Cryptocurrency
Bitcoin is close to a two-year low. What awaits it next
Experts explain what factors put pressure on cryptocurrencies and when you can expect positive changes in the market
Since the beginning of the year, the capitalization of digital currencies has decreased by 60% — to $934 billion. The “crypto winter” collapsed the price of bitcoin by 70% of the historical maximum of $69,000.
Tokens of meta-vendors and NFT-projects, as well as currencies of DeFi-platforms were hit hardest — coins lost in price from 70% to 85% since the beginning of the year. Cryptocurrencies on exchanges fell the least: their quotes fell by 46%-57%.
Since mid-June, bitcoin rates have been fluctuating in the range of $18,000 — $22,000. Because of the falling quotes, some institutional investors and credit crypto platforms have already faced financial problems, and mining companies are forced to sell all the mined bitcoin to cover operating costs.
Is there potential for bitcoin growth in the near term, or is a true reversal in the market still to come? Experts described the current price dynamics in the cryptocurrency market and told when the turning point may occur.
Bitcoin price dynamics
The current week “pleases” traders with increased volatility. After bitcoin went below $19K on July 13, the panic was very strong.
If you look at the chart of BTC from the point of view of technical analysis, “the price is in a horizontal channel with a width of about $4000. Approximately the same channel was formed in May-June and as a result the price strongly “fell”.
Now there are already a lot of touches in the new channel as the upper and lower edges, so with a high degree of probability, the exit from the channel will occur in the next couple of weeks, the expert suggested. On July 13, the price “pushed back” from the lower boundary; that is, we can hope that the growth will continue to the upper boundary.
There is full synchronization with the index S & P 500, from its movement now directly depends on the dynamics of bitcoin and other top cryptocurrencies. A breakdown of the horizontal channel upwards will open a target to levels around $26k, while a breakdown downwards will open a target of $16k.
Influence of external factors
The most likely negative scenario, which implies the fall of the entire crypto market, and bitcoin — to $15,000 in the next month.
Cryptocurrencies are seen as a tool to hedge inflation risks. But on the other hand, digital assets now correlate strongly with the stock market, and the latter will inevitably show a decline due to high inflation in the U.S., despite all the efforts of the Fed to curb this growth.
At the next meeting of the U.S. Federal Reserve will decide to raise the key rate again. This is already obvious, and in the run-up to the meeting, capital will start to exit high-risk assets.
In August, bitcoin will fall to multi-year lows, but this does not cancel the forecast for the growth of bitcoin in the perspective of 3 years. Bitcoin will return to growth in the autumn.
In the second half of 2023, a new bullish cycle will begin in anticipation of another halving. And bitcoin will update to new all-time highs within 12 months of it — between May 2024 and May 2025.
Intermediate bottom
Soon we expect mostly sideways movement with the risk of another renewal of annual lows for BTC, ETH, and some other capitalized assets.
Such dynamics are unlikely to lead to a significant drop in quotations, and the new lows will allow market participants to enter assets more profitable, the expert explained. He said he expects the prices will recover sharply after the possible decline of BTC up to $17,000 and ETH — up to $900.
Until the end of July, the crypto market will form an intermediate bottom, which will give cryptocurrencies an opportunity to strengthen within 2-3 months; Pershikov said. The current dynamics will remain until the end of the month, while growth in individual assets and the market will begin in August.
Hong Kong has allocated another $50 million to accelerate the development of the crypto industry after local authorities allocated HK$50 million (about $6.37 million) in late February to develop the Web3 direction. This is stated in a press release on the website of the government.
Legalization of cryptocurrencies in Hong Kong
According to the head of the Financial Services and Treasury Bureau of Hong Kong (FSTB) Christopher Hui, the pool of funds will be allocated, in particular, to organize major international Web3-events. Hui also said that the government will organize educational programs for young people, for which preparations have already begun.
In addition, the 2023 budget provides for the creation of a working group to focus on developing virtual assets and study the situation in the crypto market, development opportunities and the need for changes in regulation.
“Hong Kong is well positioned to become a leading hub for Web3 in Asia and beyond, and we attach great importance to virtual assets (VA) and Web3. The government is committed at a high level to developing this sector and providing a comprehensive support system for enterprises,” Hui said.
He added that the Hong Kong Monetary Authority (HKMA) is now working on regulating stablecoins to introduce them into the economy next year. The country also plans to improve securities regulations so that retail investors can access ETFs based on cryptocurrency futures.
Despite several personal initiatives, Hong Kong authorities are also working closely with mainland China, testing international payments in the digital currency and working with the Central Bank. In all, as of the end of February, more than 80 Chinese companies had expressed interest in operating in Hong Kong.
Bloomberg wrote about China’s support back in late February. The agency pointed out that after Hong Kong set out to develop the crypto industry last October, Chinese officials have become more frequent visitors to Hong Kong. According to sources, this interest is because Beijing wants to use the city as a testing ground for digital assets amid tight control of crypto activity on the mainland.
We previously reported that the collapse of the Silicon Valley Bank is spurring demand for crypto apps.
Stablecoin issuer USDT is rapidly printing “digital dollars” in the TRON (TRC-20) ecosystem. This time, Tether printed another billion dollars in USDT, according to transaction details. The total number of USDT in circulation in the TRON ecosystem is over 42.1 billion USDT. By comparison, the Ethereum ecosystem issued significantly less – 34.2 billion USDT.
As TRONScan data shows, this is the second billion-dollar tranche issued by Tether for TRON. The last time the USDT-issuing company issued a similar amount of Stablecoin was on March 14. Since the beginning of 2023, this is the fourth transaction to issue such a large amount of USDT. As of 2023, the largest issuance occurred in February. At that time, Tether issued two billion dollars in USDT at once.
Amid the news, bitcoin barely reacted to the USDT pump. According to TradingView, the bitcoin (BTC) exchange rate in the BTC/USDT trading pair is $27,949, up just 1.4% overnight. Bitcoin has a market capitalization of $540.4 billion.
In early March, The Wall Street Journal revealed that Tether had opened bank accounts using fake documents and shell companies. It turned out that one of Tether’s Turkish accounts had been opened in the name of Denix Royal Dis Ticaret Limited Sirketi, which had previously been caught laundering money for a terrorist group.
Tether chief technology officer Paolo Ardoino ridiculed the publication on Twitter and said the WSJ’s information was untrue. Tether said it adheres to legal requirements to combat money laundering and terrorist financing, and uses KYC mechanisms of the highest level. Renowned cryptocurrency critic Molly White, for her part, said that The Wall Street Journal journalists couldn’t “just make this stuff up.”
We previously reported that major cryptocurrency exchanges have moved offshore.
According to a report by platform CoinGecko, 21 of the 30 largest crypto exchanges (70%) are based in offshore financial centers – territories that want to attract companies from abroad through loyal laws and schemes with low or no taxation.
Analysts of the service note that offshore zones, as a rule, offer non-residents more financial services and on more loyal terms than “in the home country”.
Where are crypto exchanges registered? They choose islands
Seychelles, the Cayman Islands and the British Virgin Islands were among the most popular offshore locations for cryptocurrencies. These territories are also considered tax havens for many corporations.
Also, one in five Crypto exchanges in offshore locations (20%) are registered in the Seychelles. This jurisdiction has become home to many centralized exchanges. Among them, there are well-known major platforms such as OKX, KuCoin, and MEXC Global. Many companies are “moving” to the Seychelles because the Seychelles Financial Services Authority (FSA Seychelles) refuses to license and oversee activities or companies related to cryptocurrencies.
In total, according to CoinGecko, the top 30 cryptocurrency exchanges are listed in 15 different countries: 11 of the 30 platforms (37%) are in North America – mostly in the Cayman Islands, British Virgin Islands and the United States. The number of companies located in Europe, Asia and Africa is evenly split: 20% each (or 6 countries).
The number of companies offshore may grow
Because of stricter U.S. regulators’ policies toward cryptocurrency companies, many firms are having to move to more cryptocurrency-friendly countries.
For example, the Hong Kong government, to turn the state into a new crypto hub, has allowed retail investors to trade digital tokens such as bitcoin (BTC) and Ethereum (ETH). The Hong Kong authorities themselves admit that they want to create a “favorable environment” for developing the local crypto industry.
Also, Ras Al Khaimah, one of seven regions in the United Arab Emirates (UAE), is preparing to open a free zone for cryptocurrency companies. Entrepreneurs in these areas own 100% of their businesses and have their own tax schemes and regulatory frameworks.
We previously reported on the Top 5 low-cost AI tokens with huge growth potential.
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