First mover Asia: Large Bitcoin holders content to hold long positions amid regulatory turmoil

Bitcoin brush-off

As Asia markets opened Friday (HKT), Bitcoin was trading sideways, largely unmoved by news a few hours earlier that financial services giant Fidelity Investments was refiling an application for a spot bitcoin ETF or unexpectedly strong U.S. economic data.

The largest cryptocurrency by market capitalization was recently trading at about $30,400, up 0.6% over the previous 24 hours.

Fidelity joined Blackstone, Invesco and WisdomTree, who have filed spot BTC ETF applications with the SEC over the past two weeks. These initiatives have buoyed investors and sent crypto prices higher.

“What’s striking to observe is how the digital asset industry continues to rebound from negative news," CJ Reim, co-founder and managing partner at venture capital firm Amity Ventures and a contributor to Core DAO, wrote in an email to CoinDesk. "Despite regulatory uncertainty in the US and notable failures like FTX, we are witnessing global competition for the nascent industry heating up, as well as increasing institutional demand as evidenced by BlackRock’s recent Bitcoin ETF application."

Ether, the second largest cypto in market value, was recently changing hands at $1,844, also roughly flat from Wednesday, same time. Other major cryptos were largely in the green with SOL, the token of the Solana smart contracts platform, recently soaring more than 14%.

As CoinDesk reported Thursday, crypto traders on the Solana blockchain have been following the example of Ethereum’s “Liquid staking token” (LST) craze by leveraging their SOL token derivatives in pursuit of lofty yields through an obtuse, re-leveraging process. The trend's emergence follows Drift Protocol’s Tuesday release of a new service, known as “Super staking,” which packages the entire cycle into a one-click operation.

The CoinDesk Market Index, a measure of crypto markets' performance, was recently up 1.2%.

U.S. equity markets largely shrugged off the positive economic data - a revised 2% increase in GDP and decline in weekly jobless claims – that suggested inflation would remain problematic and offered potential support for the Federal Reserve's plans to raise interest rates two more times in 2023. Such monetary hawkishness has repeatedly unsettled asset markets over the past year.

At the Banco de Espana Fourth Conference on Financial Stability, Fed Chair Jerome Powell noted central bank uncertainty about the appropriate inflationary medicine in the months ahead, although he has suggested in recent weeks that the Fed would raise rates in upcoming months.

“Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go,” Powell said, adding: “We see the effects of our policy tightening on demand in the most interest rate–sensitive sectors of the economy, particularly housing and investment. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.”

In an email to CoinDesk, Akash Mahendra, director at Haven1 Foundation and portfolio manager at digital wealth platform Yield App, wrote that while the "bitcoin ETF frenzy" was "good news for bitcoin's price," the industry's success would also depend heavily on innovation.

"Endorsement from large institutions is fantastic, and we do all hope that BlackRock’s ETF goes through – not least because rejection would be very, very bad for bitcoin," Mahendra wrote. "However, at its core, blockchain is really a place for innovation beyond what is available in the traditional finance sector."