Hong Kong is relaxing its crypto regulation to allow retail investors to trade digital assets directly. A licensing regime for crypto platforms that allows retail crypto trading is reportedly set to be enforced in March next year.
Hong Kong is reportedly relaxing its strict cryptocurrency regulation with a plan to allow retail crypto trading, Bloomberg reported Thursday, citing people familiar with the matter.
A mandatory licensing regime for cryptocurrency platforms that allows retail crypto trading is set to be enforced in March next year, the publication conveyed, elaborating:
Hong Kong plans to legalize retail trading for crypto starting in March after years of skepticism — a stark contrast to mainland China’s ban.
Moreover, regulators are seeking to allow retail exchanges to list large cryptocurrencies, like bitcoin (BTC) and ether (ETH), the news outlet added. The listing rules are likely to include criteria such as the token’s market value, liquidity, and inclusion in third-party crypto indexes.
Gary Tiu, executive director at crypto firm BC Technology Group, commented:
Introducing mandatory licensing in Hong Kong is just one of the important things regulators have to do. They can’t forever effectively close the needs of retail investors.
Michel Lee, executive president of digital asset financial services group Hashkey, explained that Hong Kong has been trying to create an all-encompassing crypto regime, citing tokenized stocks and bonds as a potentially more important segment in the future. “Just trading digital assets on its own is not the goal. The goal is really to grow the ecosystem,” he was quoted as saying.
Hong Kong’s top financial regulator, the Securities and Futures Commission (SFC), introduced a voluntary licensing regime in 2018. It restricted crypto trading platforms to clients with portfolios of at least HK$8 million ($1 million). However, the tough regulation turned away many crypto businesses and only two firms — BC Technology Group and Hashkey — were approved.
Many people are skeptical of the new crypto regulation, however. Bitcoin Association of Hong Kong co-founder Leonhard Weese shared:
The kind of conversations I’ve had was that people still fear there’ll be a very strict licensing regime. Even if they’re able to deal directly with retail users, they’re still not going to be as attractive or as competitive as overseas platforms.
The SFC’s director of licensing and head of the fintech unit, Elizabeth Wong, said last week: “We’ve had four years of experience in regulating this industry … We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.” She noted that Hong Kong could also authorize exchange-traded funds (ETFs) to offer exposure to mainstream crypto assets.
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.
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The bitcoin price’s mammoth 2021 bull run catapulted its market capitalization to over $1.2 trillion last year. It’s since crashed back to a mere $400 billion. Meanwhile, ethereum’s own huge price rally saw it climb to over $500 billion before dropping to just over $200 billion. Now, some traders and investors are predicting the ethereum price will surge following its long-awaited, radical upgrade—potentially making ethereum more valuable than bitcoin for the first time, an event known as “the flippening.”
“Investor interest in ethereum has remained resilient as it nears the merge, its once-in-a-lifetime event that will see the whole network migrate onto proof-of-stake,” Gabriel Selby, lead research analyst at cryptocurrency index provider CF Benchmarks, said via Twitter. “Some have suggested it could be the catalyst for ethereum to overtake bitcoin as the world’s largest coin by market capitalization.”
This week, ethereum is expected to complete its transition from the energy-intensive proof-of-work consensus mechanism used by bitcoin to the more power-efficient proof-of-stake, removing ethereum’s reliance on miners and handing control to those that “stake” their ether on the network. The switch is expected to reduce ethereum’s carbon emissions by 99%, according to the Ethereum Foundation.
Bitcoin’s dominance, a measure of its value compared to other cryptocurrencies, has in recent weeks dipped under 40%, down from a peak of almost 50% earlier this year, according to data from CoinMarketCap. Ethereum has seen its share of the market climb to over 20%, up from lows of under 15%. “Since the start of the year, the market cap ratio between bitcoin and ethereum has converged to its narrowest differential since May 2021.
If the current trend persists, ethereum could reach the top of the league tables by the end of 2023, or sooner,” Selby said. While bitcoin has developed a reputation as digital gold due to its immutability and resistance to both change and censorship, ethereum is designed to be used as the foundation of a decentralized, blockchain-based internet—an idea that’s become known as web3.
“With the proliferation of financial products that have enabled a much broader range of investors to express their price view in the crypto markets—such as the recently launched ethereum options contract by CME—the mechanisms are very much in place for ethereum’s market cap to overtake bitcoin, should there be buy-in from a sufficient number of investors,” Selby added.
“We believe that ethereum has great utility and once the purge phase of pruning the code starts in 2023 it will be a very good blockchain with even greater adoption,” Martin Hiesboeck, head of blockchain and crypto research at crypto trading platform Uphold, said via email, adding: “The [ethereum] price could well skyrocket.”
Over the last year, ethereum has seen a demand boom due to the soaring popularity of non-fungible tokens (NFTs), digital art and media that’s tokenized on the ethereum blockchain. “Ethereum has already surpassed bitcoin in terms of the number of transactions executed,” Daniel Kostecki, a senior financial analyst at the investment company Conotoxia. “However, it is still far behind bitcoin in the volume of transactions on the blockchain or trading on exchanges.”
Kostecki warned it will be “hard to overtake a coin that was first in the world and whose issuance is limited.” Though others are more confident the flippening will eventually happen. “The merge will help global sentiment towards crypto and [the blockchain-based third iteration of the internet] web3 because the second biggest blockchain is becoming greener,” Max Kordek, chief executive of decentralized applications platform Lisk, said in emailed comments. “This is also a necessary step for ethereum to flip bitcoin, which I foresee happening in the next major bull run.”
When the Ethereum (ETH) merge occurs in September, it will mark the end of its PoW system and begin its status as a PoS coin. The Merge will supposedly decrease ETH’s total supply. A decreased supply should help lift the price of ETH. This could assist its rise to #1. However, BTC will always be seen as “digital gold” within the digital universe, while Ethereum is known as “digital oil.”
A rapid increase in the ETH price, a decrease in BTC’s price, or a combination of these two could lead to the Flippening. The ETH merge will not reduce gas fees for transactions (at least not immediately), a primary sticking point that could prevent ETH from growing. By contrast, Solana (SOL) and Cardano (ADA) have cheaper fees due primarily to their PoS consensus mechanism. Could one of them overtake ETH?
Many believe the fees on the Ethereum platform will decline gradually. Instead, the ETH blockchain plans to scale its users’ activity and secure its Mainnet through a decentralized layer. This method could allow for cheaper transactions within the network (eventually). For those unaware, market cap for cryptocurrencies works the same way as that of the stock market.
Replace the word “share” with “coin or token” so that “total shares outstanding multiplied by price per share” becomes total altcoins/tokens outstanding multiplied by the price per altcoin/token equals the assets’ market cap. Market cap is one of the vital indicators of an altcoin’s value. Many newcomers (including me) to the cryptocurrency market considered only an altcoin’s price to determine its value without considering how many are circulating and how many will be produced.
However, scarcity is only one part of the Law of Supply and Demand. Between ETH and BTC, the value or market cap gap is more than $200 billion. BTC’s market cap on 19 AUG is $408,567,909,013, while ETH’s is $206,487,299,810. That’s more than double. However, many are looking at it like the “glass is half-full,” or ETH is almost halfway to the Flippening.
ETH is almost triple its next closest competitor a “stablecoin,” Tether (USDT) valued at $67,554,732,043. In fact, BTC owns more than 55% of the total value within the cryptocurrency industry. These valuations were genuine at the time of my research, though market valuations in the highly volatile cryptocurrency market change rapidly. Conversely, ETH owns just a little more than 12% of the value. This gap may be a hard one to close for ETH.
Plus, other factors may make it challenging for ETH to top BTC in the near future. Let’s explore those so you can form an opinion about the “flippening.” Some “whales” believe ETH has the presence in the crypto universe but not the asset liquidity of BTC, though some Ether watchers and owners would say “…we’re halfway there.” Most crypto enthusiasts understand that the BTC halving creates a bull run.
Well, imagine that times three. The Merge will cut emissions by 90 percent, daily block compensation will diminish from 12800 to 1280 ETH, and inflation will drop from 4.3% to 0.43%, which could be seen as a 3X halving. Many investors do not understand the difference between circulating supply, total supply, and maximum supply. It can be complicated. Of course, circulating supply refers to the number of coins in circulation.
However, total supply doesn’t necessarily refer to the total supply that will ever be produced; that is maximum supply. As opposed to government-produced and regulated fiat currencies, the maximum supply of BTC is set at 21,000,000, which it is predicted to reach by 2040. Yet the price can move quickly due to its small number compared to ETH, which has an announced total/circulating supply of 122,027,066 coins. The maximum supply is not currently known.
Although the number of coins in circulation and price will drive market cap, inflation can stifle growth. Although the Merge will help fight inflation and quell circulating supply, ETH has nearly 100 million coins in circulation than BTC ever will. Regardless of the number of coins in circulation, the demand for either will drive the price. BTC has always led the way, but it has no real project outside of its decentralized nature, limited anonymity, and stored value.
Those functions often lead to ETH being referred to as “digital oil” because it “greases the skids” for so many operations across the crypto universe. While ETH is set to complete the Merge to PoS in September, many believe it will flip BTC and become number one. However, we must wait and see how the ETH blockchain will function once the Merge is complete.
Suppose, as predicted, the gas fees remain high. What is the advantage beyond the apparent but not visible benefit to the environment? If developers and creators must pay the same high fees, what will stop them from using another platform that performs the same function for less?
Ethereum, the world’s second largest cryptocurrency has been trading under major selling pressure. ETH prices have dropped by 40% over the past 30 days. However, expert suggests that this drop may continue further.
July/August can be worst months
Daniel Cheung, Co founder of Pangea Fund Management in a Twitter thread mentioned a massive short opportunity for Ethereum at $1,200 in the next 2 months. He suggests that the market hasn’t yet seen the capitulation yet. It added that July and August are lined up to be the worst months ahead.The fund manager highlighted that currently, the market is in the Macro trade regime. The Bitcoin and Ethereum trends suggest that the crypto market has been trading very sensitively to inflation.
The recent selling pressure has led the Global crypto market cap to plunge by another 5% over the past day. It now stands at $902 billion. The digital asset market recorded its all time high (ATH) of $3 trillion in November 2021.
The world’s second largest crypto is still likely to be levered and liquid bet on Nasdaq and that too for the next 2 months. He believes that Nasdaq still has a lot of room to fail ahead. It is still down by 30% from the recent ATH with a prior drawdown. Cheung added that a further 20% downside is still in the frame for QQQ and 40% for Ethereum.
ETH prices are down by more than 9% in the last 24 hours. It’s trading at an average price of $1,111, at the press time. Its 24 hours trading volume is up by 7% to stand at $14.6 billion. However, it is still down by 77% from its all time high.
Ethereum price analysis is bearish today as we have seen more downside reached over the last 24 hours with a steady downside momentum. Therefore, we expect ETH/USD to drop even lower and look to retrace even lower. The next obvious target is the $1,050 support, which, if broken, would lead to a lot more downside in July. The market has traded in the red over the last 24 hours. The leader, Bitcoin, lost 4.81 percent, while Ethereum a more substantial 9.17 percent. The rest of the top altcoins have followed close by, with some declining even further.
Ethereum price movement in the last 24 hours: Ethereum breaks past $1,175
ETH/USD traded in a range of $1,111.20 to $1,229.74, indicating substantial volatility over the last 24 hours. Trading volume has increased by 5.36 percent, totaling $14.58 billion, while the total market cap trades around $135.5 billion, resulting in market dominance of 15.13 percent.
ETH/USD 4-hour chart: ETH targets $1,050 next?
On the 4-hour chart, we can see the Ethereum price still testing further lows with no signs of reversal just yet. Therefore, more downside should follow to the $1,050 previous local swing low. Ethereum price action has seen strong bullish signals over the second half of June. After the initial reaction from the last swing low at $1,050, ETH/USD retraced to $1,175, setting a strong lower high. However, further downside did not follow as the $1,050 offered strong support.
From the newly found local higher low, ETH rallied higher one more time last week. A new high was set at $1,275, indicating that the several-week bearish momentum could soon end. On Monday, bearish momentum took over as buyers became exhausted. After some , ETH/USD set a lower local high and broke past the $1,775 local support. Late yesterday the decline continued, pushing the Ethereum price as low as the $1,100 mark.
This means that bullish momentum could soon come back. However, as long as bearish candles are seen later today, we expect further downside at the $1,050 previous low to be reached soon. From there, much depends on how the market will react. If a break below this support follows, we could see a lot more downside and both lower lows and highs set in July. Alternatively, if the $1,050 mark holds, ETH could move into consolidation.
Ethereum price analysis is bearish today as we have seen a lot more retrace from the previous swing high at $1,275 so far this week. Since no signs of reversal have followed today, we expect ETH/USD to move even further and target the previous local low. In case it is broken, ETH should see a lot more downside early in July.
The cryptocurrency market’s latest swoon is giving investors a painful lesson about the risks of trading digital tokens through intermediaries. In a bankruptcy restructuring, crypto investors would be navigating uncharted territory.“What can safely be predicted is that there will be litigation, and there will be delay,” said Adam Levitin, a law professor at Georgetown University who studies bankruptcy.
Crypto exchanges and lending services provide individual investors an on-ramp to markets, but the cryptocurrency that customers put on these platforms might not belong to them in the eyes of a bankruptcy court, according to regulators and legal experts. If a cryptocurrency company goes bust, its users’ digital assets will likely go into the bankruptcy estate that lawyers, financial advisers, lenders and other creditors divvy up. Customer assets could be repaid at a loss, rather than simply returned to the users.
Even if customers of a troubled cryptocurrency firm eventually get access to their tokens, they still could suffer big losses if the market turned against them while the bankruptcy played out. Many people were motivated to put crypto assets in Celsius to earn interest rates as high as 18%. The lender took customer deposits and put them in decentralized finance investments to get a return or lent the funds out to other users for a fee.
Celsius looks like a bank in many ways. But the company lacks the protections that banks have, such as federally backed deposit insurance. Celsius, and other cryptocurrency intermediaries, also aren’t registered as broker-dealers, which provide account holders with critical protections in the event of bankruptcy by keeping their funds separate from the broker-dealers’ own funds. In the U.S., most crypto intermediaries instead possess simple money-transmitter licenses issued by state governments, intended for companies like Western Union.
How Celsius’s crypto lending process works:
Celsius puts customer deposits in decentralized finance investments and lends out funds to other users (including to exchanges and market makers). Customers lend money to Celsius in exchange for yield. (This is essentially an unsecured loan). Celsius earns a return from borrowers and investments. Celsius puts customer deposits in decentralized finance investments and lends out funds to other users (including to exchanges and market makers).
Customers lend money to Celsius in exchange for yield. (This is essentially an unsecured loan). Celsius earns a return from borrowers and investments. In a recent paper, Mr. Levitin argued that the easiest way to protect investors would be for the Consumer Financial Protection Bureau, a federal regulator, to require that cryptocurrency exchanges hold customer funds in bankruptcy-remote arrangements to segregate funds. He said the CFPB has clear authority from Congress to take such steps but that the agency has yet to do so.
Coinbase shares plunged following a disclosure by the company in May that customers could be treated as general unsecured creditors in a hypothetical bankruptcy. Celsius also sought to reassure customers shortly before it froze withdrawals. A spokeswoman for the firm told The Wall Street Journal in an email Friday that it had not had any issues meeting withdrawal requests and that it held enough ether—a popular cryptocurrency—to meet its obligations.
Some lawyers say the type of contract between investor and firm could make a difference and offer some protection of ownership rights in bankruptcy. The treatment of customer assets may depend on whether the firm holds them in a way that is consistent with customer ownership as established under relevant commercial laws, said Jonathan Cho, a bankruptcy and regulatory lawyer at Allen & Overy. For example, many firms have adopted a holding model, available under the commercial laws of most states, that helps define what the ownership rights should be, Mr. Cho said. Celsius also has a lending arm that offers cash loans, collateralized by people’s cryptocurrency assets.
A bankruptcy judge may also have to decide whether Celsius’s depositors would even be considered unsecured creditors or merely investors, which rank even lower, said Jim Van Horn, bankruptcy lawyer at Barnes & Thornburg LLP. State laws on ownership of assets in custodial accounts might be helpful to depositors. But they may not even come into play in a bankruptcy case if a judge determines that users are merely investors, Mr. Van Horn said.
The crypto market suffered one of its most dramatic selloffs in years this week as the prices of top cryptocurrencies declined as much as 35% week-over-week as fears of a broad economic recession intensified. On Saturday, the total global market cap of cryptocurrencies sank below $850 billion as top tokens tumbled. Ethereum is trading at half of where it was one month ago, falling below the $1,000 price barrier which it has traded above since January of 2021. That figure is down roughly 80% since it’s all-time-high in November of last year.
Bitcoin, the largest cryptocurrency by market cap, similarly eclipsed an important price barrier Saturday, falling below $20,000 after a weeks-long plunge ratcheted the currency down again and again. While investors in top coins worry, smaller ecosystems are dealing with major hits as well as backers grow concerned about the survival of tokens and ecosystems that are still nascent at the edge of a bear market. There are still some 44 tokens with market caps north of $1 billion according to CoinMarketCap.
The latest crypto crash occurs as investors grow fearful of macroeconomic conditions and the Federal Reserve’s efforts to curb inflation. Crypto investors have also seen a number of core protocols and services threatened by the rapid depreciation of assets with some worrying that the inter-reliance of these various services could cause cascading shutdowns.