The cryptocurrency space has had another trying week, with Bitcoin declining by some 20 percent in just the past few days. Many cryptos have continued to exhibit a high degree of market volatility. While some major swings are to be expected, there is no telling when these markets may find firmer ground and settle down.
A major factor for much of the selling seen in cryptos in recent months has been the idea of tighter market regulation. According to a recent article from marketwatch.com, “Regulation was back in the spotlight after two cryptocurrency exchanges were suspended in Japan over what Nikkei said was “not taking adequate steps to protect customers and money laundering.” The article also added :
“That follows Wednesday’s statement from the U.S. Securities and Exchange Commission that warned investors of investing in non-regulated and exchanges and called for tighter restrictions across all trading avenues.”
“If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration,” the SEC said.”
It is important to keep in mind that it is not simply the idea of tighter regulation that may have investors upset, bur rather a lack of information as to how the space will be regulated and how such regulatory actions may impact the markets over the long-term.
Bitcoin has continued to see selling pressure, down over 4% on Friday. Of particular note, however, is that some cryptos have begun to stabilize following some recent selling. This could potentially point to a rally in the days head. Due to Bitcoin’s larger price levels, however, it could potentially remain weaker compared to other cryptocurrencies. Buyers may not be comfortable stepping in unless the currency makes another big low, perhaps on heavy volume.
Bitcoin: Bitcoin is down some 20% on the week, and has fallen below the 9k level. The market has been in a steep and steady downtrend, and could remain vulnerable to further selling pressure if a significant rally is not seen soon.
Bitcoin Cash: This crypto saw a drop of almost $400 on the week, and also appears to be headed lower. The currency is down almost 5% on Friday, and like Bitcoin, will need to see some buyers step in to stop the selling.
Ethereum: This crypto saw a drop of some $200, declining from over $860 to a low around $660. The currency has tried to mount a bit of a bounce, but is also under some pressure Friday. If the currency can get back above the $700 level, bargain hunters may step in for a larger rebound.
Ethereum Classic: This crypto was holding around the $30 level for part of the week, before finally breaking down as selling in the crypto space mounted. The market declined to almost the $20 level, but it appears that the worst of the selling pressure may have subsided.
Litecoin: This crypto has seen a decent bounce from the recent lows of less than $162 to a current price of nearly $183. Bucking the week trend in other currencies today may be a bullish sign for the currency, but follow-through will need to be seen in the next few sessions.
Ripple: This crypto was actually on the offensive earlier in the week, with prices moving back above the key $1.00 level. Selling in cryptos eventually weighed on the currency, however, and it declined from over $1.00 to a low around $.75. It has since rebounded a bit, however, and is trading for just under $.83.
Without question, the past week has been another wild one for cryptocurrencies. As has been discussed, however, a fair amount of price volatility should be expected as these currencies attempt to become more widely used and “mainstream.” Long-term investors may actually welcome any significant dips in price, as buying on dips can potentially be used for a dollar-cost averaging strategy. Contrarian investors may also view big dips as an opportunity, with more bad press and lousy investor sentiment the better. Many of the most vocal cryptocurrency fans have not been shaken by recent selling, and in fact are still targeting significantly higher price levels for some of the currencies.