Daily News | BTC Rally Continues as Institutions Embrace Crypto Market; Market Caution Persists Amidst Fed Testimony Anticipation
Crypto Daily Digest: Bitcoin’s Rally Continues as Institutions Embrace Crypto Market
Bitcoin‘s price has surged to a new high, breaking the $28,000 mark, fueled by positive developments in the cryptocurrency market. One significant factor driving the rally is BlackRock’s application for a Bitcoin exchange-traded fund (ETF), signaling the increasing interest of institutional investors in digital assets. The filing by BlackRock, the world’s largest asset manager, has sparked Optimism among investors and is seen as a significant milestone for the broader adoption of cryptocurrencies.
Adding to the positive sentiment, Deutsche Bank AG, a major global banking giant, has recently applied for regulatory permission to operate as a cryptocurrency custodian in Germany. This move demonstrates the growing recognition of cryptocurrencies as a legitimate asset class by traditional financial institutions. Deutsche Bank’s foray into the crypto custody space aligns with its previous announcement in 2021 about exploring institutional-grade storage solutions with insurance-grade protection for digital assets.
The surge in venture capital investments in the crypto industry has further contributed to the positive market sentiment. Despite the overall economic backdrop, crypto venture capital funding experienced substantial growth for the second consecutive month in May. Funding amounts soared by 34% compared to April, with the number of individual deals increasing by 62%. These figures highlight the increasing confidence and interest of investors in the long-term potential of digital assets.
Meanwhile, Japanese cryptocurrency exchanges are urging regulators to ease margin trading restrictions, particularly on popular cryptocurrencies like Bitcoin. The Japan Virtual and Crypto Assets Exchange Association (JVCEA), a self-regulated body of local exchanges, is calling for higher leverage limits to attract more participants, including institutional investors. The JVCEA argues that these restrictions hinder market growth and liquidity and discourage new entrants into the crypto market.
Institutional interest in cryptocurrencies is not limited to Japan. The Bank for International Settlements (BIS), an umbrella group for central banks, has proposed the concept of a unified electronic ledger as a new market infrastructure. This ledger would combine central bank digital currencies (CBDCs) with tokenized money and assets on a single platform. The BIS believes that such a unified ledger, powered by automated smart contracts on blockchain technology, could enhance the efficiency and transparency of the global financial . It could revolutionize securities settlement processes, enable tokenized deposits with regulatory checks, and reduce trade finance costs for smaller businesses.
As the crypto market continues to evolve, regulators will play a crucial role in shaping its future. Any revisions to margin trading restrictions or the implementation of unified ledgers for cross-border payments will require careful uation of market risks and investor protection. Harmonization of policies across jurisdictions will also be essential to create a cohesive global regulatory framework for cryptocurrencies.
Bitcoin (BTC) $28,716 (+1.46%) - Neutral Outlook
Overview:
- Closest daily support zone: 28020 - 27790
- Closest daily resistance zone: 28420 - 29095
- Key Level: 29300 (Monthly High of Dec. 2020)
Daily Resistance zones
- 28420 - 29095
- 29475 - 30025
- 30470 - 31015
Daily Support zones
- 28020 - 27790
- 27260 - 26970
- 26700 - 26285
Macro: Market Caution Prevails as Asian Equities Open Lower Amidst Fed Testimony Anticipation
Asian stock markets opened lower on Wednesday as investors grew cautious following declines in the US market and ahead of Federal Reserve Chair Jerome Powell’s upcoming congressional testimony. This cautious sentiment resulted in benchmark drops in Japan, South Korea, and Australia, while futures for Hong Kong also decreased. US-listed Chinese stocks experienced their biggest decline in three months. The S&P 500 recorded back-to-back losses for the first time in nearly four weeks as trading resumed after the long holiday weekend.
The downward trend extended into extended US trading, with FedEx Corp. seeing a significant drop after its 2024 outlook fell short of analyst consensus estimates due to weakened demand. Bonds in Asia mirrored the performance of US Treasuries by gaining, while the US dollar steadied after advancing against most major currencies, except the yen, on Tuesday.
Investors in the US stock market are grappling with a dilemma. On one hand, there is the fear of missing out, but on the other hand, concerns are rising about overvalued markets and hawkish signals from the Federal Reserve. Additionally, traders are exercising caution regarding Chinese assets, as Beijing has yet to issue specific support measures and banks have offered only modest rate cuts.
All eyes are now on Jerome Powell’s upcoming semi-annual report to Congress, which is expected to have a hawkish tone. While the Federal Reserve kept interest rates unchanged at its latest meeting, the forecasts indicate the possibility of around two additional quarter-point rate hikes or one half-point increase. Market skepticism remains regarding the sustainability of the current rally, with some investors believing that the Fed may not hold rates higher for an extended period if a favorable soft landing occurs and labor markets remain resilient.
In other market developments, surprising data revealed a surge in US housing starts in May, suggesting potential economic growth fueled by the construction sector. However, there are concerns about the sustainability of the rally and the potential impact of higher real rates. Meanwhile, oil prices retreated, with global benchmark Brent settling below $76 a barrel, amid a broader risk-off sentiment, while gold prices remained relatively stable.
Overall, caution prevails in the markets as investors assess various factors, including Powell’s testimony, the trajectory of interest rates, and the performance of different sectors amid global uncertainties.
