Last week marked a “back in green” period in the overall digital asset space, with the Nasdaq Crypto Index (NCI) climbing 10.9%, Bitcoin (BTC) having its second best week (11.5%) since the November lows, and ether (ETH) following along with a 9.5% upside.
It was a rough start of the week for the crypto markets, as not only the fear of a more strict regulatory framework for crypto assets started to creep in, but the SEC also fined centralized crypto exchange Kraken and forced it to end its staking service. On Monday, investors were rattled by a Wall Street Journal article on a possible investigation of Paxos, the issuer of Binance's stablecoin BUSD, for violating investor protection laws. Following the news, Paxos said it would halt the minting of new BUSD tokens, causing markets to react badly and BTC to drop to $21,500 and ETH to dip below $1,500. Continuing with its actions targeting major crypto players, the SEC also announced legal charges against Terraform Labs and its CEO Do Kwon, which were at the core of Terra/Luna’s demise and arguably of much of the 2022 crypto bear market.
On Tuesday, markets had a slight recovery as investors priced in no surprises over the expected 0.5% CPI figure. The actual figure was close to expectations, although slightly higher, but still the smallest since late 2021. This points to a continued slowdown in inflation and is likely to keep the Federal Reserve on a moderate interest rate-hiking path. Prices wobbled at first, but soon investors seemed to agree that the figures were not so bad after all.
The positive mood helped markets on Wednesday alongside the release of stronger-than-expected retail and industrial activity in the US. This was the largest growth in nearly two years, with a month-on-month increase of 3.0% for January, notably higher than the average forecasts of +1.8% and much higher than December's 1.1% drop. Such a scenario underscores the surprising strength of consumers and the resiliency of the US economy, although it also fuels the prospect that the Federal Reserve may keep interest rates at a higher level for longer. By Wednesday night, BTC was back over the $24,000 mark and ETH was eyeing the $1,700 level.
The positive mood continued throughout Thursday, with BTC briefly touching $25,000 for the first time since August 2022, with bulls battling to push prices back above the 200-week simple moving average, which in previous cycles had provided consistent support on the weekly time frame, but—after being lost in June 2022—hasn’t been recouped. ETH surpassed $1,700, only to find strong resistance and retrace along with BTC back to Wednesday night prices. BTC and ETH remained, respectively, around $24,000 and $1,700 throughout Friday and the weekend.
For the next week, investors will continue to keep an eye out for new SEC follow-up actions on crypto’s regulatory landscape. In response to these, Brian Armstrong, CEO of Coinbase, wrote on Twitter: "We will keep fighting for economic freedom (our mission at Coinbase). Some days, being the most trusted brand in crypto means protecting our customers from government overreach. Coinbase's staking services are not securities. We will happily defend this in court, if needed."
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Crypto Firm Paxos Faces SEC Lawsuit Over Binance USD Token
Given that BUSD is one of the top 3 stablecoins in the crypto market, it would be wise for investors to keep their eyes peeled for the aftermath of this saga. USDC and USDT might end up being short-term winners, although it seems like Paxos and Binance are not likely to be the only ones staring down the barrel of a gun, as time goes on.
SEC Charges Terraform and CEO Do Kwon with Defrauding Investors in Crypto Schemes
Siemens Issues €60m Digital Bond on Public Blockchain
In addition to providing a shared ledger which reduces the need for reconciliations, the blockchain securities are issued directly to investors, sidestepping the cost and need for intermediaries. Siemens is one of the first large corporations to issue digitally native bonds on a public blockchain, although there have been many more on private blockchains. To date, the main public blockchain issuances have been by banks such as Societe Generale, Santander, as well as the European Investment Bank. ABN Amro
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