Daily News | # US Debt Ceiling Sparks Uncertainty, Investors Await FOMC; Crypto Resilient as BTC Stagnates, HK Targets Digital Asset Hub

2023-05-24, 01:27

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## Crypto Daily Digest: BTC Holds Steady Amidst Macro Uncertainties; Hong Kong's Push for Digital Asset Hub Status

<a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>'s price has remained stagnant at around $27,220 while stocks have declined, indicating limited liquidity and participation in the crypto market. The overall crypto market capitalization has remained steady, with uncertainties in the global macro picture.

Ether has also been range-bound between $1,780-$1,880, while other major cryptocurrencies have seen modest gains. The correlation between the S&P 500 and <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> has been decreasing, suggesting a decoupling between traditional assets and cryptocurrencies.

Despite volatility, <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> holders remain committed to the asset. However, the role of cryptocurrencies as safe havens is debated, as they have not consistently acted as hedges during market troubles. The uncertainty surrounding the debt ceiling has negatively affected crypto assets due to the strengthening US dollar. <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>'s behavior indicates that it is driven more by monetary liquidity factors than its reputation as a safe haven.

Meanwhile, Hong Kong's Securities and Futures Commission (SFC) has introduced new rules allowing retail investors to trade cryptocurrencies as part of its plan to become a digital asset hub and restore its position as a prominent financial center. The SFC's framework includes measures to protect investors, such as knowledge tests, risk profiling, and exposure limits. Licensed platforms will be required to comply with investor protection measures and follow standards set by independent providers.

Starting from June 1, unlicensed exchanges targeting Hong Kong investors will be deemed illegal. This shift towards cryptocurrencies reflects a pragmatic approach by Hong Kong, aiming to balance financial stability and innovation. However, the recovery of the crypto industry and the level of regulatory scrutiny it will face in the region remain uncertain. While Hong Kong is embracing digital assets, other countries like Singapore are imposing restrictions on retail investor participation, and global regulators continue to grapple with regulatory frameworks for the sector.

## Bitcoin (BTC) $27,207 (-0.06%) - Neutral Outlook

![](https://gimg2.gateimg.com/image/article/1684891505Untitled0524 1.png)

![](https://gimg2.gateimg.com/image/article/1684891518Untitled0524 2.png)

**Overview:**

- ***Closest hourly support zone: 26690 - 26570***
- ***Closest hourly resistance zone: 27080 - 27260***
- ***Key Level: 26285 (Weekly Close between Dec. 21-28, 2020)***

<br> **Hourly Resistance zones**

1. 27080 - 27260
2. 27540 - 27660
3. 27790 - 28020

<br> **Hourly Support zones**

1. 26690 - 26570
2. 26380 - 26120
3. 25900 - 25818

## Macro: US Debt Ceiling Impasse Sparks Market Uncertainty; Traders Await Fed Meeting Minutes

Negotiations over the US debt ceiling have hit a roadblock, causing a decline in both US stocks and short-dated Treasury bills. Despite ongoing discussions, progress has been limited, with certain House Republicans questioning the urgency of Treasury Secretary Janet Yellen's deadline for debt payments. This impasse has created uncertainty, prompting investors to demand higher premiums for holding US debt, particularly those considered at a higher risk of default. As a result, stock market indices have experienced a decrease.

One of the major concerns arising from the deadlock is the potential for a brief technical default on the debt ceiling. Experts warn of increased market turbulence in the days ahead. This uncertainty has had an impact on Asian markets, with expectations of a decline as negotiations over the US debt ceiling remain deadlocked, dampening risk sentiment. Futures for equity benchmarks in Hong Kong, Japan, and Australia have already reflected this pessimism, following the drop in US markets.

Amidst these developments, oil prices have continued to rise, providing some respite. Major currencies, on the other hand, have remained relatively stable. Attention is now turning to New Zealand's central bank, which is expected to announce its 12th consecutive interest rate hike. The decision will be closely watched, especially after heightened volatility caused the New Zealand dollar to drop 0.6% on Tuesday, and as a gauge of the strength of the US dollar reached a two-month high.

In the US, the lack of progress in debt negotiations has raised concerns among investors. Some House Republicans are questioning the urgency of the Treasury Secretary's deadline, adding to the complexity of reaching an agreement. This skepticism has led to a demand for higher premiums on US debt, which further underscores the risk of a potential default.

Conversely, positive economic news has emerged, with US new-home sales unexpectedly rising to a more than one-year high and business activity showing significant growth in May.

In terms of monetary policy, the Federal Reserve has indicated that it may maintain elevated interest rates if inflation becomes more entrenched. Traders are eagerly awaiting the release of the minutes from the last Federal Open Market Committee meeting, as it will provide insights into the future direction of interest rates. While a pause in interest rate hikes is a possibility, analysts believe that restarting the rate hikes would require substantial justification given the current economic environment.

<div class="blog-details-info">
<div>Author:** Peter L. **, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>