Bitcoin BTC Price Drops Due to US Regulatory Issues: Analyst

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Good morning. Here is what happens:

Price: Bitcoin continued its two-day slump, dropping below $28,000 at one point. The head of research at Canadian crypto asset manager 3iQ linked its decline to US regulatory issues and also noted that “market liquidity remains heavily biased towards Asia.”

Insights: With MICA and a separate crypto-related rule, European lawmakers have built a promising regulatory foundation for digital assets. U.S. efforts remain disjointed and counterproductive, CoinDesk columnist Daniel Kuhn writes in The Node.

Bitcoin decline due to US regulatory issues

Crypto regulatory issues in the United States weigh heavily on bitcoin.

So wrote Mark Connors, Head of Research at Canadian Crypto Asset Manager 3iQ, in a series of posts discussing BTC’s stumbling from what appeared to be safe highs above $30,000.

“The Kabuki theater that unfolded in Washington this week suggests that Asia and other jurisdictions will continue to gain market share from the United States,” Connors wrote to CoinDesk, adding, “Coinbases’ decision to getting a license in Bermuda to launch an exchange as soon as next week shows that US digital asset companies are now voting with their feet. So this week we’ve had both price volatility and regulatory volatility, with one clear loser, the US economy.”

The largest cryptocurrency by market capitalization was recently trading at around $28,100, down around 2.7% in the past 24 hours. But earlier Thursday, bitcoin briefly fell to $27,991 on Coinbase, its lowest level since April 9. The decline continued a two-day slide that began early Wednesday amid a UK inflation report and a selloff on Binance. BTC is down around 10% from last week’s high near $31,000 as investors are more worried than optimistic about the way forward for crypto assets.

Connors noted that “market liquidity remains heavily biased towards Asia, so he was “not surprised to see the start of bitcoin’s decline as markets in that part of the world closed. “Remember, the dislocations last May and June happened in a similar window,” he wrote.

Ether recently changed hands at around $1,936, just fractions of a point and a far cry from its recent Shanghai leveling highs above $2,100. Other major cryptos were largely red tones, mostly darker. XRP, the token of the open-source public XRP blockchain XRP Ledger, and ARB, the native crypto of the Arbitrum layer 2 blockchain, both fell by more than 3.5%. The CoinDesk Market Index, a measure of the overall performance of crypto markets, recently fell 1.3%.

Stock markets fell, but not severely, with the tech-focused Nasdaq Composite and the tech-heavy S&P 500 down 0.8% and 0.6%, respectively. Gold hovered comfortably above $2,000, suggesting that investors’ appetite for assets that hold their value through good times and bad has remained strong.

Despite encouraging first quarter earnings from several major banks, investors remain cautious, given the decline in a number of important economic indicators that could portend a recession. Recent jobs data pointed to a scorching job market slump, and on Thursday the National Association of Realtors’ monthly report showed home prices posted their biggest drop since 2012 and mortgage rates were increasing.

Meanwhile, Connors wrote that “more volatility” was likely in store, “but not the year-to-date upside volatility we’ve seen so far in 2023.”

“We may be entering a period of consolidation as U.S. regulation dims hopes and prompts many players to reboot regulation. Both thwart longstanding and structural tailwinds for BTC,” the company pointed out in its outlook 2023.

Why the EU has MiCA and the US has a confusion in securities law

The European Parliament has gone ahead and done it: today, after years of deliberation and at least two official delays, the historic regulatory framework for crypto-asset markets (MiCA) has been voted on. European Union lawmakers have also passed a separate crypto-related rule known as the Remittances Regulation that imposes stricter oversight and identification requirements for crypto traders, CoinDesks Jack Schickler reported.

The rules were described as a “world first by the European Commission’s Mairead McGuinness, and also the end of the Wild West era for crypto assets,” according to Green Party lawmaker Ernest Urtasun. The laws, which will be enforced at state level, still need to be formally approved by the supra-governmental body called the Council of the EU, and are set to be cleared to come into force next year. (Council approval is more of a formality at this point, given that it already approved the text of the law last year.)

This article is excerpted from The Node, CoinDesk’s daily roundup of the most crucial stories in blockchain and crypto news. You can sign up to receive the full newsletter here.

For many, MiCA represents a crucial breakthrough for the crypto industry. This is the first major attempt to provide a comprehensive set of rules for crypto companies so they know in advance what they can and cannot do and where their responsibilities lie if they want to operate in the block. strong trade of 27 nations. The European Union hopes to set the global standard (and, in a sense, worries about the effectiveness of MiCAs in the EU if similar rules are not adopted everywhere).

CoinDesk has drafted a number of overviews of the legal framework. But. In short, the MiCA requires crypto businesses such as wallet providers and exchanges to be EU-licensed and comply with anti-money laundering and terrorist financing safeguards if they wish to serve customers based in the EU. Some have balked at reporting standards, which will undoubtedly weaken crypto user privacy in the name of customer safety and national security.

Read the full story here:

On Thursday, European Union lawmakers voted 517 to 38 in favor of a new crypto licensing regime, MiCA, with 18 abstentions, making it the first major jurisdiction in the world to introduce a comprehensive crypto law. . Bitstamp COO John Ehlers joined the conversation. This came as bitcoin (BTC) fell for a second straight day, hitting a 10-day low. Options Insights founder Imran Lakha shared his analysis of the crypto markets. And, Lukso co-founder Marjorie Hernandez explained why Layer 1 blockchain for creative types opens up a smart contract that allows origin validators to participate in the execution of the blockchain.

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