This weekly edition of crypto insights and news is another globe-trotting roundup of the biggest stories that are having an impact on crypto markets right now. In the June 7, 2023 edition, we're looking at a major step taken by Hong Kong to establish itself as a cryptocurrency hub, the weeks of ho-hum bitcoin pricing news, and the fallout from the debt ceiling deal in the United States.
Could Hong Kong be China’s gateway back into crypto? Prior to a nationwide ban on crypto, a large percentage of the globe’s crypto mining activity was based in China. But since Beijing cracked down on crypto in late 2021, China has been undergoing a shaky reunion with cryptocurrencies. The central government is piloting a digital version of the Chinese yuan, which is a central bank digital currency (CBDC) and different than “crypto” as most might conceive of it. The digital yuan is being tested in select cities but there’s still no green light on crypto transactions for the country at large.
That all could be changing as Hong Kong recently reopened to crypto on June 1. The issuance of retail crypto licenses may be seen as a positive signal for crypto because China is a huge market. But the effect on crypto prices has been muted thus far …
Learn more: CBDCs vs. Crypto, what’s the difference?
We’ve seen weeks of sideways price action for bitcoin heading into June. The price has maintained around $27K since the second week of May, and there haven’t been any pops to $30K or higher that bitcoiners might hope for. But crypto price volatility is a bit like the weather -- just wait a bit and it’s bound to change.
More reading: Bring it back to bitcoin
Congress signed a deal to raise the nation’s debt limit with only days to spare before the U.S. government defaulted on its debt. We won’t get into the nitty gritty of what’s in the deal here, but it’s full of compromises. Is that still a sign of a good deal? Here’s what we know for certain: we will see a replay of the debt ceiling drama that recently hung over markets again. Even though this latest deal is done, the government can borrow money with effectively no limit but only until January 1, 2025.
The U.S. dollar is the global reserve currency. There are devastating downstream effects if the government's credit rating gets junked because of ceaseless political tug-of-war. Could crypto live up to its potential and be a less-volatile haven during hypothetical fiat currency crises like this one? We’ll see.
Read more: How is crypto regulated in the United States?
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