Bitcoin (BTC) experienced a significant surge in price early Tuesday following an announcement by Hong Kong’s Securities and Futures Commission (SFC) regarding retail investors’ access to digital assets. The SFC stated that it would start accepting applications from exchanges to offer cryptocurrency trading to retail investors starting from June 1. However, the SFC also outlined specific requirements for approved tokens, including a 12-month track record and substantial market capitalization. Additionally, registered exchanges would be prohibited from providing stablecoin and interest-bearing instruments.
This development aligns with expectations that advancements in Asia will play a crucial role in driving the next bull run in the crypto market. It also highlights the contrasting regulatory landscape between Asia and the West, particularly the United States, where regulatory clarity remains a challenge.
Bitcoin witnessed a notable increase during Asian trading hours, with its price rising over 2% to reach $27,500. This surge brought it close to the key resistance level formed by the horizontal trendline connecting the first and second troughs of the head-and-shoulders (H&S) pattern. Earlier this month, Bitcoin had fallen below this trendline, confirming the H&S breakdown and potentially signaling a further decline towards $25,000.
Noelle Acheson, author of the Crypto Is Macro Now newsletter, observed that this upward movement in Bitcoin appeared unrelated to macro factors and coincided with the news of Hong Kong’s approval of retail trading in BTC and ETH on licensed digital asset platforms. Acheson highlighted that while the ruling and timing were largely expected, their confirmation holds significance in a lackluster market facing headwinds from various directions.
Acheson also noted that Hong Kong’s decision may not necessarily result in a sudden surge in demand for cryptocurrencies, as local traders likely already access the market through offshore platforms. Nevertheless, the announcement serves as a positive reminder that the adoption of crypto is expected to grow substantially in the coming years.
To confirm a bullish revival, Bitcoin needs to overcome the resistance posed by the H&S trendline and the 20-day simple moving average at $27,500, according to Secure Digital Markets, a digital assets liquidity provider based in Canada. They caution that as long as Bitcoin remains below these levels, further downside is likely, with potential targets at $25,250 and possibly $24,000.
Bitcoin’s short-term outlook is also influenced by ongoing concerns over the U.S. debt ceiling and the trajectory of the dollar index. Treasury Secretary Janet Yellen has warned of a potential government default if a debt deal is not reached by early June. Such an event could have far-reaching consequences and impact Bitcoin, as a successful resolution might lead the Treasury to withdraw liquidity from the market, potentially exerting downward pressure on the cryptocurrency.
Furthermore, rising bond yields indicate investors’ reassessment of the possibility of the Federal Reserve’s continuation of its rate hike campaign, which would result in higher borrowing costs. At present, the U.S. 10-year yield has reached a more than two-month high of 3.75%, while the two-year yield has surged to 4.4%, the highest since March 13. Increasing yields tend to diminish the appeal of risk assets like technology stocks and cryptocurrencies, as well as zero-yielding assets like gold.
