Good morning! Here's what happened:
Prices: Bitcoin and other major cryptocurrencies are rising slightly.
Insights: stablecoins are under increasing scrutiny.
Technician's take: Bitcoin is weighed down by resistance at $34,000 and support at $20,000-$25,000.
Bitcoin (BTC): $30,377 +2.2%
Ether (ETH): $1,840 +2.5%
Biggest price gainers
|Chain link||LINK||+5.1%||Data processing|
|Cardano||ADA||+3.0%||Platform for smart contracts|
|Algorand||ALGO||+2.6%||Smart contracts platform|
|Internet Computer||ICP||-2.9%||Data processing|
Bitcoin rises in weekend trading
Bitcoin spent another weekend in the same neighborhood it has spent most of the last month.
The largest cryptocurrency by market cap recently traded just above $30,000, up slightly from Friday but still in the doldrums. Bitcoin has moved above and below that threshold at times since early May, depending on the day's events, as investors nervously wait for clear signs on how inflation and the global economy are faring.
"BTC remains weak until it finally breaks the $31-$32 range," Joe DiPasquale, CEO of crypto fund manager BitBull, wrote to CoinDesk. "However, we continue to see some buying below $30,000 keeping the price afloat."
Ether, the second-largest cryptocurrency by market cap, recently changed hands just above $1,800, a slight increase over the same period and well within the range that has kept it below $2,000 over the past two weeks. Other major cryptocurrencies were about even, albeit mostly in the green, with LINK and ADA among the biggest gainers, up 5% and 3%, respectively. As usual on most weekends, trading was light.
The weekend behavior of cryptocurrencies diverged slightly from equity indices, which closed Friday down 2.4% for the tech-heavy Nasdaq and 1.6% for the S&P 500. The correlation between digital assets and stocks has increased in recent months.
On a positive note, the U.S. jobs report on Friday was better than expected. It showed that nonfarm payroll jobs rose by 390,000 in May, suggesting that the economy is far from over. Analysts are concerned that the Federal Reserve's interest rate hikes could push the U.S. economy into recession. One small bright spot for the crypto economy is that shares of investor Cathie Wood's ARK Innovation ETF, which includes crypto exchange Coinbase, are up more than 15% since the second week of May. Wood is a well-known bitcoin advocate.
Yet crypto traders remain pessimistic, as evidenced by last week's drop in the Fear & Greed Index. BitBull's DiPasquale thinks it's more likely that bitcoin will fall from its current level than break out. "We expect some directional changes in the coming week or so as Bitcoin either breaks out of its current range or breaks out to the downside in search of a deeper low," he wrote. "Currently, the probability of a breakout to the downside seems higher than a breakout to the upside."
S&P 500: 4,108 -1.6%
DJIA: 32,899 -1%
Nasdaq: 12,012 -2.4%
Gold: $1,852 +0.09%
Another challenging week for stablecoins
First South Korea. Then Japan.
Stablecoin protocols have had another bumpy week with increased regulation and scrutiny.
The protocols, which tie a digital asset to a fiat currency, commodity or mathematical formula based on a group of assets, have been on the defensive since the collapse of the TerraUSD (UST) stablecoin token in early May. Observers of stablecoins, which are considered lower-risk than other digital assets, have been anticipating the additional attention, especially for algorithm-based stablecoins like UST.
On Friday, Japan's parliament passed a legal framework for stablecoins to protect investors, making the country one of the first major economies to pass a stablecoin-specific law. The law, which takes effect in a year, defines stablecoins as digital money that must be pegged to the yen or other legal tender, and guarantees holders the right to redeem them at face value. The bill does not address existing asset-backed or algorithmic stablecoins.
Only licensed banks, registered money transfer agents and trust companies can now issue stablecoins, although they are not listed on Japanese exchanges.
The law followed less than two weeks after a report in The Korea Times that South Korean financial authorities would introduce measures to subject crypto exchanges to closer scrutiny following the implosion of UST and the LUNA token behind it. A two-day National Assembly emergency seminar to discuss the debacle, which may have victimized some 280,000 South Koreans, focused on the role of exchanges and law enforcement, among other issues.
"We must ensure that stock exchanges play a proper role, and to that end, it is important for regulators to monitor them thoroughly," said Rep. Sung Il-jong of the ruling People Power Party. "If exchanges violate rules, they should be held legally accountable to ensure that the market functions without problems."
The country's Financial Services Commission plans to work closely with law enforcement agencies "to monitor all illegal acts in the industry and protect investors' rights," said Vice Chairman Kim So-young.
A technician's opinion
Bitcoin weighed down by $34K resistance, support at $20K-$25K
Bitcoin (BTC) continues to face strong resistance at its 50-day moving average, currently at $34,000.
The cryptocurrency has been stuck at the $30,000 price level for the past two weeks, absorbing much of the trading volume. This could indicate volatile price action later this month.
On the daily chart, Bitcoin's Relative Strength Index (RSI) is below the neutral level of 50, indicating a weakening momentum behind the recent price upswing. The continued decline in momentum means that BTC's six-month downtrend remains intact.
The weekly RSI is more oversold than it has been since March 2020, when the price was in an uptrend. This time, however, the uptrend seems to be limited due to negative long-term momentum signals.
In the short term, however, BTC could stabilize above the support zone between $20,000 and $25,000. The 200-week moving average, currently at $22,179, is another indicator of long-term trend support.
The DeMark indicators show a bullish signal for BTC that could occur in the next two weeks. This could pave the way for a short-term price rally that would delay further breakthroughs on the chart. Upsides could be short-lived, however, as secondary support at $17,673 provides a more stable floor for capitulation.
9:00 HKT/SGT (1:00 UTC): Australia TD Inflation MoM/YoY (May).
9:30am HKT/SGT(1:30am UTC): ANZ job ads
9:45am HKT/SGT(1:40am UTC): China Caixin PMI for Services (May).
In case you missed it, here is the latest episode of "First Mover" on CoinDesk TV:
U.S. added 390,000 jobs in May, but more crypto firms announce layoffs, DOJ's first NFT insider trading case
Quantfury's Ali Pourdad joined "First Mover" to discuss recent moves in the crypto market as Bitcoin trades below $30,000 and the market decline leads to layoffs in the crypto industry. NFT and Web 3 attorney Moish Peltz provided insight into the U.S. Department of Justice's lawsuit against former OpenSea product manager Nate Chastain over allegations of insider trading in non-fungible tokens. In addition, a group of tech experts is lobbying the Biden administration in Washington, D.C., against cryptocurrencies. One of the signatories, David Gerard, explains the reasons behind this move.
Japan passes landmark stablecoin law to protect investors: Report: new legal framework will take effect in a year.
GameStop reports $76.9 million in revenue from digital asset sales in first quarter: The company also confirmed plans to launch its NFT marketplace in the second quarter.
Middle Eastern oil producers are getting into bitcoin mining with Crusoe Energy: The U.S. startup, which uses flared natural gas to power bitcoin mining facilities, counts the sovereign wealth funds of Abu Dhabi and Oman among its investors.
Will crypto markets be regulated like traditional markets? An NFT lawyer speaks up: "They [consumers] should be able to trust that the market is working and not being pitted against them," NFT and Web 3 lawyer Moish Peltz said on CoinDesk TV's "First Mover."
Are exchange layoffs the first sign of crypto winter, or is it already over? Coinbase, Gemini and other crypto exchanges are laying off employees. It could get worse from here - but there is reason to hope for a soft landing.
Today's crypto explainer: what is a satoshi? On understanding bitcoin's smallest unit.
Other voices: The voices of crypto skeptics are getting louder and louder
Said and heard
"The data signaled that the Federal Reserve's initial moves to scale back its monetary support for the economy did not constrain economic activity - at least so far - to the point that hiring took a hit. Following the strong recovery from the aftermath of the coronavirus - all but 800,000 of the 22 million jobs lost have been restored - the Fed has shifted its focus from maximum employment to its other mandate: price stability. The challenge is to apply its main tool, a steady series of rate hikes, without causing a recession." (The New York Times) ... "I understand that struggling families probably don't care why prices have gone up; they just want them to go down." (U.S. President Joe Biden on the May jobs report) ... "Financial advisers say some investors are interested in buying shares of the ARKK fund at prices that look like bargains compared with the previous two years." (The Wall Street Journal)