First Mover Asia: Crypto's Delicate Position in China, India; Bitcoin, Ether Rise

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Insights: The environment has grown less favorable for crypto in China and India, although the industry still has some reason for optimism in both countries.

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The world continued to wrestle with rising prices and bad news pouring out Ukraine. But at least bitcoin, ether and other major cryptos had a good Wednesday.

The largest cryptocurrency by market capitalization was recently trading at about $41,100, up over 2% over the past 24 hours after two weeks of almost straight declines. 

Ether, the second largest crypto by market cap, was trading at about $3,100, up similarly over the same period. Other cryptos in the CoinDesk top 20 were solidly in the green, with AAVE, GRT and AVAX rising by more than 8% at certain points.

These prices dovetailed with major equity indices, which rose for the trading day, with the tech-heavy Nasdaq climbing over 2%. Gold, a more risk-off asset, was also up.

Crypto trading was light as investors continued to digest the flood of economic data and events that threaten to ignite a global recession.

Natural gas prices closed at their highest level since 2008. Corn prices reached a 10-year peak. Amazon (AMZN) announced a 5% fuel and inflation surcharge on independent sellers using its packing and shipping services – a first for the online retail giant – starting April 28.

The fee follows similar moves from Walmart (WMT) and ride-share services Uber and Lyft to help offset gas prices. 

Those prices have had an accelerated climb since the start of Russia's aggression in Ukraine and could continue rising as countries supporting Ukraine's defense look to wean themselves from Russian energy supplies.

Following a visit to Ukraine, the chairmen of three key German parliamentarian committees urged the European Union to halt Russian oil imports as soon as possible, even as the German government has continued to resist such a ban over fears of triggering a recession. 

Brent crude oil, a widely watched measure of energy prices, rose to nearly $109 per barrel, a roughly 40% increase since the start of the year.

The latest developments damped a few glimmers of hope Tuesday when some economists reported seeing indications that inflation, which has reached a four-decade high of over 8% in the U.S., is topping out.

Crytpo Finance AG head of trading Mike Schwitalla told CoinDesk TV's First Mover show that the market was consolidating. "it's a quiet market," and with the "macro narrative of rising yields, it's expected, so the market is fading."

Schwitalla described crypto as being in "a normal market cycle. We're in the broader range of $35,000 to $45,000." But he warned of "a potential tail risk" if events in Ukraine escalate significantly or other problematic events in crypto or otherwise occur.

For all its widening popularity worldwide, cryptocurrency remains in a delicate position in Asia's two largest countries, which have been so important in the industry's rapid growth.

In recent months, China and India have created a new environment less nurturing for digital assets by tightening regulation. Their authoritarian-leaning governments do not appreciate crypto's decentralized nature that takes its lead from no one.

Consider this week's main events. On Wednesday, three major Chinese banking groups – the Internet Financial Association, the China Banking Association and the China Securities Association – announced their desire to "resolutely curb" the tendencies of non-fungible tokens (NFT) to be made into financial products and securitized, and to limit the risk of illegal financial activities related to the tokens.

In a statement, the three associations said NFTs have the potential to promote "the digitalization of industries and digital industrialization," but warned against financial risks related to hyping the assets, money laundering and other illegal financial activities.

The latest announcement comes amid China's year-long crackdown on bitcoin mining and trading. “We should be more alert and look for potential risks,” according to a statement posted on a Chinese government website last May, adding that the government wanted to "prevent individual risks from being passed to the whole society.”

China had been the world's crypto mining leader and its investors had been among the world's most active. The crackdown ignited an immediate bitcoin price drop – long since recovered – and re-ordering of the mining industry that continues today.

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