It’s official: Hong Kong confirms it will give the green light to retail crypto trading starting 1 June, Bitcoin reacts positively to the news.
Below are all the details.
Hong Kong says yes to crypto trading, Bitcoin rises 1.7%
As anticipated, crypto prices rose Tuesday after Hong Kong’s securities regulator announced that it will allow retail trading of certain cryptocurrencies starting 1 June.
As a result, Bitcoin rose 1.7% to $27,293.64, according to Coin Metrics. The largest cryptocurrency traded in a small range throughout May, struggling to exceed $30,000 but remaining above $25,000.
Late Monday evening, the Securities and Futures Commission in Hong Kong said it will allow retail investors to trade certain cryptocurrencies starting next month on registered trading platforms.
The move was widely expected, with the announcement marking the end of a request for public comment filed in February on proposed regulatory requirements for retail cryptocurrency trading.
It is worth noting that the new guidelines are part of a broader effort by Hong Kong to become a global crypto hub.
However, this ambition stands in stark contrast to China, which banned cryptocurrency trading in 2021, as well as the United States, where the regulatory stance toward cryptocurrencies has become hostile since the FTX collapse.
Considerations regarding Bitcoin’s performance
The Securities and Futures Commission in Hong Kong has already licensed two digital asset platforms, OSL and Hash Blockchain, and it is likely that some are already actively trading offshore, Acheson said.
In addition, Oppenheimer analyst Owen Lau called Hong Kong “quite aggressive” in its attempt to want to become a crypto hub:
“It will continue to capture the attention of the community and attract more companies to open offices in Hong Kong. It is difficult to gauge the exact impact, but it has a long-term effect on capital flow and talent movement.”
Although the price movement is small, the news comes at a time when the market lacks major catalysts and trading has reached a pause.
In addition, as investors monitor debt ceiling negotiations and rate hike expectations rise, Bitcoin has started acting like a risk asset again, just as it was starting to trade more in tandem with gold.
We also see that Bitcoin and Ether are on track for the worst month of 2023, down 7.6% and 3.1%, respectively. Bitcoin is down 4.5% for the quarter, after ending the first quarter up 71%. Ether is up 1%, after registering a 52% gain in the first quarter.
Historically low levels of crypto assets: why?
In recent times, major digital assets have recorded total liquidation of about $55 million, with Bitcoin and Ethereum leading the pack at $15.54 million and $14.77 million, respectively.
As a result, the rest of the altcoin market reported a liquidation of about $25 million, showing a significant decline in cryptocurrency traders.
At the same time, the decline in crypto trading volume aligns with the drop in Bitcoin’s price below the crucial $27.5K support level.
Bullish Bitcoin traders are now trying to maintain stability above the weekly 200 MA, drawing attention to the upcoming FOMC meeting minutes scheduled for Wednesday.
In addition, a recent report by on-chain platform Santiment reveals a substantial decrease in cryptocurrency trading volumes since Bitcoin’s rebound in early March.
Furthermore, it is interesting to note that the highly anticipated Ethereum Shanghai Upgrade on 12 April failed to trigger significant trading volume in the cryptocurrency ecosystem due to concerns over potential regulatory crackdowns in the United States.
In fact, Santiment’s report points out that the largest crypto assets are currently experiencing historically low levels of weekly trading volume. In particular, altcoin volume has declined significantly.
Looking ahead, as Bitcoin’s halving approaches within a year, experts anticipate that the cryptocurrency market will continue to consolidate and trade in sync with the overall market outlook.
As a result, cryptocurrency analysts expect a potential shakeout before a rebound as fears of an impending recession loom in the second half of 2023.