Asian Market Update – Wednesday: Cryptocurrencies recover from earlier sharp falls

Bitcoin recovery

The Big Question: Will governments and regulators be able to stop the rise of digital currencies?

Crytocurrencies appear to have regained its footing overnight during the Asian trading session, trimming massive losses from a free fall in the past couple of days after China issued a ban on ICOs.

The price of bitcoin rebounded from a low of near the $4,000 mark on Wednesday to change hands at above $4,400, after it surged about 1.9 percent overnight. Although that’s still significantly lower than the peak level of nearly $5,000 reached over the weekend, it’s a remarkable comeback after falling as much as 20 percent on Monday.

Ethereum also bounced back overnight, gaining 4.55 percent to $330.57. Following bitcoin’s recovery, ethereum also showed an outstanding comeback from a nosedive that brought the digital currency’s price from the weekend’s peak of about $395 all the way down to below $270.

With the recovery on Wednesday, Asian investors seem to shrug off the potential impact of the Chinese ICO ban and instead focus on the overall uptrend of digital currencies.

China on Monday issued a notice, demanding that all ICOs have to be halted as of Monday, claiming that coin fundraising poses “multi-layer” risks and that platforms are barred from trading virtual currency with fiat currency.

The question now is if this could lead to even tighter controls on crypto trading? Some media reports suggested the ICO ban is just the beginning.

Apart form China, Canada’s finance watchdog has voiced concern over blockchain anonymity and the Russian central bank has issued a warning against cryptocurrency and ICOs.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,313.12 -0.38%
China-Shanghai Composite Index 3,369.50 -0.44%
Australia-ASX 200 5,681.20 -0.44%
Hong Kong-Hang Seng 27,506.01 -0.86%
South Korea- KOSPI 2,320.23 -0.27%

Major equity markets in the Asia Pacific were down following losses on Wall Street, as rising tensions on the Korean Peninsula appears to have spooked investors.

In Japan, the Nikkei 225 continued on a downtrend that started earlier this week. Before midday, the benchmark skidded 0.38 percent to 19,3113.12.

In South Korea, the KOSPI index lost 0.27 percent to 2,320.23 around midday.

Down under, the ASX 200 was still down 0.44 percent to 5,681.20.

In Greater China, the Hong Kong Hang Seng index declined 0.86 percent to 27,506.01 at midday. The Shanghai Composite lost 0.44 percent to 3,369.50 at midday.

After pressure from the US and UN Security Council, the North Korean government has threatened to launch a “gift package” to the US if it does not stop pressuring the North.

The US has warned that any move from North Korea against the US or its allies will be met with a “massive military response.” Trump on Tuesday suggested that the US would allow the sale of more advanced weapons to Japan and South Korea, potentially boosting a military build-up in the Korea Peninsula.

Russian President Vladimir Putin warned against such military build-up, saying it could cause a global catastrophe.

Currencies

The Japanese yen gained 0.08 percent against the US dollar during the Asian trading session to 108.71 per dollar.

The Chinese yuan is still going strong against the greenback. Overnight, the Chinese currency gained 0.02 percent to 6.5331 per dollar.

The Australian dollar lost a slight 0.03 percent to 1.2509 per dollar overnight.

Commodities

WTI Oil lost 0.04 percent to $48.55 per barrel.

Brent Crude was up 0.02 percent to $53.13 per barrel.

Gold gained 0.03 percent to $1,338.93 an ounce.

Business News across Asia

In China, The power of Chinese social media was on display on Wednesday. After an article claiming that five-star hotels do not change beddings after the previous guest checked out circulated on popular social media sites, five global chains – Hilton, the W Hotel, InterContinental, JM Marriott and Shangri-La – are in trouble. The official newspaper People’s Daily reported that Beijing city officials have summoned the companies and demanded that they start a complete overhaul.

Take away: This is a trend in China, where consumers are getting picker about the quality of things. One analyst said that foreign brands used to made money very easily in China because nobody questioned the quality, but this is now changing.

In Japan: the Korean Peninsula tension got so bad that the government of Japan has begun planning for a possible mass evacuation of nearly 60,000 Japanese citizens currently living in South Korea.

Take Away: People in other parts of the world, or some even in the region, tend to shrug off anything could happen with North Korea because people seem to get used to the rogue regime firing off some missiles every now and then. But things seem to be different this time, as North Korea is already a nuclear power with an aggressive 30-something year old dictator at the top. Most analysts agree that Kim Jong-un seems to take a much more aggressive approach than his father, which is a cause of concern around the world.

Featured image from Flickr.

Author:
Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.