Early Tuesday, Bitcoin ( BTC ) rose above a key price resistance after Hong Kong announced that retail investors can trade digital assets as of June 1.

Hong Kong’s Securities and Futures Commission announced it would accept exchange applications to offer crypto trading for retail investors as of June 1. Tokens approved by the SFC must have a track record of 12 months and a substantial market capitalization. SFC stated that registered exchanges will not be allowed to provide stablecoins and interest-bearing products.

The announcement confirms expectations, that the development in Asia will trigger the next bull run in crypto and contrasts with the lack of regularity seen in the West.

Bitcoin picked up a bid during the Asian hours and rose more than 2% to $27,500, probing the former support-turned-resistance of the horizontal trendline connecting the first and second trough of the head-and-shoulders (H&S) pattern. The H&S pattern was confirmed when the cryptocurrency dropped below the trendline at the beginning of this month. This opened the door for a further decline towards $25,000.

Noelle Acheson of the Crypto Is Macro Now Newsletter said that this move was not macro-related. It also coincided with the announcement by Hong Kong to allow retail trading for BTC and ETH in licensed digital asset platforms starting June 1. The timing and the ruling were expected. This is not a surprise. confirmation is more important in a market that’s not performing well, with other factors causing headwinds.

Acheson believes that Hong Kong’s decision allowing crypto trading to retail investors will not result in a surge of demand, since local traders have probably been accessing the market via offshore venues. Acheson said that the announcement was a “welcome reminder” of the fact that crypto adoption is expected to increase significantly over the next 12 months and beyond.

Bitcoin rose above the H&S Resistance early Tuesday. (TradingView) (TradingView)

Secure Digital Markets, a Canadian digital asset liquidity provider, says that Bitcoin must clear the H&S resistance trendline and the 20-day moving average of $27,500 in order to confirm a bull recovery.

The analysts wrote: “As long prices remain below neckline [horizontal trendsline] and the 20-day moving mean of this [H&S] chart, we can expect further declines to $24,250 or even $24,000.”

Bitcoin’s outlook is also affected by the U.S. Debt Ceiling Drama and the Dollar Index’s trajectory. Treasury Secretary Janet Yellen warned that if a deal on debt isn’t reached by early June, the government will run out of cash. This could lead to a catastrophic default. According to some analysts, the Treasury could drain liquidity from the market if the debt ceiling drama is resolved. This would put downward pressure on the price of bitcoin.

Bond yields have also risen, a sign that investors are re-evaluating the possibility that the Federal Reserve will continue its rate hike campaign in order to keep borrowing costs high for longer.

At the time of publication, the U.S. 10-year bond yield had risen to a record high of more than two months, at 3.75%, and the 2-year bond yield had jumped to 4.4 percent, its highest level since March 13. The rising yields reduce the appeal of high-risk assets such as technology stocks, cryptocurrencies and gold.

Stephen Alpher edited the book.