There is never a dull moment when it comes to cryptocurrencies. The past week saw a lot of news regarding these markets, and recent price volatility remains elevated. That being said, cryptos may have reached a near-term bottom, and long-term buyers could potentially consider current price levels very attractive. Some of the larger currencies, like Bitcoin, may need to see a substantial bounce higher soon, however, or another large wave of selling could fuel another significant decline.
One of the biggest issues potentially facing cryptocurrency markets and investors is the possibility of further regulation. Some areas, such as South Korea, have already begun the process of regulating exchanges, and more guidelines will likely be seen. A recent Businessinsider.com article discussed this topic at length, specifically about new developments in Russia and the U.K. Regarding Russia, the article stated that:
“The country’s Finance Ministry has been working on regulations for cryptocurrency transactions that would also extend to initial coin offerings (ICOs). The government stance on cryptocurrencies is ever-changing in Russia, with the Finance Ministry previously planning to make cryptocurrencies illegal back in 2014, and other government bodies continuously voicing concerns. Having regulations in place would allow Russia to tax cryptocurrencies, while also likely reducing the risk of fraud.”
As for the U.K., it said:
“At the World Economic Forum’s annual meeting in Davos, UK Prime Minister Theresa May spoke out about cryptocurrencies, urging governments to take them very seriously. Additionally, she said companies involved with cryptocurrencies should focus on the issue of social responsibility, especially in terms of terrorism financing. This is in line with previous warnings by UK regulators on cryptocurrency-related activities.”
In a recent article from CNBC.com, former SEC Chairman Harry Pitt suggested that the agency is getting ready to crack down on cryptocurrencies. He was quoted as saying: “We’re in line for some serious regulatory responses to all of this and that will be forthcoming after the first of the year.”
The attention these currencies are getting comes as no surprise, and additional regulation-to some degree-is to be expected. Tighter regulation is not, however, likely to deter buyers as they see the long-term potential of this form of money.
Bitcoin: Bitcoin is still on the mend following the heavy selling seen in recent weeks. The market stayed fairly range-bound, moving from $10,500 to $11,500 for much of the week. Although it appears to have stopped the bleeding, it needs to see a bounce higher before too long or it may remain vulnerable to another sharp sell-off.
Bitcoin Cash: This crypto declined from the $1800 level to a weekly low around the $1500 level. It has shown a bit of buying interest since, however, and is nearly $100 off the lows heading into the weekend.
Ethereum: Ethereum had a good amount of price volatility this week, dropping from over $1140 to a low around $920. This crypto has seen some solid rebounding, however, and has climbed back towards the $1046 level in action on Friday. This could be due to willing buyers taking advantage of the recent dip.
Ethereum Classic: This cryptocurrency declined from over $35 to less than $27.50. Like its counterpart Ethereum, however, buyers seem to have stepped up and price is now back near $29 in action on Friday.
Litecoin: This crypto saw declines from over $200 to $168, and is trying to bounce but not making much headway thus far. Trading around $175 on Friday, this currency is ending the week on a weak note, and could see further selling next week.
Ripple: Ripple has declined by some $.30 on the week, and has been trending lower. The market has been finding some buying interest around the $1.20 level, however, it has not yet seen a much-needed bounce higher. Going into the weekend on a week note could also point to further selling next week before the market finds more stable footing.
Cryptocurrencies have seen some significant declines in recent weeks, but appear to be in a bottoming process. Investors may also be taking a wait-and-see approach, as the notion of additional regulation could potentially have an impact on how these markets are traded. The next several weeks are likely to be exciting for these markets, and the potential for a sharp, broad-based rally cannot be ruled out.