Cryptocurrency
Significant growth in Bitcoin is now considered extremely unlikely. What prevents the main cryptocurrency?
One of the expected events of this week is the growth of Bitcoin to the level of 20 thousand dollars. So far, the main cryptocurrency is trading below this line, which was previously considered by many to be a very important support level and just a psychological mark. At the same time, BTC is now dependent on the dynamics of the DXY index, which is a representation of the strength of the U.S. dollar against a basket of the other six most weighty currencies in the world and is breaking records. Let’s talk more about the current conditions in the coin market.
At the moment, most experts really don’t expect any dramatic change in what’s happening in the coin industry, as inflation in various regions continues to pick up and geopolitical issues have not yet been resolved. That doesn’t mean, however, that the growth phase for the cryptocurrency niche will never come.
There could be several reasons for the transition to coin growth. The main one is a change in the policy of the Federal Reserve, whose representatives should sooner or later leave the key rate alone after its long rise. Also, adoption of a spot ETF on Bitcoin would have a good effect.
That said, in the short term there really isn’t much to expect from the coin market.
Why Bitcoin is not rising
The DXY index is near its all-time highs at the moment, which shows the strength of the dollar against other assets, although it has seen a slight correction in the last few days.
Even such a slight drop in the index is a very sensitive indicator for the price of Bitcoin. It is worth noting how quickly risky assets rise when the DXY drops even to its lowest value. They react much more strongly to a drop in the index than to its rise. When the DXY falls even lower, more notable bounces in the crypto market are expected.
In other words, the analyst is betting on the weakening of the dollar against other assets. Such a situation usually creates conditions for investors’ activity, as they face the need to invest their own capital. And cryptocurrencies are an attractive niche, given their fundamental features.
First, we are talking about the fixed rate of inflation, which cannot be influenced. As of today, this Bitcoin indicator is 1.68 percent per year – that is exactly the share by which the total supply of bitcoins increases over a year. At the same time, in the overall economy of various countries, this figure in annual terms exceeds 10 percent.
Some experts are even more pessimistic. They argue that the probability of Bitcoin growing to at least $24,000 soon is “quite low.” A similar situation is also seen in the stock market – investors should allegedly prepare for a new wave of correction, rather than aiming for higher levels.
Bitcoin is weakly showing any preconditions for growth. After falling below $20,000 this week, the main cryptocurrency has not demonstrated even an attempt to approach thelevel. At the same time, any serious fall from current values could mean much bigger losses for investors, as the scale of this correction is already unprecedented.
Glassnode analysts have noted a trend of “heavy pressure” on long-term Bitcoin holders. This does not mean that the current bearish trend is even close to its bottom, and in fact it only lasts fully just over 50 days. By comparison, the bear trends of 2015 and 2018 lasted 402 and 328 days, respectively. Although, if we consider the market peak to be November 2021, when Bitcoin reached $69,000, the final current interval turns out to be longer.
So there is a chance that true fans of digital assets have yet to prove their unwavering faith in the industry. And Glassnode analysts also make it clear that it is too early to wait for the final turn of the industry in the direction of the bulls.
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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