded along with other riskier assets by spending most of Tuesday on the heels before rallying later in the day.
The largest cryptocurrency by market cap was recently changing hands above $20,000, down about 1% in the last 24 hours. BTC has struggled to hold this psychologically important threshold as investors worry about continued monetary hawkishness from the US Federal Reserve, at least in part linked to a historically low unemployment rate.
“Risk aversion is back in place and that sent bitcoin below the $20,000 level,” Oanda senior market analyst Edward Moya wrote in an email, noting that if the current “broad selloff” in stocks “intensifies, bitcoin could be vulnerable .
“If the S&P drops 3% over the next few days, that could be the catalyst to send bitcoin back toward June lows,” Moya wrote.
Ether recently traded near $1,600, up roughly 3% in the past 24 hours after the second-largest crypto by market capitalization also rallied late. ETH has struggled to hold support above $1,500 in recent days. Most other cryptos in CoinDesk’s top 20 spent much of the day in the red. The popular meme coin DOGE and DOT were recently reduced by more than 2% and 1% respectively. Trading volume was tepid compared to a week ago.
“Retail sentiment is very weak,” Rosh Singh, co-founder and CEO of Quadency, told CoinDesk TV’s “First Mover” program. “A lot of retailers are platform-focused on retailers. So we’re seeing very weak activity lately, which could indicate that we’re about to bottom.”
Stock markets fell for a third day in a row amid the looming prospect of a third consecutive 75 basis point rate hike. The tech-heavy Nasdaq, S&P 500 and Dow Jones Industrial Average (DJIA) all fell around 1%. The U.S. Labor Department’s latest employment report, which showed 11.2 million job openings in July, provided the latest evidence of a relentlessly improving job market at odds with other economic indicators that show the economy is in decline.
“This is a critical component of the labor market that will help the Fed justify aggressive rate hikes,” Moya wrote of Tuesday’s Labor Department report.
A tidbit of good news: The Conference Board’s August consumer confidence index rose after three straight monthly declines, rising to an unexpectedly high 103.2 reading, up from 95.3 in July and above the median forecast of 98 in a Bloomberg survey of economists. Perhaps buoyed by falling gas prices and plenty of jobs, consumers said they were more confident about the business outlook in six months, the time frame the report assesses.
Regulation assumed at least some of the crypto news spotlight on Tuesday with CoinDesk reporting that FTX CEO Sam Bankman-Fried and his government relations and policy team had visited members of the Biden administration in May amid the ongoing debate in Congress over whether Commodity Futures Trading Commission (CFTC) or Securities and Exchange Commission (SEC) should serve as the crypto industry’s primary federal market regulator.
Meanwhile, Barclays ( BCS ) analyst Benjamin Budish initiated coverage of crypto exchange Coinbase ( COIN ) with an equal weight rating and price target of $80, although he also noted the threats of regulatory risk and exposure to retail revenue.
Quadency’s Singh called $19,800 “an important support resistance level.”
“If it were to break, we could see $14,000,” he said, but optimistically noted “that’s probably unlikely since we’re also seeing strong fundamentals from the miner side. Mine outflows are at two-year lows right now. And the hashrate continues to rise .”
He added: “If bitcoin holds the $19,800 level, we could see it go up to $30K.”
Biggest winners
Biggest losers
Insight
Singapore’s central bank governor’s speech shows continued crypto-hostility
By Sam Reynolds
It’s no secret that the Monetary Authority of Singapore (MAS) has a growing hostility to crypto. A recent address by Ravi Menon, the authority’s CEO, cemented this stance: “Yes to digital asset innovation, no to cryptocurrency speculation.”
Digital asset innovation in MAS’ eyes means things like security token offerings (STOs) and tokenized bonds. During his speech, which sought to clarify the sovereign island nation’s stance on digital assets, Menon listed a number of key projects where the bank has engaged institutional stakeholders to build out offerings.
To be sure, the digitization of traditional financial vehicles through blockchain and digital ledger technology (DLT) offers a wide range of benefits. The problem is that despite the approval from Singapore’s regulator, these offerings are not hitting their stride because regulations are holding them back.
Remember, none of this is institutional crypto; DBS has a desk for it, as does OSL. This is about using blockchain technology to mimic traditional financial products.
By their very nature, regulated digital asset offerings must be geographically locked and limited to institutional investors. While the back end of these products has improved, they still have access to the same pools of capital, perhaps even less, that traditional financial products use.
Lack of regulation
Alessio Quaglini, CEO of Hex Trust, a Hong Kong-based crypto manager, told CoinDesk in an email that investors have remained cool to STOs. Quaglini’s position has not changed since an interview last year when he also noted little interest in this type of investment. He blames the lack of crypto-native regulation for this trend.
“The main problem is the regulatory framework, which is still non-existent or too fragmented,” he said by email.
Apart from the fact that the markets close at 5pm to mark the end of business, Quaglini says they are already efficient.
“I think the first type of security token initiatives will come from synthetics listed on crypto exchanges,” he said, referring to a specific token type that is actually a representation of another asset such as a stock, bond or commodity future.
FTX launched something like this with tokenized shares earlier this year.
DBS did not respond to CoinDesk’s request for comment. All trading takes place behind virtual closed doors on the DBS Digital Exchange using permissioned blockchains. On-chain data is not available as it would be for regular, public chains.
Until there is regulation that is written with crypto in mind, and that doesn’t try to apply securities laws from the last century to this asset class, STOs remain a big yawn. MAS’ Menon also said in his speech that a retail crypto ban would be impossible to enforce. So why not just regulate retail crypto instead of trying to produce something that the market has only mild interest in?
Important events
9am HKT/SGT(1am UTC): China NBS Manufacturing PMI (August)
13:00 HKT/SGT (5:00 UTC): Housing starts in Japan on an annual basis (July)
13:00 HKT/SGT(5:00 UTC): Japanese Consumer Confidence (August)
CoinDesk TV
In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:
Ether Rising, Bitcoin Steady; The Federal Reserve’s FedNow real-time payments set to debut in mid-2023
“First Mover” dove into the markets as ether (ETH) led a crypto relief rally and bitcoin (BTC) looked to find support at $20,000. Rosh Singh, founder and CEO of Quadency gives his crypto market outlook. CoinDesk’s Nikhilesh De also explains the Federal Reserve’s instant payment service that could pave the way for a central bank digital currency (CBDC). Plus “Sin Week” continues at CoinDesk and “First Mover” looks at decentralized sports betting.
Headings
Thai SEC Fines Bitkub Executive $235,000 for Insider Trading: Last week, the country’s oldest commercial bank pulled out of a deal to buy a majority stake in the local crypto exchange, citing unresolved regulatory issues.
Singapore state investor Temasek to lead $100 million funding round in Animoca Brands: Report: The sovereign wealth fund, whose net portfolio value was $403 billion in March, has been an active investor in the crypto industry.
Founder of Turkish crypto exchange Thodex arrested in Albania: Faruk Fatih Özer disappeared in 2021, taking funds from 400,000 users.
Crypto lender Nexo allocates additional $50 million for token buybacks: After purchasing its initial tokens, Nexo will hold them for a vesting period of 12 months.
Longer readings
Other votes: Cryptoverse: Bleeding bitcoin holds out for a hero (Reuters)
In defense of crime: Crime can be an important signal that something in society needs to be reformed, writes David Z. Morris. Financial surveillance that attempts to prevent crime completely can only make things worse in the long run. This piece is part of CoinDesk’s Sin Week.
Said and heard
“After all, the adult entertainment industry has been an early adopter of new technologies. If the metaverse is meant to reflect people’s wildest fantasies, sexual exploration will definitely be part of the scene, as we’re already seeing in virtual dating.” (CoinDesk contributor James Key)
