First Mover Asia: Amazon’s Web3 Foray Will Be a Compliance Nightmare; Bitcoin Tops $23.9K

Good morning. Here’s what’s happening:

Prices: Bitcoin tops $23.9K before retreating slightly amid ongoing investor optimism. But one market observer says the largest cryptocurrency by market capitalization could be due for a U-turn.

Insights: Amazon is rumored to be unveiling an NFT initiative, part of the retail giant's larger push into Web3. The project could raise significant regulatory issues.

In recent news, Amazon’s entry into the world of Web3 and decentralized finance (DeFi) has caused quite a stir in the crypto community. Amazon, the world's largest online retailer, is rumored to be working on a project that will allow its users to use decentralized applications (dApps) and blockchain-based solutions to buy and sell goods. However, the company's venture into the world of DeFi and Web3 is likely to be a compliance nightmare.

The DeFi and Web3 space is still largely unregulated, and Amazon will need to navigate the complex world of crypto regulations to avoid running afoul of the law. In recent years, regulators around the world have become more interested in the crypto space and have imposed strict rules and regulations on crypto exchanges and other blockchain-based companies. For example, the U.S. Securities and Exchange Commission (SEC) has been cracking down on initial coin offerings (ICOs) that it deems to be unregistered securities.

This has led many companies in the crypto space to either shut down or move to more crypto-friendly jurisdictions such as Malta or Gibraltar. However, Amazon is one of the largest and most established companies in the world, and it is unlikely to be able to simply move its Web3 operations to a more favorable jurisdiction.

Instead, Amazon will need to work closely with regulators to ensure that its Web3 project is in compliance with all relevant laws and regulations. This could be a complex and time-consuming process, putting a significant strain on the company’s resources. In addition, Amazon will also need to ensure the security of its users’ assets in a decentralized system that is vulnerable to hacking and other types of cyberattacks.

Despite these challenges, the potential rewards of a successful Web3 project are huge. DeFi and Web3 have the potential to revolutionize the way we buy and sell goods and services, and Amazon is well-positioned to take advantage of this trend.

On the other hand, Bitcoin continues to make headlines as its price has surged to new all-time highs, topping $23.9K. This is great news for Bitcoin holders who have seen their investments appreciate significantly. However, it is also a warning for those who are considering investing in Bitcoin. The crypto space is highly volatile, and prices can swing wildly from one day to the next.

Many experts believe that the current Bitcoin boom is simply a speculative bubble and that prices will eventually come crashing down. This has led many investors to call for caution and to advise against investing more money in the crypto space than one can afford to lose.

In conclusion, Amazon’s foray into Web3 and DeFi is likely to be a compliance nightmare, and the company will face several challenges in navigating the complex world of decentralized finance and Web3. However, the potential rewards of a successful project are huge, and Amazon is well-positioned to take advantage of this trend.

As for Bitcoin, its price continues to soar, making it both a cause for celebration and a warning for investors. The crypto market is highly volatile, and it is important to thoroughly research and understand the risks involved before making any investment decisions.

Prices

Bitcoin (BTC)

$23,762+636.4▲2.8%

Ethereum (ETH)

$1,645+60.3▲3.8%

S&P 500 daily close

4,070.56+10.1▲0.2%

Gold

$1,945+16.5▲0.9%

Treasury Yield 10 Years

3.52%▲0.0

BTC/ETH prices ; gold is COMEX spot price. Prices as of about 4

Bitcoin Continues Flying High...for Now

On the weekend before the U.S. central bank unveils its latest interest rate decision, crypto investors were in a buoyant mood.

They sent bitcoin as close to $24,000 as it's been since mid-August. The largest cryptocurrency by market capitalization topped $23,900 at one point Sunday before retreating to about $23,760, a nearly 3% gain over the past 24 hours. Markets have remained largely hopeful the past week despite sometimes conflicting economic data and worrisome fourth quarter earnings reports from some of the world's biggest brands.

On Friday, news from the inflation front tilted favorably with the U.S. Commerce Department's announcing that personal consumption expenditures (PCE) excluding food and energy in December had registered its most moderate annual rate increase since October 2021. The PCE, a key inflationary measure that the Federal Reserve weighs heavily in its monetary decisions, offered the latest evidence of a cooling economy, although it also showed services inflation remaining stubbornly resilient.

"The decline in goods inflation is welcome, as it brings inflation closer to the Fed's 2% goal (for reducing inflation), but with services inflation still sticky, it highlights that the Fed has more work to do," First Republic Bank wrote in a weekly note to investors.

The "more modest increase is part of the reason that many crypto prices have increased," DiPasquale wrote. "It’s seen as a positive economic sign and is now being baked into the demand for bitcoin. It has been positively correlated with the equities markets in recent years and the lower rate is a bullish sign for the stock market."

Ether, the second largest crypto in market value, fared even better than BTC on Sunday, rising nearly 5% at one point to trade over $1,650 at one point. ETH has risen over this threshold twice in the last nine days. Most other major cryptos by market cap spent much of Sunday firmly in the green with MANA, the token of 3D virtual reality platform Decentraland, and SAND, the native currency of the metaverse game Sandbox, recently jumping more than 15% and 7%, respectively, and SOL, the token of the Solana blockchain, up 8.2%.

Equity markets furthered their upbeat January on Friday with the tech-heavy Nasdaq and S&P 500, which has a hefty technology component, each closing up the better part of a percentage point. The S&P has reached its highest level in nearly two months, a reversal from its desultory 2022. Investors are cautiously optimistic about inflation and other macroeconomic uncertainties, even as such powerhouses as Amazon, Salesforce and Microsoft have announced job cuts in anticipation of an economic contraction.