Cryptocurrencies started the week in a weak mood, with Bitcoin slipping back into the $21,500 area, and one of the largest cryptocurrencies, Binancecoin is trading near 7,5% lower after NYDFS regulator decision, which hits stablecoin BinanceUSD (BUSD). On the macro side, last week's data and statements by Fed members indicated that the Fed's hike cycle could extend, and tomorrow's CPI inflation reading could bring renewed risk aversion.
- The atmosphere in the financial markets seems to be negative in perspective of tensions between the US and China. China has accused the United States of sending reconnaissance drones over its territory since January 2022, additional uncertainty for investors was raised by weekend reports of three unidentified objects that were taken out by US fighter jets. The Asian session proceeded in a weak mood, however, indices managed to recover some of the losses at the end;
- The Financial Times reports that New York's Department of Financial Services regulator has called on Paxos to stop issuing the third largest stablecoin on the market, BUSD to the Binance exchange. As a result, Paxos will stop support BinanceUSD and Binancecoin (BNB) token has come under pressure and is already losing nearly 8%. If the role of stablecoin gradually weakens in the results of the regulators' actions, this could paradoxically support Bitcoin in the long term because investors, as in the early years of the industry, will have to purchase it in order to buy other cryptocurrencies with BTC;
- Bernstein analysts pointed out that increased U.S. regulation could cause a resurgence in demand for De-Fi projects out of the reach of regulators, with projects moving to friendlier locations in Dubai, Singapore, Hong-Kong and London, among others. In addition, Bernstein cited as a reason for the NYDFS decision that the regulator sees Binance as out of its control by which it wants to limit its role in the US and hit Paxos, the stablecoin issuer BinanceUSD;
- ArkInvest fund on Friday purchased more than 162,000 shares of cryptocurrency exchange Coinbase (COIN.US), whose doors the SEC has yet to knock on. The exchange, unlike Kraken, which was fined last week, has not yet made its staking services available to retail investors by what it will potentially be able to do with possible approval and guidance from the regulator. The fund previously bought Coinbase shares in January;
Bitcoin's correlation with the NASDAQ ahead of tomorrow's U.S. inflation reading (15:30 GMT, Tuesday) is increasing, making it likely that cryptocurrencies will remain highly sensitive to macro data readings and expectations about future Fed policy:
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The correlation of the overall cryptocurrency market with the NASDAQ has returned to 'positive levels' again and continues to rise. Cryptocurrencies lost it in late November and early December by the FTX bankruptcy, which caused the entire industry to implode regardless of market sentiment. Tomorrow's CPI (expected to be 6.2%) and core inflation (expected to be 5.5%) readings are likely to be key to sentiment, any reading above forecasts could raise risk aversion and weigh on cryptocurrencies. Source: Tradingview
External financing for the cryptocurrency industry in 2022 weakened with initial interest rate hikes in the U.S., which dramatically increased the cost of financing and debt service for cryptocurrency projects involved in development, venture capital funds, among others. Gaming, NFT, DAO (social) and centralized cryptocurrency services were hit the hardest. Source: Cryptorank
BINANCECOIN, D1 interval. The price of the Binance exchange token has retreated 23.6 Fibonacci abolition of the upward wave initiated in December 2022 and is trying to find support at the SMA200 level (red line) and 38.2 Fibonacci abolition. Binancecoin once again fell below the MA200 (blue line) signaling potentially longer-term weakness. The nearest support is the 61.8 Fibon abolition in the vicinity of $267. Source: xStation5
BITCOIN, H4 interval. A drop below the SMA200 in a declining scenario indicates a possible test of $21,000, which coincides with the 38.2 Fibonacci's abolition,of the upward wave started in November 2022. Source: xStation5
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