Bitcoin and other cryptocurrencies continue to grapple with a number of issues that have thus far kept a lid on any major rallies since prices took a major slide in recent weeks. Although things have been looking up for some cryptos, numerous hurdles remain that could potentially stand in the way of higher prices.
News broke this week that the SEC is investigating cryptocurrency tech and advisory companies. According to a recent article by investopedia.com, the agency is targeting initial coin offerings, or ICOs specifically. It stated:
Last month, SEC chairman Jay Clayton signaled his agency would crack down on the unregulated cryptocurrency market when he testified before the Senate Banking Committee.
“I believe every ICO I’ve seen is a security,” Clayton said.” It continued:
In December 2017, Clayton warned about the potential for scams in the digital currency space, and said there’s a “substantial risk” that victims would not be able to recoup their losses. (See also: SEC Chair Warns Cryptocurrency Investors to Beware.)
“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation,” Clayton warned in a letter.
The issue of additional scrutiny from regulators has been a major theme for cryptos in recent months, and regulators could look to take further action to try to prevent fraud, theft, excessive risk-taking and other issues that could potentially take place.
While the notion of market regulation in and of itself likely won’t hurt-and may be a very good thing for crytpos in the long-term- it could weigh on prices until more clarity is seen about regulatory actions.
The Bank of England is also taking a closer look at cryptos. In a recent article from theguardian.com, Bank of England Governor Mark Carney reportedly expressed some concerns over the current state of the crypto markets. The article quoted him as saying: ““Authorities are rightly concerned that given their inefficiency and anonymity, one of the main reasons for their use is to shield illicit activities. This cannot be condoned. Anarchy may reign on the dark web, but in the UK it’s just a song that your parents used to listen to.”
Bitcoin: This crypto has been trending higher for much of the week. Prices bottomed out for less than 9.5k before rebounding to over 11k. Thus far, however, momentum seems to be weakening and prices have stalled out at 11k. Investors may want to see further strength before getting back in.
Bitcoin Cash: Bitcoin Cash has been primarily range-bound with prices oscillating between $11160 and $1280. Like other cryptos, the market has thus far failed to put together a convincing upside rally. The lack of follow through could potentially draw sellers back into the market.
Ethereum: This crypto has also been stuck in a tight range-moving from about $820 to just under $900. Although much of the aggressive selling has stopped, it too must also see some upside to attract more buying interest. An ongoing lack of upside follow through could open the door to more selling.
Ethereum Classic: The classic has been in a clear trend lower this week, dropping about $10 from the highs to the lows. Prices have previously found support around the $32 level, but that area appears to be giving way to lower prices. The currency is down over 10% on Friday.
Litecoin: This crypto looks ready to end the week on a sour note, having declined from the highs seen earlier in the week. News of a fork had driven prices higher, but that bullish momentum has stalled out. Prices may need to hold the $200 level or the currency could see sellers return in droves.
Ripple: This crypto has been trading from about $90 to $.95 and has not shown much to be excited about recently. Ripple put together an impressive rally several weeks ago, but after giving back the gains it has not done much of anything. The market has been largely sideways in recent months with the exception of that rally, and could continue sideways to lower without any fresh, bullish inputs.
The next few weeks may be critical for the cryptocurrencies, as investors digest new regulatory actions and as changes could be in the cards for ICOs and how currencies are traded on exchanges. Once many of the uncertainties surrounding such actions are clarified, however, the currencies may be in a better position to make a sustainable run higher.