CoinLoan Weekly: BTC near $24K, historic January, Congress pushed for crypto regulation

Price dynamics

BTC price

BTC swiftly rose to $23,000 and reached higher before a 7-day low of $22,437.68 on Wednesday, January 25. It then spiked to nearly $23,400, dipped on Friday, January 27, and approached $23,100 by the start of the weekend. After resting in a tight range, BTC skyrocketed late on Sunday, January 29, reaching $23,907.56. Monday trading eventually pulled it back below $23,100.

Last week was Bitcoin's fourth straight week in the green, with a gain of roughly 38% so far in 2023. The Friday morning uptick above $23,000 followed news that GDP growth in Q4 2022 had exceeded expectations, despite fears of a recession. The Crypto Fear & Greed Index entered the greed zone on Monday, January 30, reaching 62 points for the first time since November 2021. Investor sentiment improved ahead of the FOMC meeting, with rising hopes for an end to hawkish interest rate hikes.

As of this writing, BTC is changing hands at $23,154.61, with a 24-hour change of -1.9% and a 7-day gain of +1.8%.

BTC price chart. Source: CoinGecko
BTC price chart. Source: CoinGecko

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ETH price

Ether fell behind the veteran coin. After two days of trading above $1,625, it plunged to $1,537.32 on Wednesday, January 25, and struggled to revisit the initial level until the week's end. Following an uptick to $1,621.14 on Thursday, January 26, the price appeared to weaken. It fell below $1,600 and surged to $1,655.62 late on Sunday, January 29. The next day, ETH drew close to $1,575.

Last week's derivatives stats reflected improving sentiment. At long last, ETH futures turned neutral, with the premium reaching 4%. Traders of ETH options also switched to a neutral positioning, indicating subsiding discomfort. Meanwhile, analysts note that investors' appetite has been tempered by the troubles of Digital Currency Group (DSG), a Genesis subsidiary sued for federal securities laws violations. On the other hand, the recently launched testnet for Ethereum stake withdrawals has boosted confidence in the network.

As of now, ETH is worth $1,584.50, with a 24-hour loss of -2.1% and a 7-day slide of -2.8%.

ETH price chart. Source: CoinGecko
ETH price chart. Source: CoinGecko

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XRP price

Rising past $0.40, XRP soared to $0.430785 on Tuesday, January 24, and hit a low of $0.402771 the next day. The price then touched $0.42 momentarily before declining. A lower low of $0.401815 on Friday, January 27, preceded a rebound to just above $0.412. Saturday and Sunday passed without significant change. On Monday, January 30, XRP headed downhill, falling below $0.40 in the late hours.

Despite gaining nearly 20% since January 1, XRP has fallen behind BTC and ETH. Last week, IG Bank published an article on the SEC vs. Ripple case, suggesting its outcome could prove crucial for the future of fintech in the US. The consequences of Ripple's defeat might severely inhibit crypto companies' growth, while its victory could send XRP soaring. Meanwhile, Ripple has partnered with the government of Montenegro to develop a payments infrastructure for financial inclusion and the country's first CBDC (Central Bank Digital Currency).

At press time, XRP is trading at $0.401521, with a 24-hour loss of -3.3% and barely any 7-day change (-0.2%).

XRP price chart. Source: CoinGecko
XRP price chart. Source: CoinGecko

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Cryptocurrency news

This January proves historic for Bitcoin

Bitcoin continued climbing last week as more investors expected the industry crisis and monetary tightening to subside. By Monday, January 30, BTC had closed in on $24,000 — the highest high in five months. Its spectacular 39% year-to-date gain led experts to suggest that this January could be the best beginning in a decade.

Previously, BTC had a more impressive January twice, back when the coin was in its infancy. Its latest rise has lifted other non-stablecoin crypto, adding $280 billion to the total market cap. By Monday, the latter had remained above $1 trillion for eight days, the longest streak since August 2022. Meanwhile, Solana (SOL), once backed by Sam Bankman-Fried, has more than doubled in value, gaining 138.1% over the past 30 days.

This rebound has come in stark contrast to last year's crypto winter. Bloomberg connects it to bets on less severe central bank policies. As inflation appears to be slowing, investors expect the Fed to moderate the borrowing costs. According to Noelle Acheson, Editor of Crypto Is Macro Now, the reasons lie with "emerging clarity as to bankruptcy proceedings, corporate restructurings, and market fundamentals pointing to the bottom being behind us."

Still, skeptics are contemplating less optimistic scenarios. For instance, Bank of America Corp. strategists have warned that if oil prices, wages, and inflation contradict the "soft landing" narrative, speculative markets will probably reverse.

Key events to watch

The next two-day meeting of the FOMC (Federal Open Market Committee) is scheduled to begin on January 31. On January 30, the CME FedWatch Tool showed a nearly unanimous expectation of moderation in the form of a 25-basis-point hike. In December, the Fed added 50 basis points to reach the 4.25%-4.5% range. The officials have also indicated their intention to keep it above 5% in 2023.

Other updates to watch this week include earnings reports by Inc., Apple Inc., and Meta Platforms Inc. Market analysts are anticipating the figures to determine if job cuts in the tech sector are likely to continue.

US Congress urged to step up crypto regulation

Following what the Biden Administration called a "tough year for cryptocurrencies," several senior officials have urged Congress to step up its legislative efforts. They have called for stablecoin laws and more power for regulators to help them enhance customer asset protection, transparency, and reporting requirements for crypto businesses.

The Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks was published on Friday, January 27. Its authors include Brian Deese (Director of the National Economic Council), Arati Prabhakar (Director of the White House Office of Science and Technology Policy), Cecilia Rouse (Chair of the Council of Economic Advisors), and Jake Sullivan (National Security Advisor).

The four officials suggest measures to combat fraud and weed out bad apples in crypto. Aside from more power for the SEC and the CFTC, their announcement mentions more demanding transparency and disclosure requirements for crypto firms, more funding, increased penalties for breaking existing rules, and reconsidered penalties for intermediaries.

The document also warns against strengthening ties between crypto and TradFi. It reads, "In the past year, traditional financial institutions' limited exposure to cryptocurrencies has prevented turmoil in cryptocurrencies from infecting the broader financial system".

The proposal comes on the heels of an announcement by Kristin Jonson, Commissioner of the CFTC (Commodity Futures Trading Commission). Last week, she called for Congress to allow the CFTC to conduct due diligence on any company intending to purchase a stake of at least 10% in a registered market participant.

Earlier this January, the US House of Representatives established a new congressional subcommittee dedicated to cryptocurrencies. Meanwhile, Arizona Senator Wendy Rogers has proposed making Bitcoin legal tender and making blockchain technology exempt from local tax. His fellow Republican Ted Cruz is also pushing for crypto on Capitol Hill.

Last week, Cruz re-introduced the ACCEPT Resolution allowing food vending machines and gift shops at the US Capitol to accept crypto. The senator claims this change would benefit foreign tourists by allowing them to avoid currency exchange fees. However, US residents would still have to pay up to 30% in taxes on those transactions.