Bitcoin snaps losing streak as Pelosi Taiwan trip goes without incident

Good morning. Here’s what happens:

Prices: Bitcoin snaps losing streak, while Solana’s SOL token slides after hack that drained crypto wallets.

Insight: The risk posed by this week’s visit to Taiwan by US House Speaker Nancy Pelosi does not appear to be materializing – at least in the eyes of the bitcoin market, reports Sam Reynolds.

●Bitcoin (BTC): $22,807 -1.1%

●Ether (ETH): $1614 -2.0%

●S&P 500 daily close: 4,155.17 +1.6%

●Gold: $1,781 per troy ounce +0.5%

●Ten-year Treasury yield daily close: 2.75% +0.007

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 extends losing streak to six days

By Helene Braun

Bitcoin (BTC) extended its losing streak to six days, falling 1% to around $22,800.

The largest cryptocurrency by market cap appeared largely unfazed by the crypto’s latest hack that left over 8,000 wallets, including several Solana (SOL) addresses, compromised on Tuesday.

But Solana’s SOL token fell over 4.2% in the last 24 hours and is down 76% year to date. The ninth largest cryptocurrency by market capitalization did not break below its 50-day simple moving average (SMA) – suggesting that some large Solana holders may still be holding on.

Over the past two weeks, bitcoin appears to have entered a new range, now hovering between $21,200 and $24,400, up from $17,000 to $21,000 in the previous weeks.

“Bitcoin needs a crypto-specific catalyst to trigger a meaningful move above the $24,700 level,” Edward Moya, senior market analyst at forex broker Oanda, wrote Wednesday in an email update.

Read more: Dagens Market Wrap by Glenn Williams Jr.

Markets generally appear to have recovered after US House Speaker Nancy Pelosi’s (D-CA) visit to Taiwan on Tuesday prompted many investors to steer clear of risky assets amid potential US-China tensions.

The story continues

Ethereum (ETH) ended the day slightly lower, trading at $1,644.62 at press time.

Biggest winners

Biggest losers

Insight

Nothing is going to happen as a result of the Pelosi trip. So let’s all calm down

By Sam Reynolds in Taipei

Tuesday was a pretty normal day in Taiwan. On Kinmen, a group of islands just a few miles from China“the threat of war is the furthest thing from people’s minds,” as a foreign journalist on the island described the local mood in the late afternoon.

On Twitter and most Western media, it was something else: war clouds were gathering. Beijing certainly encouraged the narrative with displays of military equipment on the beaches of Xiamen, a coastal city in China. Censors on Weibo, a local social media platform that is often quick to delete anything politically sensitive, left the videos untouched and they eventually made their way onto YouTube.

After Pelosi landed, Beijing was quick to “retaliate.” It suspended import licenses for citrus fruits, two types of fish, as well as 100 brands of snacks and confectionery. They have also promised to conduct live-fire drills off Taiwan’s coast later this week, but have not specified exactly what that would entail.

China’s economy

Let’s put all this into context

There is speculation that on Beijing’s part, these may be calculated measures to distract the local population from the grim economic reality unfolding in China.

Four regional banks in the country are reportedly poised to collapse, dragged down by China’s growing debt bubble, the precarious housing market and an industrial slowdown due to shutdowns and zero-covid policies. When a bank refused to accept withdrawal requests, protesters marched on the stairs; the authorities hired thugs to spread them and weaponized the protesters’ health QR codes, turning them red, which is an automatic quarantine sentence in government facilities.

Blaming Americans for meddling in Taiwan — what China calls its own affairs, governance — is an easy distraction.

Both sides know their limits. After all, China is Taiwan’s largest trading partner, with 40% of exports going to either China or Hong Kong. Similarly, Taiwan is an important trading partner for China: it is the ninth largest destination for China’s exports.

Taiwan also conducts its share of military exercises near China’s coast. Kinmen, a cliff of calm this week as many in the West thought Pelosi’s impending arrival was the precipice of war, hosts annual live-fire military exercises taking place just miles from Xiamen.

While China sends aircraft into Taiwan’s Air Defense Identification Zone, an area outside a country’s airspace monitored by the military, it tends to keep its fly far away from Taiwan’s actual airspace and does not cross the median line of the Taiwan Strait. Unlike the Taiwan Air Force flies regularly to Kinmenand its other offshore islands that are past the median line such as Penghu and Matsu.

Taiwan semiconductors

Neither side wants war

If China really wanted to escalate things, it would use its vast censorship leviathan to wipe Weibo clean of videos of military equipment moving or talk of live-fire exercises off the coast of Taiwan.

It will also seek to ban more significant Taiwanese exports instead of citrus fruits, frozen fish and sweets. Remember, the last ban on agricultural exports backfired when local people and other nations angry with China bought up the Taiwanese fruit for China that would otherwise have gone to waste.

Semiconductors make up just over 35% of all Taiwan’s exports, and banning imports to China would significantly damage the Taiwanese economy.

But at the same time, it will deprive Chinese firms of the advanced chips their electronics industry requires. Its own semiconductor manufacturing firms are years behind Taiwan and Korea, as export restrictions first put in place by the Trump White House prevent Chinese firms from getting the tools they need to compete. A ban on semiconductor imports would seriously damage the Chinese economy, which is why it is not being considered.

It seems the most China is capable of doing is causing irritation with a cyber campaign and using bots to spread disinformation about missile strikes.

The market has seemed to shake this off as cooler heads have prevailed. There has been saber-rattling for the home crowd, but business across the strait continues to flourish. And there is nothing that will affect the price of bitcoin.

CoinDesk TV

In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:

Headings

• Ethereum Classic is not Ethereum, so a merger-fueled rally will not last: Ethereum Classic is unlikely to have any long-term viability, despite interest from miners, according to analyst Tom Dunleavy.

• Amidst Crypto Carnage, huge traders remain super bullish on Bitcoin: A major player in professional finance says its trading partners see bitcoin returning to $32,000 this year.

• US Senate Bill Will Give CFTC Crypto Market Oversight – But Doesn’t Say How Much: The measure will make the Commodity Futures Trading Commission the watchdog for most of the market, but it does not define whether tokens are securities or commodities.

• Robinhood CEO shuts down FTX M&A Chatter, says he has money to do his own deals: Robinhood has $6 billion in cash if the brokerage wants to explore potential acquisitions, CEO Vlad Tenev said Wednesday.

• Hackers return $9 million to Nomad Bridge after $190 million exploit: The popular Ethereum to Moonbeam bridge works with law enforcement and data analytics firms.

• Want to strike terror in crypto markets in 2022? Just say you’re suspending withdrawals: Voyager’s and Celsius’ bankruptcies were preceded by announcements that they were preventing customers from getting their money.

• Riot Blockchain mined 28% less Bitcoin in July when the heat wave cut power: Lower energy consumption helped the miner generate $9.5 million in power credits.

• Goerli Comes: Ethereum’s Last Exercise Before the Merger: The Prater upgrade, the first component of the upcoming Goerli testnet merger, is happening this week.

• Binance Taps Co-Founder Yi He to Lead $7.5B Venture Arm: Binance Labs announced a new $500 million fund in June to invest in Web3 and blockchain projects.

• Bank of America says blockchains have intrinsic value, citing transaction fees: However, the bank’s report noted that fees on the Bitcoin and Ethereum chains have fallen this year.

• Alchemy integrates the Astar Network to support Web3 developers in the Polkadot Ecosystem: The dapp staking feature will encourage developers to build on the chain to earn rewards in its native token.

• CFTC would become primary crypto regulator under new Senate committee plan: The proposed bill would create a definition of “digital good.”

• Banking Platform Galoy Raises $4M for Bitcoin-Backed Synthetic Dollar: Stack Rate allows people to use Lightning for daily payments without exposure to short-term volatility.

• B2B Payments Startup Paystand Acquires Mexican Peer Yaydoo: While the companies will operate independently, there is hope for cross-selling opportunities.

This edition of First Mover Asia was edited and produced by Bradley Keoun.