Crypto-Bitcoin-BTC market is on “standby” as release of June inflation data draws closer

Good morning Here’s what happens:

Prices: What Will Take Bitcoin From $30,000?

Insights: A freely convertible Chinese yuan is a requirement for a CNY stablecoin. That won’t happen anytime soon.

Bitcoin Expects A 2024 Bull Market, But Is $120,000 Realistic?

As Asia begins its trading day, Bitcoin continues to hold the $30,000 mark while Ether is flat. Coinglass data shows that there were slightly more long liquidations than short liquidations over the past 12 hours, with $7 million in long positions and $6.73 million in short positions being liquidated .

“The market is on hold, awaiting signals of a price increase following a slowdown or pause in rate hikes in the second half of the year, which would be marked by an inflow of liquidity,” Bybit’s chief financial engineer, Ether Chen, told CoinDesk in a note.

Chen said that Bybit’s team anticipates a possible market price recovery in the fourth quarter, but a full bull market may not materialize until 2024. This recovery would be contingent on the end of rate hikes, the BTC halving, and the resolution of regulatory storms.

Tim Frost, CEO of digital wealth platform Yield App, points out that inflation numbers are slowing but the market is confident the Federal Reserve will hike rates anyway, which is kind of a mixed message, referring to a recent report by Standard Chartered back stating Bitcoin will hit $120,000 by the end of next year.

“For crypto assets, this likely means range trading will continue at current levels. Bitcoin appears to be fairly close to $30,000 right now, up nearly 100% from January when it started the year at $16,540,” he said in a note. “There are few assets that do as well in a ‘bear’ market, and savvy, experienced traders will likely have done well on BTC this year.”

Whether or not Standard Chartered’s price prediction is correct, Frost sees a bull market on the horizon for 2024.

“The long-term consensus remains that crypto will enter its next bull market in 2024 after a period of sustained consolidation this year, and behind closed doors huge innovations are paving the way for the next wave of crypto adoption” , he concludes.

This is why we will not see a CNY stablecoin

Circle CEO Jeremy Allaire argues that a stablecoin pegged to the Chinese yuan (CNY) is a better option than a central bank digital currency (CBDC).

But a yuan stablecoin will not exist, just as a Chinese CBDC will not challenge the dollar.

Why? Because the free convertibility of the yuan violates a core principle of Beijing’s monetary policy.

The People’s Bank of China (PBoC) exercises tight control over the exchange rate of the yuan, keeping it within a narrow range and not allowing it to fluctuate freely in international markets. This allows China to remain in control of its export prices and domestic economy. But it also means that the yuan cannot be used abroad like the euro or USD, and there are strict capital controls on how much you can take out of the country.

The more you want your currency to be used internationally, the more control you must be willing to cede.

As IMF First Deputy Managing Director Gita Gopinath pointed out in an address in 2022, these are not the hallmarks of a global currency. After all, the yuan (as of January 2022) is only used for around 3.2% of global payments.

“If a country aspires to be a global currency, then in principle one would have to have full and freely movable capital, full capital account liberalization and full exchange rate convertibility, which is not the case in China now.” ‘ Gopinath is quoted as saying.

But do you know who else has been on Washington’s radar as a currency manipulator? Taiwan.

Unlike China, Taiwan is not actively intervening to keep its currency, the New Taiwan Dollar (TWD), artificially low to boost exports. Instead, Taiwan is known to be intervening to prevent a rapid appreciation of its currency that could hurt its export-oriented economy.

David Mulford, then undersecretary-designate in the Treasury Department’s international affairs office, cited the Taiwanese central bank’s large-scale intervention in the foreign exchange market and the lack of any meaningful exchange rate appreciation, despite Taiwan’s large balance of payments surpluses.

For its part, Taipei denies being an active currency manipulator or having capital controls, citing the openness of foreign investment in its stock market and the free convertibility of foreign currencies on its shores.

But if there’s one thing that Taipei and Beijing have in common, it’s that central bankers in neither capital want to cede control of their currencies to the market.

Justin Sun, Founder of TRON and Global Advisor to Huobi, attended First Mover to discuss the state of crypto regulation, Hong Kong prospects and more. Bitcoin (BTC) holds above $30,000. Rich Rosenblum, Co-Founder and President of GSR Markets gave his analysis of the crypto markets. And the European Commission’s Metaverse strategy is set to be released later today. Metaverse EU Editor Patrick Grady shared his expectations.

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