DeFi Tokens May Benefit from Regulatory Uncertainty in the Crypto Market

By Omkar Godbole (All times ET unless otherwise stated) As the crypto market, including bitcoin (BTC), awaits the Federal Reserve's interest rate decision on Wednesday, renewed concerns over US crypto regulation have emerged, potentially impacting market sentiment. On Tuesday, CoinDesk reported that Senate Democrats are hesitant to advance landmark stablecoin legislation due to concerns about President Donald Trump's personal gains from his crypto ventures. When Trump took office, many expected crypto regulation to progress smoothly. However, in hindsight, that optimism may have been misplaced. With the president involved in digital assets through family-linked projects, opposition has grown, potentially slowing regulatory progress. This uncertainty may lead investors to reassess regulatory risks, coinciding with charts for BTC and XRP indicating potential pullback risks. Additionally, CryptoQuant notes signs of renewed weakness in bitcoin demand from US-based investors. According to CryptoQuant contributor Abram Chart, 'Over the past month, the premium has recovered significantly but is now dropping again, aligning with the recent BTC price correction.' On a positive note, US-listed spot bitcoin exchange-traded funds (ETFs) have seen three consecutive days of net inflows. Acting CFTC Chairman Caroline Pham told crypto journalist Eleanor Terret that the derivatives market regulator plans to observe tokenization pilot programs to evaluate the technology and its real-world application. In traditional markets, Taiwan dollar forward contracts indicate extreme pressure on the US dollar, which could lead to further weakening against the Asian currency and potentially other major currencies like the euro. This broad-based USD weakness may support crypto. FX market volatility could drive investors to gold and possibly bitcoin, unless it leads to a broad-based risk-off scenario, in which case BTC may be affected. Another bullish development is US Treasury Secretary Scott Bessent's comments that US rates now carry sovereign credit risk, not just long-term growth and inflation expectations. In other words, rates are artificially high due to the US government being the risk premium, as noted by pseudonymous observer EndGame Macro. This could lead to a shift away from US assets and into alternative investments. Key Events to Watch Upcoming Conferences CoinDesk's Consensus will take place in Toronto on May 14-16. Use code DAYBOOK for 15% off passes. Market Analysis By Shaurya Malwa Derivatives Positioning Market Movements Bitcoin Statistics Technical Analysis Crypto Equities ETF Flows Spot BTC ETFs Spot ETH ETFs Source: Farside Investors Overnight Flows Chart of the Day While You Were Sleeping In the Ether