Cryptocurrency prices were edging higher one day after the Federal Reserve delivered its third major rate hike in succession.
Bitcoin was up slightly to $19,040 at last check on Sept. 22, according to data firm CoinGecko. Ether, the native currency of the ethereum blockchain, gained 1.2% to $1,279.18, while Dogecoin was up nearly 1% to $0.059070.
The Fed lifted its Fed Funds rate by 75 basis points to a range of 3% to 3.25% and said further near-term rate moves would be needed in order to combat the faster since the early 1980s.
'The Pump Was Not Sustained'
“Crypto markets initially reacted positively to the Fed’s 75 basis point rate hike yesterday, especially when Powell stated that 'at some point it will become appropriate to slow the pace of rate hikes,'" said Frank Corva, senior analyst, digital assets with Finder.
Corva said that Bitcoin jumped from about $19,000 to about $19,600 within an hour of Fed Chairman Jerome Powell’s press conference.
The pump was not sustained, though, he said, "as its price sunk back to almost $18,000 before bouncing back to just above $19,000 overnight."
"The 75 basis point rate hike seems to have been priced into crypto markets," Corva said. "But what wasn’t priced in was Putin’s threatening the West with nuclear weapons within two hours of Powell’s press conference."
He explained that part of the reason that risk-on asset markets like crypto and tech stocks have fallen so dramatically in the recent months has been due to the conflict in Ukraine and the energy crisis it catalyzed.
'Entering a New Era'
"Money has cycled out of risk-on asset markets and into bonds and certain commodities," Corva said. "An escalation of the Russia-Ukraine conflict into a potentially more global conflict will likely only exacerbate this trend - at least in the short term - which could result in more pain for crypto investors.“
On the regulatory front, the White House recently published its first-ever comprehensive framework to regulate the crypto industry, the hallmark of which is eliminating both middlemen and control of centralized entities.
"The cryptocurrency market is entering into a new era," said Winston Ma, managing partner of CloudTree Ventures. "The new guidelines follow an executive order issued in March, in which President Joe Biden called on federal agencies to examine the risks and benefits of cryptocurrencies and issue official reports on their findings."
Accordingly, he added, the U.S. Treasury Department issued three reports to call for more regulations from investor protection and market stability perspectives.
"Most notably, framework encourages the Federal Reserve to continue its research on a central bank digital currency," said Ma, author of "Blockchain and Web3: Building the Cryptocurrency, Privacy, and Security Foundations of the Metaverse." "It seems the competition between the digital dollar and Chinese e-CNY is officially on."
'A Triple Whammy'
David Lesperance, managing partner of immigration and tax adviser Lesperance & Associates, took a look at Terraform Labs co-founder Do Kwon's legal troubles.
Last May, sister tokens Luna and UST lost all their value in a matter of days, wiping out at least $55 billion.
Crypto lenders and brokers Celsius Network and Voyager Digital filed for Chapter 11 bankruptcy due to their exposure to hedge fund Three Arrows Capital, which had invested heavily in Luna.
"Hot on the heels of the 'Where in the World are the founders of Three Arrows Capital?' mystery comes this week’s announcement by the Korean government that they have leveled a triple whammy against Do Kwon," Lesperance said.
South Korea first issued an arrest warrant on Sept. 14 and moved to invalidate his passport, though Do Kwon had been believed to be in Singapore until the Singapore Police Force confirmed that Kwon was no longer in the city-state.
More Legal Problems
Officials reportedly issued a so-called red notice to law enforcement worldwide, according to Interpol's website.
Kwon, however, tweeted that he was not on the run and that he was cooperating with the South Korean authorities.
Lesperance said Kwon’s legal problems extend even further with a US court ordering him to comply with subpoenas from the Securities and Exchange Commission regarding the sale of potential unregistered securities.
"The SEC is seeking information on Mirror Protocol, a trading network built on the Terra ecosystem that offered customers tokens closely tracking the price of some of the largest listed companies in the US, such as Apple and Amazon," he said. "On the civil side, a new US class-action lawsuit accuses Kwon and Terraform Labs of selling unregistered securities and misleading investors by “repeatedly touting the stability of UST."
