First Mover Asia: DBS Bank's Ditching Retail Exchange Delivers a Small Blow to OSL, Less so to Singapore's Crypto Industry; Bitcoin Rises Late Sunday

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Good morning. Here’s what’s happening:

Prices: Bitcoin and other major cryptos dipped early over the weekend but regained ground and were up late Sunday.

Insights: DBS Bank's decision to abandon its retail crypto plans did not affect affect the stock price of OSL parent BC Technology Group, and is unlikely to have a big impact on Singapore's crypto industry.

Technician's take: BTC's upside momentum signals remain intact.

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Bitcoin, ether rise late

Bitcoin started the weekend quietly, but by late Sunday, the largest cryptocurrency by market capitalization had soared past $47,300 at one point, a 2.6% gain from 24 hours earlier. BTC, which had dropped below $46,000 early Saturday, was more recently trading at about $46,700.

Ether, the second largest crypto by market cap, followed a similar pattern dipping and then regaining ground to jump past the $3,550 level, up about 3% over the same time period.

Major altcoins were mixed, some rising and others falling slightly. Meme coin DOGE rose about 5% on at least one occasion from 24 hours earlier. DOGE alternative SHIB rose more modestly. Solana and Cardano recently rose 3% and 2%, respectively. Terra's Luna token was off about 2%.

Trading was off from higher levels earlier in the week as is often the case on weekends.

Crypto's late weekend surge veered slightly from major equity markets' performance on Friday, which did little more than hold ground from the previous day. The tech-heavy Nasdaq and the S&P 500 fell slightly as investors seemed to be girding for the U.S. Federal Reserve and other central banks worldwide to continue more hawkish monetary policies.

Low interest rates and central bank stimulus that may jar an economy from a slumber lead to rising asset prices. But when inflation increases and the economy overheats, central banks reverse these accommodative policies, typically spurring higher market volatility.

Meanwhile, the macroeconomic environment remained as unsettled as it has been since Russia invaded Ukraine five weeks ago. After pictures emerged of horrific civilian casualties in Bucha, a town near the Ukraine capital Kyiv, Germany's defense minister, Christine Lambrecht, said in a television interview that the European Union should consider halting Russian gas imports.

EU bloc countries have resisted this action, fearful that it would send their economies into recession. Brent crude oil, a widely watched measure of energy prices was trading at $102 per barrel, a massive increase from where it started the year.

Still, the crypto rally late last month may not be over, said Joe DiPasquale, the CEO of fund manager BitBull Capital.

"Bitcon's consolidation above $46,000 will be key for bullish continuation toward the $50,000 milestone," DiPasquale said, striking a cautiously optimistic note. "While we did see rejection around $48,000, as long as BTC remains above $46,000, bulls can be hopeful of another move. If we lose these levels in the new week, another test of the low $40Ks is the probably scenario."

Insights

DBS crypto reversal hurts OSL, but only a little

DBS’s about-face decision on a retail crypto exchange – canceling its plans to open one by the end of 2022 – leaves us with two questions: Is this another chapter in Singapore’s continued tightening of crypto regulations? And will this stymie OSL, the Hong Kong-based institutional exchange that provides DBS with exchange software?

The answer to both is, not really.

It’s not a secret that authorities in Singapore aren’t fans of retail crypto trading. Earlier this year, regulators banned direct-to-consumer marketing for exchanges and told crypto ATM operators to turn off their machines. It also put DeFiance Capital, one of the larger crypto funds in the city-state, on an investor alert list because it was “wrongly perceived as being licensed or regulated by the Monetary Authority of Singapore.”

But Singapore hasn’t changed its tone on institutional investment in crypto. That has always been what the country has been interested in developing as a hub, not retail, which requires nanny-like regulations to ensure amateur traders leveraging their retirement savings don’t get rekt when their crypto position is liquidated. Needing to regulate with a heavy hand isn’t what Singapore wants.

If DBS were to actually launch a retail crypto exchange it wouldn’t look like what many retail traders are used to seeing. There would be a limited selection of tokens, and decentralized finance (DeFi) would definitely be out of the question. While there would undoubtedly be an element of convenience because of the integration with the bank, it would be challenged to attract significant volume because it wouldn’t be competitive with leading exchanges in terms of features.

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