First Mover Asia: Bitcoin Has Reached 'a General Accumulation Phase': Analyst

Good morning. Here’s what’s happening:Prices: Bitcoin remained below $27K, but an analyst says that the largest crypto by market value is in an "accumulation phase."Insights: BRC-20 tokens reach toward a $500 million market cap, and Glassnode data shows that they continue to be a lucrative source of fees for miners.PricesBitcoin Hits an "Accumulation Phase"

Crypto prices remained lethargic as Asia markets opened Friday.

Bitcoin was recently trading at about $26,835, roughly flat over the previous four hours but down 1.2% from Wednesday, same time, according to CoinDesk Indexes. The largest cryptocurrency has seemed almost entirely unaffected by the Wednesday, late-night U.S. House vote to pass a debt ceiling increase that would ensure the government can pay its bills, at least short-term. The Senate will likely vote on the bill late Thursday night (ET).

But in an email to CoinDesk, Bob Baxley, the CTO of DeFi infrastructure platform Maverick Protocol, wrote that crypto markets may now have to reckon with a U.S. Treasury having to replenish its general account, which has shrunk in recent months. That could sap liquidity otherwise available for digital asset investments.

“The risk here is that the roughly trillion dollars flowing back into the general account could suck a tremendous amount of liquidity out of the market," Baxley wrote. "Something like this happened in 2019, and the strain placed on the market basically compelled the Federal Reserve to step in and add emergency liquidity to prevent a full-blown crisis. So, in short, just because a deal has been reached doesn’t mean we are out of the woods yet."

Ether, the second largest crypto in market value, was recently trading at about $1860, up 0.6% over the past 24 hours. ETH spent part of Thursday in the green on a day when most assets dithered in negative territory. GRT, the token of the The Graph indexing protocol and popular memecoin SHIB tumbled more than 7% and 4%, respectively. But litecoin continued its recent winning ways to rise more than 3%. LTC has risen 7.5% over the past 30 days as investors eyed its halving two months away and increased trading activity.

In its opening hour Friday, the Nikkei Index rose about 0.6%. U.S. equities closed largely up, despite ongoing concerns about the inflation and the potential for more hawkish interest rate hikes this year.

Maverick's Baxley wrote optimistically that crypto investors seem "to be a general accumulation phase."

"The moving averages are pointing to neutral or perhaps a little more bullish, suggesting that we are in the process of building another foundation for another leg upwards," he wrote, noting that markets had already priced in potential U.S. central bank rate hikes, which in the past have shaken prices.

He added: "What matters most in this day and age is liquidity. And much of what plays out in the coming weeks likely depends on how carefully the Treasury can carry out its replenishing process. Most investors are taking a rather cautious approach right now as a result, I suspect.”