First Mover Asia: Bitcoin Ticks Up as Congestion Wanes and Investors Ponder the Next Price Spur

Good morning. Here’s what’s happening:

Prices: As blockchain congestion eases, Bitcoin's price recovers. eToro's Callie Cox said that inflation remains a key concern among crypto traders but noted bitcoin's resilience in an interview with CoinDesk TV.

Insights: Extraterritoriality is once again at the front-and-center of a crypto court case. Will we finally get some answers as to how far U.S. authorities can reach?

Prices

Bitcoin Showing Green Shoots as Congestion Begins to Clear

CoinDesk Market Index (CMI) 1,185 +2.2 ▲ 0.2% Bitcoin (BTC) $27,741 +71.2 ▲ 0.3% Ethereum (ETH) $1,853 +2.9 ▲ 0.2% S&P 500 4,119.17 −19.0 ▼ 0.5% Gold $2,043 +17.0 ▲ 0.8% Nikkei 225 29,242.82 +292.9 ▲ 1.0% BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)CoinDesk Market Index (CMI) 1,185 +2.2 ▲ 0.2% Bitcoin (BTC) $27,741 +71.2 ▲ 0.3% Ethereum (ETH) $1,853 +2.9 ▲ 0.2% S&P 500 4,119.17 −19.0 ▼ 0.5% Gold $2,043 +17.0 ▲ 0.8% Nikkei 225 29,242.82 +292.9 ▲ 1.0% BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)

Good morning Asia.

While bitcoin traded sideways throughout the U.S. business day, as Asia opens, the first signs of a return to price growth have reappeared amid diminishing congestion on the bitcoin blockchain.

Bitcoin is currently trading at $27,741, up 0.3%, according to CoinDesk market data, while ether is trading at $1,853, up 0.2%.

On-chain data shows that of Wednesday morning Asia time, the number of unconfirmed transactions had dipped to just below 400,000 from nearly 500,000 over the weekend. In addition, fees for sending transactions had settled to just over $5 from over $20 at the peak of this crisis.

But the question on many people's minds was what will cause the next big move in prices?

eToro investment analyst Callie Cox points to inflation as the chief concern from everyone from the Fed to crypto traders.

On a recent appearance on CoinDesk TV, Cox argued that Americans want inflation to decrease while maintaining job security, and the Fed is trying to balance these, but it's a process that inevitably involves some pain.

“Powell really leaned into his megaphone and provided some very flexible language on the future of policy,” Cox said on CoinDesk TV. “They keep dropping hints and statements, where they basically change the language around if future policy moves are needed. This could be a hint that the Fed is becoming more flexible."

Meanwhile, despite Bitcoin’s congestion, it remains a defensive asset, as she pointed out that it has surprisingly outperformed the S&P 500 on most CPI and Fed days.

“In the wake of massive sell-offs, Bitcoin, while still risky, seems to be benefiting from both its traditional role and its emerging role as a value store during lower rates," she said.

Aside from bitcoin, what is Cox watching at the moment? Ethereum.

She views ether as a riskier investment, but recognizes its economic value and the number of projects being developed on the Ethereum blockchain.

"Ethereum is one of those blockchains that is proving its value at the moment, and I think investors are realizing that," she said.

Biggest Gainers

Asset Ticker Returns DACS Sector Terra LUNA +3.2% Smart Contract Platform Shiba Inu SHIB +2.1% Currency Dogecoin DOGE +0.8% Currency

Biggest Losers

Asset Ticker Returns DACS Sector Polygon MATIC −2.8% Smart Contract Platform Cosmos ATOM −2.3% Smart Contract Platform Gala GALA −1.7% Entertainment

Insights

Former FTX CEO Sam Bankman-Fried has begun his defense.

In a court filing published yesterday, Bankman-Fried moved to dismiss the majority of the charges against him.

One part of his legal team’s move to dismiss the allegations of commodities fraud: extraterritoriality.

Bankman-Fried’s legal team argues in a filing that the commodities fraud charges would necessitate an extraterritorial application of the Commodities Exchange Act (CEA), which is not permissible as the CEA only applies to domestic conduct.

They further argue that prior case law dictates that the focus of the CEA is not on the geographical location of transactions, but on preventing manipulation and ensuring market integrity.

Remember, FTX did not serve U.S. customers, and as lawyers point out in the filing, was headquartered first in Hong Kong before moving to The Bahamas.

What exactly is the U.S. nexus?

We’ve been down this road before with BitMEX.

BitMEX was charged under U.S. anti-money laundering laws despite not serving U.S. customers nor operating bank accounts with U.S. institutions.

“The CFTC’s increasingly expanded view of their jurisdiction will likely be challenged, especially against offshore exchanges and participants that have limited ties to the United States,” Braden Perry, a former Commodity Futures Trading Commission enforcement attorney and now a partner at Kennyhertz Perry, said at the time. “This is dangerous territory for the CFTC.”

Unfortunately, for those interested in seeing a case where the CFTC’s view that its mandate was international, a plea deal taken by Arthur Hayes and Ben Delo prevents a full exploration of these issues in court.

If it had gone to court, the case would have explored new considerations for the Bank Secrecy Act's applicability to entities that don't accept fiat currency or have limited ties to the United States, raising questions about jurisdiction and regulatory overreach.

Part of Hayes and Delo’s settlement involved a large fine as well as house arrest for Hayes and probation for Delo.

This option is unlikely for Bankman-Fried. He’s got more incentive to fight his case.

Hopefully, this will mean we have the extraterritorial tendencies of U.S. regulators tested in court and enshrined in case law. If anything, it would give the industry some certainty of where the U.S. can and can’t reach, instead of playing a constant guessing game.

Important events.

Moonclave (Las Vegas)

Crypto and Digital Assets Summit (London)

8:30 p.m. HKT/SGT(12:30 UTC) United States Consumer Price Index ex Food & Energy (YoY/April)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Bittrex Files for Bankruptcy in U.S.; Bitcoin Slips Below $28K

Crypto exchange Bittrex filed for bankruptcy in the U.S. state of Delaware on Monday, months after announcing it would wind down operations in the country and weeks after being sued by the Securities and Exchange Commission (SEC). This came as bitcoin (BTC) was hovering below $28,000. eToro U.S. Investment Analyst Callie Cox provided her crypto markets analysis. Plus, Phoenix Labs co-founder and CEO Sam MacPherson discussed MakerDAO's Spark Protocol launching today. Tiago Sada, Tools for Humanity head of product, along with Navin Gupta, managing director of South Asia & MENA at Ripple, also joined the conversation.

Headlines

Litecoin Transactions Hit Record High as Bitcoin Fees Surge Amid BRC-20 Frenzy: Transaction fees on the Bitcoin blockchain have hit a two-year high due to the rising popularity of so-called BRC-20 tokens.

Coinbase Works to Fix Wallet Support for Ethereum Staking Withdrawals Stuck in Limbo: According to Coinbase’s customer support, “Our systems currently do not support deposits to Coinbase ETH addresses from external validators… Funds may be stuck until we are able to support these transactions.”

There's No Such Thing as High Fees on Bitcoin: Bitcoin’s BRC-20 debate is a re-run of the 2015-17 blocksize wars, except this time some of the combatants have changed sides, says Nic Carter.

CoinDesk Turns 10: How The DAO Hack Changed Ethereum and Crypto: The $60 million hack in 2016 led to a controversial revision of the blockchain, and was a factor leading to the ICO boom starting the following year, argues David Z Morris. This feature is part of our “CoinDesk Turns 10” series.

DCG Looks to Refinance Outstanding Genesis Obligations, Raise Growth Capital: The crypto conglomerate may owe its bankrupt lending division hundreds of millions in loan payments, due in May.