Cryptocurrency
Rose crypto market cap on the back of the Fed’s prime rate decision: views and forecasts
We are now witnessing a temporary rose crypto market cap. As part of the fight against inflation, the U.S. Federal Reserve raised the prime rate by 75 bps during the next meeting. – to a range of 2.25-2.5% per annum. The crypto market reacted to the news with positive dynamics. How long can the rise in the crypto industry last, and what other consequences of the Fed’s decision risk investors?
Crypto market tips – what should investors do?
It’s difficult to give specific crypto-market tips. One would assume that the crypto market is responding to the fact that the Fed’s rate hike was softer than many expected. That said, experienced traders point out that cryptocurrency investors are too early to get excited.
“People are celebrating the 75 bps as if the change opens up the prospect of growth for the crypto market. Twitter users have completely lost their minds,” was the opinion shared by a trader popular in the cryptocurrency community who runs a microblog under the nickname Psycho.
The fact is that the U.S. government abandoned its policy of quantitative easing as part of the fight against inflation, which implies printing more money and then pouring it into the market. Against the backdrop of the changes, the crypto market faced a liquidity crisis. Therefore, many crypto-industry participants believe that the Fed’s fight against inflation and an increase in the prime rate could put pressure on the cryptocurrency rate.
No reason for optimism
Is the crypto market going to crash? Analyst Lark Davis drew attention to the market’s positive reaction to the Fed’s decision. Many of his subscribers think that prices won’t rise for a long time. In their opinion, the next wave of fall may hit cryptocurrencies this week.
A popular analyst in the cryptocommunity, who runs a microblog under the nickname Profit Blue, holds a similar point of view. In his opinion, bitcoin is preparing for a fall. This is indicated by the results of technical analysis. Profit Blue drew attention to the fact that the cryptocurrency repeats the figure of late May – early June, which led BTC to the renewal of the local minimum at $17,708. This time, Profit Blue is sure, history may repeat itself.
As a reminder, earlier, similar results of technical analysis were shared by Peter Brandt, a trader and analyst popular in the crypto community, who managed to correctly predict the cryptozyme of 2018. He saw a technical analysis figure on the bitcoin chart, which, in his opinion, foretells the BTC’s imminent exit to new lows.
Some experts do not exclude the decrease in BTC to $10-12 thousand and lower. Many of them are sure that the current growth of the cryptocurrency market is nothing more than a correction after a protracted fall.
Crypto market rose analysis: crypto investors should look ahead
Many members of the crypto community believe that investors should not be intimidated by the prospects of a market decline. In their opinion, sooner or later, investments in cryptocurrency will bear fruit. For example, Changpen Zhao, head of the largest cryptocurrency exchange Binance, holds this view.
“Learn about recession and inflation, and then explore [the possibilities of] bitcoin and Binance Coin,” the Binance head wrote amid an online discussion about the impact of the Fed’s decisions on the market.
For his part, analyst Joe Burnett pointed out that cryptocurrency market movements are cyclical. In his microblog, he reminded readers that decadence always goes with cryptozymes. The current period of falling prices was no exception.
Authors of the Twitter channel Wicked Smart Bitcoin shared a similar opinion. They think that the decisions of the Fed and other regulators are just “dust” that loses any significance in the context of talks about bitcoin’s global future.
Wicked Smart Bitcoin explains their point of view with the fact that BTC’s growth is programmed by halvings, which corrects the rate of new coins coming into the market. Many are also convinced that the financial market has already passed the main phase of the crisis. According to this logic, there is a recovery ahead for the industry.
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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