23rd May 2023 – (New York) Hong Kong’s Securities and Futures Commission (SFC) has announced that it will accept applications from exchanges to offer digital asset trading to retail investors starting 1st June. The SFC added that approved tokens must have a 12-month track record and substantial market capitalisation, and registered exchanges will be barred from providing stablecoin and interest-bearing instruments.
This move is in line with expectations that developments in Asia will spur the next crypto bull run, and highlights the lack of regulation in the West, particularly in the US.
Bitcoin saw an increase in demand during Asian trading hours and rose more than 2% to $27,500, approaching the former support-turned-resistance of the horizontal trendline connecting the first and second trough of the head-and-shoulders (H&S) pattern. This comes after the cryptocurrency fell below the trendline earlier this month, confirming the H&S breakdown and opening doors for a deeper slide toward $25,000.
Noelle Acheson, author of the Crypto Is Macro Now newsletter, indicated that this move is likely due to Hong Kong’s decision to allow retail trading of BTC and ETH on licensed digital asset platforms from June 1. While this news was largely expected, confirmation of the ruling is significant in a market facing headwinds from other vectors.
However, Acheson believes that this decision does not mean there will be an influx of demand for cryptocurrencies, as local traders are already accessing the market through offshore venues. Nevertheless, this announcement is a “welcome reminder that the crypto adoption pool is likely to grow considerably over the next year and beyond.”
Bitcoin’s short-term outlook also depends on other factors, such as the ongoing US debt ceiling drama and the trajectory of the dollar index. Treasury Secretary Janet Yellen has warned that the government would run out of money in early June if a debt deal is not reached, potentially leading to a catastrophic default. Some analysts predict that a successful resolution of the debt ceiling drama might see the Treasury suck out liquidity from the market and put downward pressure on bitcoin.
Moreover, bond yields are on the rise as investors reassess the possibility of the Federal Reserve continuing its rate hike campaign and keeping borrowing costs higher for longer. This development could also affect bitcoin’s short-term outlook.
Secure Digital Markets, a Canada-based digital assets liquidity provider, notes that bitcoin needs to clear the H&S trendline resistance and the 20-day simple moving average at $27,500 to confirm a bull revival. However, as long as prices remain below the neckline of this H&S pattern and the 20-day moving average, further downside to $25,250 and possibly $24,000 should be expected.