Cryptopocalypse mania is back. Bitcoin which was busy testing $12000 levels a few days back has again fallen below the psychological $10000 level.
The world’s largest cryptocurrency which tested $20000 level in the recent past is now finding it difficult to fly its way back as if gravity itself is pulling it down.
The law of gravitation applies not only to the king of digital currencies but also even others like altcoin Ripple, Ethereum and much more are experiencing this pull.
After testing its high of $1.21 in this month is now at below $1 levels, down by more than 10%. Ethereum is now set to test $800 levels again. It fell more than 10% to $810 levels.
The intensity of this pull will be known to all in the matter of time but the cause behind this slump is the thought in every investor’s mind.
There is a long list of anti-cryptocurrency countries i.e. countries not supporting the use of cryptocurrencies as a legal tender. Adding to that list nowhere comes Britain too.
This recent cryptocurrency slump is accompanied by the news of the introduction of new laws to govern the volatile cryptocurrency market. This new law has been brought about by Britain’s Treasury Select Committee of Lawmakers.
An inquiry on these digital currencies will be launched to bring to light the risks and opportunities of these currencies on consumers and businessman. The committee will be recommending the government after gathering evidence from different investors.
It will also consider striking a balance between protecting the citizens from unknown risks without endangering this digital innovation.
This slump might have resulted from the speculation that the recommendation will go against the cryptocurrencies. Furthermore, the Governor of the Bank of England has recently expressed his point of view regarding bitcoin.
He claimed that it has pretty much failed as the currency. He also does not consider it as a useful way of buying things.
South Korea Impact
South Korea has recently banned its citizens from trading Bitcoin and other digital currencies anonymously. Although it does not plan on making the cryptocurrency exchanges illegal.
South Korea is an integral component in the cryptocurrency world as it is the third largest market of the digital currency. Any mixed signals from this side of the world will surely shake up this market.
Korea is also an important hub for cryptocurrency speculations and is a center of attraction for many traders and speculators. This makes South Korea even more important factor when it comes to digital currencies.
East and West
US government also expressed concerns about the popularity of bitcoin among the criminals. Congress is also looking at how to better utilize this particular asset.
Notwithstanding the fact that they realize that there is a need for regulatory framework in this particular area. They understand the impact of digital currency on the citizens.
On that front, they have decided to look carefully at them so as to save the people from any scam related to them. Bitcoin regulations in the country won’t happen anytime soon but one can expect one in the coming future.
Bangladesh has also joined the party in a more aggressive manner as they are on the hunt for bitcoin users. The use and trading of Bitcoin are illegal in the country.
Moreover there are reports of a forceful crackdown on the daddy of virtual currency traders. They have also warned the financial institutions against digital currency users. Cybercrime investigators have also been involved in this matter.
Poland’s Smear Campaign
Poland officially recognized the trading of Bitcoin and other cryptocurrencies in the country back in 2017. It worked in the favour of cryptosphere but the recent developments have a different side to it.
The Polish Central Bank allegedly launched a smear campaign against the cryptocurrencies. It is said that the Bank paid Youtubers to instill in the minds of the citizen the fear of losing money by trading in digital currencies. This campaign to change the perception of the Poland citizens certainly reveals the intentions of the country towards them.
The need for regulations has posed a major problem for these currencies. Few countries are yet to take a call on cryptocurrency market.
France and Germany recently place the policy and monetary implication of virtual currencies as an important agenda of the coming G20 meeting.
The pull might get stronger as time passes but future is uncertain and there are also crypto supportive countries like Saudi Arabia. The reason is that the country has signed a deal with Ripple to help banks in settling the payments using the technology.
Venezuela has launched a state back cryptocurrency, Petro becoming the first nation to do so. This oil backed crypto raised about $735 million on the first day of sale.
In short, though few countries are in favour of the digital currencies most of them are looking to develop a regulatory framework for the safety of its citizens.
The slump might well be the result of the sentiments developed in the minds of investors due to the regulations and trading ban approach by the countries.
On the contrary, many experts think that the threat of regulations is not as strong as it was before and has eased a bit. They consider profit taking to be the reason for this slump.
Investors bought bitcoin in their dips at around $6000 levels and almost doubled their money by selling it around $12000 levels. Experts considered the latter level as the resistance level.
As far as other currencies are concerned, they are pulled down by Bitcoin. The sell-offs were the result of falling bitcoin prices.
Experts feel that the market is trading very technically right now and estimated the support level to be around $9500. It was not surprising for them to see the sell-off at the $12000 level.
As soon as the profit taking routine gets over they expect to see the long-term appreciation of these currencies.
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.