Hong Kong is aiming to become the world's cryptocurrency hub
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Crypto Industry News:
Hong Kong, a special administrative region of China, is aiming to become the world's cryptocurrency hub. Despite the negative and even hostile attitude of the authorities of the People's Bank of China towards digital assets, the city-state constantly focuses on the adoption of blockchain and cryptocurrencies. Moreover, the regulatory framework that the region's authorities are working on could be crucial for the sector. Can Hong Kong's actions fuel another cryptocurrency boom?
Why can the adoption of digital assets by Hong Kong, and not some other jurisdiction, be the catalyst for the next bull market in the cryptocurrency market? Yesterday, the HongKong Securities and Futures Commission announced that under the new legislation, cryptocurrency exchanges will have to apply for Virtual Asset Service Providers (VASP) licenses in order to legally operate in the Chinese Special Economic Zone.
Moreover, according to the commission statement, both institutional and retail investors will be able to trade digital assets such as bitcoin (BTC) and ether (ETH).
"As long as the basic principle of not threatening China's financial stability is violated, Hong Kong can pursue its own goal of 'one country, two systems'," said Nick Chan, a member of the National People's Congress and a cryptocurrency lawyer.
What does the above news mean? To a large extent, the re-opening of Hong Kong to the digital asset sector creates huge potential for the influx of new funds. It is worth noting that Hong Kong is the fourth largest financial center in the world. Only New York, London and Singapore are ahead of it.
It is also very important that capital from China may start to flow into this economic zone. According to estimates, mainland Chinese capital is about USD 500 billion.
The regulations prepared by Hong Kong do not mention anything about opening up fully to the decentralized finance (DeFi) sector or self-storage of digital assets. Nevertheless, the aforementioned injection of foreign capital to this region may have a significant impact on the cryptocurrency market. It is worth remembering that the times when China was responsible for the majority of the volume of trading in digital coins are not that far away.
Technical Market Outlook:
The Ethereum market had made a local high at the level of $1,721 and then reversed lower towards 38% Fibonacci retracement level seen at $1,636. The intraday technical support is seen at $1,630 (100 MA). The weak and negative momentum on the H4 time frame chart supports the short-term bearish outlook for ETH. Sustained breakout below the level of $1,487 would change the mid-term outlook to bearish, so please keep an eye on the $1,487 technical support. Any violation of this level would likely extend the drop towards $1,345, but in order to do this, the volatility must increase significantly.
Weekly Pivot Points:
WR3 - $1,774
WR2 - $1,726
WR1 - $1,709
Weekly Pivot - $1,678
WS1 - $1,661
WS2 - $1,630
WS3 - $1,581
Trading Outlook:
The Ethereum market has been seen making lower highs and lower low since the swing high was made in the middle of the August 2022 at the level of $2,029. The key technical support for bulls at $1,281 was broken already and the new swing low was established at $1,074. There is a clear test of the 50 WMA located at the level of $1,080, so any breakout below the moving average and a weekly candle close below moving average will be considered as another indication of the down trend continuation. If the down move will be extended, then the next target for bears is located at the level of $1,000
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