Daily News | Crypto markets see significant drops as EU finalizes MiCA legislation and tech giants prepare to report earnings
Crypto Daily Digest: Bitcoin and Ether Experience Significant Drops; EU Finalizes MiCA Legislation to Regulate Crypto Sector, UK Under Pressure to Follow Suit
Bitcoin and Ether, two of the largest cryptocurrencies, have seen significant price drops in the past week. Bitcoin‘s price fell by around 9% to $27,590, causing some traders to fear a resumption of the downtrend and book profits. However, some analysts predict that Bitcoin may find buying interest in the $26,600-$25,000 zone and form a higher floor that could act as a launch pad for the next rally. Despite the recent price decline, most analysts expect a potential rally triggered by the upcoming halving in April 2024, potentially taking Bitcoin past $50,000. However, the recent US regulatory crackdown on cryptocurrencies and inflation concerns could restrain Bitcoin‘s price growth in the short term.
Ether has dropped to $1,860, erasing all the price gains from its recent rally following the successful implementation of the Shanghai upgrade. ETH has declined more than 11% from a Sunday high of $2,140 amid wider price slumps in the crypto market.
On the other hand, Tether‘s stablecoin, USDT, has regained its one-to-one redemption with the US dollar, with assets of about $81.4bn. This is close to regaining all market value lost following the collapse of algorithmic rival TerraUSD less than a year ago. Tether‘s recovery is supported by its dominant role in crypto as a means for transactions and storing value.
In Europe, the EU has finalized its MiCA legislation for regulating the crypto sector, which puts pressure on other jurisdictions such as the UK to implement their own rules. While the UK’s Financial Services and Markets Bill contains provisions for regulating crypto, the MiCA package sets out specific authorization requirements for crypto service providers and token issuers. The EU’s clarity on regulation gives it an advantage, but the UK’s staged approach enables it to adapt to changes in the sector more easily.
Crypto Total Market Cap $1.127T (-0.15%) - Neutral Outlook
When we take a closer look at the 4-hour timeframe, we can see that there hasn’t been any subsequent retracement after the longest red candle on Apr. 21 at 16:00 UTC. This suggests that many buyers are currently holding off on purchasing until prices become more favorable for them. Looking ahead, it’s anticipated that the overall cryptocurrency market capitalization will find support in the previous demand zone ($1.097T - $1.085T), though there is a possibility of a brief drop to the $1.058T area before quickly retracing back to the demand zone.
Macro: Markets Brace for Busy Week of Economic Data; Tech Giants Microsoft, Meta, and Amazon Set to Report Earnings
Ahead of a week packed with economic data releases that could offer insights into future interest rates, US equity futures and the dollar saw declines against major currencies. While S&P 500 and Nasdaq 100 futures dipped in early Asian trading, futures in Japan climbed. It is anticipated in swaps markets that the Federal Reserve will raise interest rates in the coming weeks, followed by a series of cuts later in the year. The US, eurozone, Sweden, and Japan will release GDP data and monetary decisions this week. Earnings reports from Microsoft, Meta Platforms, and Amazon are also expected.
In China, official data shows that the country’s economy grew at its fastest pace in a year in the first quarter, exceeding economists’ expectations. Year-on-year GDP expanded by 4.5%, with retail sales rising by 10.6% in March and fixed-asset investment increasing by 5.1% in Q1. S&P Global Ratings suggests there is an upside risk to its current projection of 5.5%. However, the recovery from 2022 is expected to be gradual rather than V-shaped due to growth in industrial output remaining below pre-pandemic rates and property investment continuing to contract, despite the expansion of housing sales.
