As cryptocurrencies gain in popularity, more and more investors have been looking to participate in this exciting market. The crypto market has seen some volatility, and that is to be expected as they look to gain prominence and become more mainstream.
Dominating much of the crypto headlines this week was the decision by South Korea to implement new rules regarding trading in cryptocurrencies, and even the possibility of shutting down some exchanges. One of the primary components of the new legislation is a ban on anonymous cryptocurrency accounts set to begin next month.
Currently, only a name and email address are required to start trading cryptos, although larger sums require additional documentation. In an effort to curb potential money laundering, the country is set to implement “know your customer” rules designed to prevent illicit transactions. It was reported that the South Korean Justice Ministry was even considering shutting the nation’s cryptocurrency exchanges down, although further details as to how or when such a move could take place have not been provided.
This is an important piece of news, as South Korea has the third largest cryptocurrency market after the U.S. and Japan. The rules to take effect may also be designed to curb widespread speculation in cryptos. Investors and traders have been piling into the currencies, and while they may potentially present an excellent long-term investment opportunity, they also come with risks and the potential for ongoing price volatility. As discussed in a recent article from Reuters, new regulations are not likely to slow down buying in the crypto market.
Bitcoin: Bitcoin remains the most popular cryptocurrency, and the news out of South Korea did have a significant impact on prices this week. The currency dropped double digits percentage-wise following the news, although it has since recovered a substantial amount of ground. Volatility is nothing new for the currency, and thus far investors have been happy to step in and buy any significant dips in price. In addition, after a run towards the $20,000 level, some profit taking and year-end selling comes as no surprise.
Bitcoin Cash: Bitcoin Cash was also affected by the news and took part in the broader crypto sell-off. Prices have been trending lower this week, although the market is seeing buyers step in late in the week.
Ethereum: This crypto also saw some selling pressure this week, although it was short-lived. The market took a dip all the way down to the $600 level, and has since seen buying taking it back towards the $750 level. As of early Friday, it is up over $116 on the week.
Ethereum Classic: This cryptocurrency has also been on the defensive this week, falling from over $34 to the $28 level. It seems to have found willing buyers, however, and is poised to end the week on a stronger note trading back over the $30 level as of early Friday.
Ripple: This crypto has had a very strong showing this week, and continues to gain ground both in price and interest. After trading for under $1.00 earlier this week, the currency is trading at $1.78 early Friday and is in a strong uptrend. Like other cryptos, the currency may see ongoing inflows as investors look to add and diversity away from Bitcoin.
Litecoin: This crypto also had a tough go this week, declining from well over the $300 level to a low of less than $240. The market seems to be finding willing buyers around that level, however, and could potentially see a significant bounce in the sessions ahead. Like other cryptos, Litecoin could also stand to benefit from further profit taking and price volatility in Bitcoin.
While all of these cryptocurrencies have exhibited some price volatility, that should come as no surprise. As this asset class gains momentum and more investors look to get involved, higher prices could be seen by sizable dips. Long-term players may look to take advantage of those dips, however, and they could potentially present an excellent long-term value for the patient investor.
More rules and regulations could potentially become a hot topic for the crypto market, and these currencies could see some knee-jerk reactions to further announcements regarding any legislation. That being said, it does not change the outlook for them as a viable means of payment and store of value. In fact, they are likely to keep growing in volume and overall market capitalization, and could become far more mainstream in the New Year.