Cryptocurrency prices were moving higher in what one analyst called "a much-needed relief rally."
Bitcoin was up slightly to $20,691.74 on Oct. 27, according to data firm CoinGecko. Ether, the native currency of the ethereum blockchain, was up 1% to $1,568.68, while dogecoin was up 3.2% to $0.078233.
"The crypto market has witnessed a much-needed relief rally over the past 48 hours, with many major cryptos posting double-digit gains and the total market cap finally making its way back above $1 trillion," Billy Endres, cryptocurrency expert with Finder.
"Ethereum has led the way after breaking out of a month-long trading range, retesting a significant psychological resistance zone at $1,500."
Market Sentiment in Crypto Shifts
Endres said the rally across the broader market probably stems from a significant correction of the US Dollar Currency Index, which rejected resistance at around $115 -- a near two-decade high. Over the past week, the US Dollar Index has dropped more than 3%.
"A weakening dollar equates to a higher buying power for assets that are traded against it, including all USD-paired cryptocurrencies," Endres said.
"If the dollar continues to drop, investors may look to trade out their profits made on the dollar over the last year in favor of a more diversified portfolio, including digital currencies and traditional stocks."
He added that if bitcoin holds above its key support zone of $20,000 and ethereum above $1,500, "the rest of the crypto market will likely remain bullish."
"This shift in market sentiment could be the catalyst that sparks a positive crypto trend and a potential bull run in the lead-up to 2023," Endres said.
Earlier this month, the Financial Stability Oversight Council published a report outlining its concerns about cryptocurrency.
Winston Ma, managing partner of CloudTree Ventures, said the report is "quite different from the other reports published so far by the U.S. financial regulators in response the to Biden Executive Order on digital assets."
That's "because the FSOC report included a series of specific policy recommendations about what Congress and the regulators ought to do next."
Lack of Consensus
"But it seems that FSOC is more skeptical than supportive of cryptoasset activities, as its report focuses almost exclusively on the financial stability risks of cryptoasset activities," said Ma, author of "Blockchain and Web3: Building the Cryptocurrency, Privacy, and Security Foundations of the Metaverse."
Further, he said, the FSOC strongly believes that cryptoasset activities should be subject to a federal regulatory framework created by Congress.
"Notably, the FSOC report highlighted the limited direct federal oversight of the spot market for cryptoassets that are not securities, which, at the same time, reveals a continuing lack of consensus and turf wars among the U.S. financial regulators," Ma said.
Meanwhile, David Lesperance, managing partner of immigration and tax adviser Lesperance & Associates, suggested that with “Bitcoin Bro" Rishi Sunak named the new U.K. prime minister, "British lawmakers have taken their cues and have voted in favor of recognizing crypto assets as regulated financial instruments and products."
Andrew Griffith, financial secretary to the U.K. treasury and London city minister, said in a statement that "the substance here is to treat [crypto] like other forms of financial assets and not to prefer them, but also to bring them within the scope of regulation for the first time.”
"Parliament then voted largely in favor of keeping the cryptofriendly amendments in the proposed legislation," Lesperance said.
Kwon But Not Forgotten
And finally, he said, the continuing saga of “Where in the world is Do Kwon,” co-founder of Terraform Labs, took yet another turn. One member of the UST Restitution Group, an association of nearly 4,400 crypto investors, said that he was flying personally to Dubai.
"Kang Hyung-suk’s faith in cryptocurrencies was shattered by the $40 billion collapse of Do Kwon’s cryptocurrency operator Terraform Labs, where he used to work in Seoul," Lesperance said.
"Now he is looking for payback. Kang is flying to Dubai in the cryptofriendly United Arab Emirates, where he believes Kwon is hiding."
Kwon oversaw the dramatic collapse of the Terra-Luna algorithmic stablecoins this spring, which wiped out billions in investor holdings.
South Korean prosecutors confirmed this month that he was in an undisclosed location after exiting Singapore and transiting in Dubai. Kwon has said that he is protecting himself by not revealing his whereabouts.
"The international manhunt for Kwon is heating up as investors try to recover from the devastating losses caused by the collapse of his terraUSD and luna coins," Lesperance said.
