First Mover Asia: Amazon’s Web3 Foray Will Be a Compliance Nightmare; Bitcoin Tops $23.9K
The retail giant’s initiative, especially in NFTs, may force some regulatory clarity for digital assets. Cryptos surge in Sunday trading.
Prices: Bitcoin tops $23.9K before retreating slightly amid ongoing investor optimism. But one market observer says the largest cryptocurrency by market capitalization could be due for a U-turn.
Insights: Amazon is rumored to be unveiling an NFT initiative, part of the retail giant’s larger push into Web3. The project could raise significant regulatory issues.
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On the weekend before the U.S. central bank unveils its latest interest rate decision, crypto investors were in a buoyant mood.
They sent bitcoin as close to $24,000 as it’s been since mid-August. The largest cryptocurrency by market capitalization topped $23,900 at one point Sunday before retreating to about $23,760, a nearly 3% gain over the past 24 hours.
Markets have remained largely hopeful the past week despite sometimes conflicting economic data and worrisome fourth quarter earnings reports from some of the world’s biggest brands.
On Friday, news from the inflation front tilted favorably with the U.S. Commerce Department’s announcing that personal consumption expenditures (PCE) excluding food and energy in December had registered its most moderate annual rate increase since October 2021.
The PCE, a key inflationary measure that the Federal Reserve weighs heavily in its monetary decisions, offered the latest evidence of a cooling economy, although it also showed services inflation remaining stubbornly resilient.
“The decline in goods inflation is welcome, as it brings inflation closer to the [Federal Reserve’s] 2% goal (for reducing inflation), but with services inflation still sticky, it highlights that the Fed has more work to do,” First Republic Bank wrote in a weekly note to investors.
Still, Joe DiPasquale, CEO of fund manager BitBull Capital, noted in a text to CoinDesk, that the Federal Open Market Committee (FOMC) was likely to follow through on a widely expected 25 basis point rate hike at its two-day meeting, which begins Tuesday.
Investors’ hopes for this more dovish tilt in monetary policy after eight months of harsher increases have fueled much of January’s surge in crypto prices and other risk assets.
The “more modest increase is part of the reason that many crypto prices have increased,” DiPasquale wrote. “It’s seen as a positive economic sign and is now being baked into the demand for bitcoin.
It has been positively correlated with the equities markets in recent years and the lower rate is a bullish sign for the stock market.”
Ether, the second-largest crypto in market value, fared even better than BTC on Sunday, rising nearly 5% at one point to trade over $1,650 at one point. ETH has risen over this threshold twice in the last nine days.
Most other major cryptos by market cap spent much of Sunday firmly in the green with MANA, the token of 3D virtual reality platform Decentraland, and SAND, the native currency of the metaverse game Sandbox, recently jumping more than 15% and 7%, respectively, and SOL, the token of the Solana blockchain, up 8.2%.
The CoinDesk Market Index (CDI), an index measuring cryptos’ performance, recently spiked more than 3.3%.
Equity markets furthered their upbeat January on Friday with the tech-heavy Nasdaq and S&P 500, which has a hefty technology component, each closing up the better part of a percentage point. The S&P has reached its highest level in nearly two months, a reversal from its desultory 2022.
Investors are cautiously optimistic about inflation and other macroeconomic uncertainties, even as such powerhouses as Amazon, Salesforce and Microsoft have announced job cuts in anticipation of an economic contraction.
In crypto news, the sad saga of Sam Bankman-Fried continued on Friday with federal prosecutors asking U.S. District Court Judge Lewis Kaplan to ban the former CEO of FTX from communicating privately with current and former employees of the embattled exchange and its investment arm, Alameda Research.
Prosecutors said Bankman-Fried had reached out to one former FTX employee in what they described as a thinly veiled attempt to “influence potential testimony.”
BitBull’s DiPasquale said that current market conditions remain ripe for a turn lower after the weeks-long surge fueled by a short squeeze and investor optimism.
“Investors might choose to take profits now given the downside potential after several weeks of gains, and the possibility that bitcoin may test $20k again in the near future,” DiPasquale wrote.
