First Mover Asia: India Loses Foreign Investment, Chinese Indices Continue a Downward Trend; Cryptos Suffer an Off Day

Good morning. Here’s what’s happening:

Prices: Bitcoin settles below $40,000 after a drop late Wednesday; most other major cryptos are in the red.

Insights: Foreign investors have been fleeing India the past two weeks; Singapore reinforces its status as a crypto hub.

Technician's take: Pullbacks could stabilize into the Asia trading day.

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Bitcoin (BTC): $39,530 -6%

Ether (ETH): $2,613 -3.6%

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Cryptos falter

The glory was temporary.

Little more than 24 hours after bolting past $40,000 as the release of a U.S. presidential executive order approached, bitcoin (BTC) was on its way down past the psychologically important barrier. By early Thursday the largest cryptocurrency by market value had settled at around $39,500.

Ether (ETH) and almost all other altcoins in the CoinDesk top 20 by market cap spent much of their day well into the red.

Cryptos and other assets continued to receive a buffeting from Russia's escalating military campaign against neighboring Ukraine because of its economic fallout and inflationary pressure. In the latest horror story, Russian forces bombed a maternity hospital in the besieged port of Mariupol, a key target on the Black Sea coastline. Russia hopes to take the city to establish a pathway to the Crimea peninsula, which it annexed eight years ago, freeing more of its force to focus on Kyiv and other major cities to the north.

The price of Brent crude oil, a key measure of global oil supply, was selling near $110 per barrel, well off its high of $130 earlier this week but well over its range just a month ago. In the U.S., inflation accelerated in February to a fresh four-decade high, signaling supply and demand imbalances were little improved amid soaring gas prices. The Consumer Price Index rose 7.9% over the past 12 months, the fastest since 1982, the U.S. Labor Department's Bureau of Labor Statistics reported Thursday.

Yet 3iQ Digital Assets President Chris Matta told CoinDesk TV's First Mover hosts that the recent combination of events were encouraging for crypto. "When you at this holistically – the macro environment, the regulatory updates, it legitimizes the space, and it's showing maturity in the crypto asset class that institutions can't ignore," Matta said.

He added: "When we talked about what that background looks like, it's super positive for Bitcoin. Traditional assets are potentially going to struggle, inflation is going to continue to be elevated, and we're going to see more interest from institutional investors."

S&P 500: 4,259 -.4%

DJIA: 33,174 -.3%

Nasdaq: 13,120 -.9%

Gold: 1,996 +.2%

The flight of foreign investment from India

India, one of the world’s biggest crypto markets by trading volume and users, has seen an exodus of funds from foreign investors. Some $2.9 billion worth of foreign capital left Indian shores last week, and this week already saw $1 billion worth of sales on Monday and Tuesday each.

Earlier this week the rupee fell to lifetime lows of 77.11 against the dollar, causing further stress in a market reeling from the ill effects of increasing crude oil prices. India imports over 85% of its fuel from Russia and other countries, with sanctions pushing prices of oil to as much as $140 a barrel earlier this week.

While noting the likely toll of the war on the Indian economy over the next six months, at least one financial advisor told Bloomberg in an interview on Wednesday that that foreign investors could return as the conflict wound down.

What this means for crypto investment in the world’s second-largest country by population is unclear, although in a positive sign earlier this week, India Finance Minister Nirmala Sitharaman said she expects the nation's central bank to launch a central bank digital currency (CBDC), or digital rupee, “this year.” The statement accelerated the timetable from an earlier pronouncement that the CBDC would launch between 2022 and 2023.

Singapore grants Paxos a license

Singapore reinforced its status as a cryptocurrency hub on Thursday, granting a license to crypto trading and custody platform Paxos, CoinDesk’s Ian Allison reported.

Paxos became the first crypto firm to receive regulatory approval in both New York and Singapore, the company said.

Crypto companies of a certain size tend to shop for licenses on an ongoing basis, especially in strategically important financial centers like the U.S., Singapore and Switzerland.

Paxos, which holds a limited purpose trust charter for digital assets in the U.S. and was one of the first crypto firms to be regulated by the New York Department of Financial Services, has actually had a presence in Singapore since 2012, said Rich Teo, the co-founder and CEO of Paxos Asia.

“It’s almost 10 years actually since we were first incorporated and established in Singapore, so throughout history we’ve always been a little bit New York, a little bit Singapore as well,” Teo told CoinDesk.

Attaining a crypto license from the MAS is no easy task, with 100 or so applicants having been turned away, Nikkei Asia reported late last year. So far just a handful of firms have gained crypto licenses, including DBS Vickers Securities, which is a unit of Singapore's DBS Bank.

Asia indices on a downward trend

U.S. equity markets aren’t the only ones that have been suffering.

The Hong Kong Hang Seng Index reached its lowest point since July 2016 amid concerns about the escalating Russian invasion and Beijing’s COVID-19 restrictions and tighter oversight of companies. The Hang Seng offers a snapshot of the Hong Kong trading market, which is one of the world’s largest.

China’s CSI 300 Index rose 1.6% on Thursday, but is nursing a 13% loss since the start of 2021. Indices tracking equities in South Korea and Japan are down about a similar 10% in the same period.

Bitcoin Returns to Range Below $40K; Support at $35K-$37K

Bitcoin (BTC) turned lower after approaching resistance near $40,000. The cryptocurrency remains in a tight trading range, although support between $35,000 and $37,000 could stabilize pullbacks into the Asia trading day.

BTC traded around $39,000 and is down 6% over the past 24 hours.

The relative strength index (RSI) on the four-hour chart declined from overbought levels, which preceded a pullback in price. On the hourly chart, the RSI is oversold, suggesting brief periods of buying activity could occur.

Still, negative momentum signals on the monthly chart points to limited upside for BTC. The current range could persist until a decisive breakout or breakdown is confirmed.