Daily News | BTC's Volatility and ETF Underperformance Amid Regulatory Challenges; Global Stocks Decline on US Equities' Loss of Momentum
Crypto Daily Digest: Bitcoin Faces Volatility as Debt Ceiling Deal and Regulatory Developments Shake the Market
Bitcoin (BTC) dipped below $28,000 before stabilizing around $27,720 due to investor concerns about the impact of increased government debt and potential interest rate hikes. The market performance of BTC is influenced by liquidity, store-of-value narratives, NFT popularity, and technical factors. While BTC has shown resilience, further rate hikes combined with quantitative tightening may dampen market-wide rallies. Other cryptocurrencies like Ether (ETH), XRP, and Filecoin (FIL) also had mixed movements. The outcome of the debt ceiling deal vote is expected to have a short-term impact.
In a separate development, ProShares’ Bitcoin Strategy ETF (BITO) underperformed BTC this year, rising only 47% compared to BTC’s 60% gain. The fund’s structure, holding BTC futures contracts instead of tokens, exposes it to losses through “contango bleed” when rolling over contracts. The resurgence of contango in the CME futures market worsened BITO’s vulnerability. The denial of BTC spot ETF applications by the SEC further highlights the limitations and potential harm to investors of futures-based ETFs.
In addition, Binance Australia trades digital tokens at a discount and will no longer allow users to withdraw AUD via PayID. Binance faces regulatory scrutiny globally, including license cancellation by the Australian Securities and Investments Commission and a lawsuit by the US Commodity Futures Trading Commission.
Meanwhile, Bybit will exit the Canadian market due to regulatory developments.
These developments underscore the evolving regulatory landscape in cryptocurrencies, presenting challenges for exchanges and investors. The crypto market adapts as governments and regulatory bodies establish frameworks and guidelines.
Technical Analysis: Bitcoin (BTC) $27,698 (-0.14%) - Neutral Outlook
Expanding on our analysis from yesterday and incorporating the information from the 1-hour chart, we observe a significant increase in the average volume. This rise in volume suggests that the Back Up Against Creek (BUEC) phase on the 4-hour timeframe may have concluded. During this phase, the bulls (representing the smart money) prevented the price from falling below a specific threshold by controlling the majority of supply, thereby limiting opportunities for the average buyers to enter at lower prices. However, it’s important to note that there is still a potential for a rapid movement to and from the 38.2% Fibonacci Retracement area at 27343. This scenario would enable the smart money to trigger some Stop-Loss orders, causing a temporary decline in price, while also allowing new buyers to enter the market and drive the price to a new high.
Overview:
- Closest hourly support zone: 27660 - 27538
- Closest hourly resistance zone: 27790 - 27970
- Key Level: 28419 (Weekly High between Dec. 21-28, 2020)
Hourly Resistance zones
- 27790 - 27970
- 28019 - 28419
- 29096 - 29300
Hourly Support zones
- 27660 - 27538
- 27343 - 27062
- 26990 - 26781
Macro: Asian Stocks Expected to Decline as US Equities Lose Momentum Amid Debt Accord Deliberations
Asian markets are anticipated to face a decline as the momentum in US equities wanes, while Congress deliberates on a debt accord crucial to prevent a catastrophic default. Futures suggest small declines for Japan and Australia, with contracts for Hong Kong falling more than 1%. Market sentiment in the region is likely to be influenced by China’s purchasing manager index (PMI) data, as investors closely watch for signs of change in the economy’s wobbly recovery, which has had a negative impact on its share markets and currency.
In the US, the stock market showed signs of stability after a surge driven by the buzz surrounding artificial intelligence (AI), propelling it to its highest level since August. The S&P 500 closed with minimal changes, holding slightly above the 4,200 mark, while the Nasdaq 100 continued its upward trajectory, boasting a remarkable 31% surge this year. However, energy companies weighed on the index as oil prices sank below $70 per barrel. Hewlett Packard Enterprise Co. experienced a decline in its stock value as it projected sales that fell short of analysts’ expectations.
Meanwhile, bond yields retreated as investors assessed the potential economic impact of a temporary suspension of the federal debt ceiling. This divergence between stocks and bonds has raised concerns among some investors, with the bond market signaling the likelihood of aggressive interest-rate cuts by the Federal Reserve over the next year or two. On the other hand, the stock market has remained optimistic, driven by the significant amount of cash on the sidelines and the expectation of a resolution to the debt ceiling issue. The recent drop in US consumer confidence to a six-month low, attributed to concerns about the labor market and business conditions, further adds to the economic backdrop.
Looking ahead, the upcoming jobs report is expected to play a significant role in shaping the Federal Reserve’s decisions regarding interest rates and monetary policy. The outcome of the report will likely influence market sentiment and determine whether the divergence between stocks and bonds continues or begins to align.
