Daily News | Tornado Cash Hacked, Hong Kong Tests e-HKD; Investors Anticipate Currency Volatility and Equity Losses Amidst Debt Default Fears

2023-05-22, 01:26

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## Crypto Daily Digest: BTC Struggles Below $27K, Tornado Cash Hit by Hostile Takeover, Hong Kong Tests Digital Currency

<a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> (BTC) struggled to surpass $27,000 as U.S. Federal Reserve Chair Jerome Powell suggested that stress in the banking sector could lead to a reduction in interest rate hikes to combat inflation. BTC was trading at around $26,775, with a slight decrease of 1.2% in the past 24 hours. Powell's comments about credit stress potentially affecting interest rates resulted in a brief rise in BTC's price. The market expects the Fed to pause rate hikes in the next policy meeting, with a possible rate cut later in the year. Ether (ETH) also experienced slight declines by about 0.7% to around $1,805.

In a concerning development, Tornado Cash, a service enabling anonymous cryptocurrency transactions, fell victim to a hostile takeover orchestrated by hackers through a malicious governance proposal. The attacker obtained 1.2 million fake votes, surpassing legitimate votes and gaining full control over Tornado Cash's governance. Exploiting this control, the hacker proceeded to withdraw and sell 10,000 TORN, the governance token of the protocol. Consequently, Binance temporarily halted TORN deposits, causing the token's value to plummet by 44%. Tornado Cash has faced allegations of facilitating money laundering, leading to US Treasury sanctions in August, including claims of North Korean hackers laundering around $450 million through the service.

Meanwhile, Hong Kong has initiated the testing phase of its digital currency, e-HKD, joining other regulators in exploring the potential of central bank digital currencies (CBDCs). Sixteen prominent firms, such as HSBC, Bank of China, Alipay, and Visa, have participated in the pilot program, focusing on various use cases for e-HKD, including offline payments. Hong Kong aims to strengthen its position as a fintech hub and respond to the increasing popularity of cryptocurrencies like <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>. The Hong Kong Monetary Authority (HKMA) plans to unveil key findings during Hong Kong Fintech Week in October. In parallel, China and Singapore are conducting their own CBDC pilot programs, with China focusing on the digital Yuan and Singapore opting against a large-scale rollout of a retail digital currency due to adoption risks.

## Bitcoin (BTC) $26625 (-0.46%) - Neutral Outlook

![](https://gimg2.gateimg.com/image/article/1684718685Untitled0522 1.png)

![](https://gimg2.gateimg.com/image/article/1684718704Untitled0522 2.png)

Today's analysis focuses on the 4-hour and 1-hour timeframes, building upon observations made last week. <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> (BTC) has started to display signs of weakness since Sunday. While this might initially appear as the beginning of a decline when examining the 4-hour chart, a different picture emerges when looking at the 1-hour chart. On the 1-hour chart, BTC is currently in the process of completing a smaller accumulation pattern. This suggests that we can expect a minor relief rally once the price tests the 1-hour Spring zone, which ranges from 26310 to 25818. However, it's important to note that this Spring zone on the 1-hour chart represents a secondary test of the selling climax area observed on the 4-hour chart. Consequently, after the short relief rally occurs, BTC is likely to experience another round of selling pressure, potentially pushing the price down to the 4-hour Spring zone spanning from 25240 to 24570, before the actual recovery begins. This recovery phase would become evident when analyzing the daily timeframe.

**Overview:**

- ***Closest hourly support zone: 26380 - 26120***
- ***Closest hourly resistance zone: 26790 - 26990***
- ***Key Level: 26285 (Weekly Close between Dec. 21-28, 2020)***

<br> **Hourly Resistance zones**

1. 26790 - 26990
2. 27150 - 27260
3. 27540 - 27660

<br> **Hourly Support zones**

1. 26380 - 26120
2. 25900 - 25818
3. 25240 - 24570

## Macro: Gold Glitters as Debt Default Fears Cast Shadow over Markets; Currency Volatility Looms

Concerns over a potential debt default in the United States are casting a shadow over the equity futures of US and Asian stock benchmarks, leading to a decline in the markets. Most major currencies have remained relatively stable against the dollar, showing only minimal fluctuations. However, S&P 500 and Nasdaq 100 futures experienced a drop of approximately 0.2%, while futures for Japanese and Australian shares also saw slight declines, although Hong Kong's futures recorded marginal gains.

The upcoming meeting between U.S. President Joe Biden and House Speaker Kevin McCarthy to discuss the debt-ceiling negotiations has been complicated by a Republican negotiator's insistence on a multiyear spending limit. Traders are closely monitoring the Federal Reserve's benchmark interest rate, as expectations for a hike in June have been reduced to 25%. Australian and New Zealand government bonds have remained steady amidst the uncertainty. The failure of the S&P 500 to sustain levels above 4,200 on Friday has contributed to the overall market decline. UBS strategists have issued a warning, stating that a failure to raise the debt limit could result in a significant drop in the stock market. Tensions between China, the United States, and its allies also continue to impact market sentiment.

In the commodities sector, oil prices have maintained stability, while gold has experienced a moderate increase. Additionally, Beijing has announced a ban on Micron Technology Inc., further complicating the landscape.

Given these circumstances, investors are preparing for potential spikes in currency volatility and anticipating equity losses as the United States grapples with the challenges of reaching a debt-limit agreement. The slight weakening of the dollar against major peers reflects the cautious sentiment among market participants, who are closely evaluating the forthcoming meeting between President Biden and Speaker McCarthy. While negotiations on the debt ceiling are set to resume, the impasse poses risks to equity markets, prompting investors to hedge their portfolios through swaps and options for major currencies. European Central Bank President Christine Lagarde has emphasized the urgency of resolving the standoff. Despite the S&P 500's recent gains based on hopes for a resolution, investors are advised to exercise caution due to the potential for increased market volatility. The yen, commodity currencies, and emerging-market equities are also under close scrutiny. Goldman Sachs has warned that the US debt ceiling issue could have adverse effects on economic growth and stock markets, particularly affecting export-driven countries like Korea, Mexico, and Taiwan.

<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>