Bitcoin BTC Price Decline Due to US Regulatory Issues: Analyst

Good morning. Here’s what happens:

Prices: Bitcoin continued its two-day lurch, falling below $28K at one point. The head of research at Canadian crypto-asset manager 3iQ linked the decline to US regulatory issues and also noted that “market liquidity remains heavily tilted to Asia.”

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

Bitcoin decline due to US regulatory issues

US crypto regulatory issues have weighed heavily on bitcoin.

So wrote Mark Connors, head of research at Canadian crypto-asset manager 3iQ, in a series of articles discussing BTC’s stumble from what seemed safe heights above $30,000.

“The Kabuki theater that unfolded in Washington this week suggests that Asia and other jurisdictions will continue to win market share from the US,” Connors wrote to CoinDesk, adding: “Coinbase’s decision to obtain a license in Bermuda to launch an exchange so early which next week shows that US digital asset companies are now voting with their feet. So this week we had both price and regulatory volatility, with only one clear loser, the US economy.”

The largest cryptocurrency by market cap was recently trading at around $28,100, down around 2.7% in the last 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 started early Wednesday amid a hot UK inflation report and massive Binance selloff. BTC is down about 10% from last week’s high near $31,000, with investors more nervous than optimistic about the cryptoasset’s path forward.

Connors noted that “market liquidity remains heavily skewed toward Asia, so he wasn’t surprised to see bitcoin’s decline start when markets in that part of the world closed. “Remember that in May and June of last year, dislocations occurred in a similar window,” he wrote.

Ether recently changed hands at about $1,936, off a few fractions of a point and well off the recent Shanghai upgrade above $2,100. Other major cryptos were mostly in the red, mostly darker shades. XRP, the symbol of the XRP open source public blockchain XRP Ledger, and ARB, the native crypto of the Arbitrum layer 2 blockchain, were both down more than 3.5%. The CoinDesk Market Index, a measure of crypto markets’ overall performance, was recently down 1.3%.

Stock markets fell, albeit not severely, with the technology-focused Nasdaq Composite and the S&P 500, which has a strong technology component, down 0.8% and 0.6%, respectively. Gold hovered comfortably above $2,000, suggesting investor appetite for assets that hold value in good times and bad remained strong.

Despite encouraging first-quarter earnings from a number of major banks, investors remain cautious, given the decline in a number of key economic indicators that could herald a recession. Recent jobs data has indicated a dip in the flaming labor market, and on Thursday the National Association of Realtors’ monthly report showed home prices posted their biggest decline since 2012 and mortgage rates rose.

Meanwhile, Connors wrote that “more volatility” was likely ahead, “but not the YTD ‘upside’ volatility we’ve seen so far in 2023.”

“We may be entering a period of consolidation as US regulation dampens hopes and prompts many players to restart regulators. Both are countering the long-term and structural tailwinds for BTC” the company highlighted in its 2023 Outlook.

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

The European Parliament went ahead and did it: Today, after years of deliberation and at least two official delays, the landmark Markets in Crypto-Assets (MiCA) regulatory framework was voted into law. EU legislators also adopted a separate crypto-related rule known. such as the Transfer of Funds Ordinance that imposes stronger monitoring and identification requirements on crypto operators, CoinDesk’s Jack Schickler reported.

The rules were described as a “world’s first” by the European Commission’s Mairead McGuinness, and also an “end to the Wild West era of cryptoassets,” according to Green Party lawmaker Ernest Urtasun. The laws, which will be enforced at state level, still need to be officially approved by the supranational body called the Council of the European Union, are due to come into force next year. (The council’s approval is more of a formality at this point, since it already approved the text of the law last year.)

This article is taken from The Node, CoinDesk’s daily roundup of the top stories in blockchain and crypto news. You can subscribe to get the whole newsletter here.

For many, MiCA represents a decisive step forward for the crypto industry. It 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 powerful 27-nation trading bloc. The European Union hopes it sets the global standard (and is somehow concerned about MiCA’s effectiveness in the EU if similar rules are not adopted everywhere).

CoinDesk has written a number of overviews of the legal framework. But. In short, MiCA requires crypto firms – such as wallet providers and exchanges – to be licensed by the EU, and comply with anti-money laundering and terrorist financing safeguards if they wish to serve EU-based clients. Some have failed reporting standards, which will undoubtedly undermine the privacy of crypto users in the name of customer safety and national security.

Read the full story here:

Lawmakers in the European Union on Thursday voted 517-38 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 Chief Operating Officer John Ehlers joined the conversation. This came as bitcoin (BTC) fell for the second day in a row, hitting a 10-day low. Options Insights founder Imran Lakha shared his crypto market analysis. And, Lukso co-founder Marjorie Hernandez discussed why the Layer 1 blockchain for creative types opens a smart contract that allows original validators to participate in the operation of the blockchain.