The crypto markets for the first quarter of the year have seen wide scale correction that had been long awaited by investors entering the market. Over the past month we have seen many volatile movements in the price of Bitcoin.
Many questions arise when the market starts bleeding and for some investors the first question that comes to mind is, can we go lower? The answer couldn’t be more frank; yes. At any moment prices can drop in the crypto markets as this is not as similar to the traditional stock market.
Climbing Down the Ladder
Let’s first analyze the Bitcoin dating back from when it reached an inflated high of $20k. We saw a significant pullback to near $12-$13k and an increase in volume leaning heavily on the sell side of the market. Although short lived, leading into the new year the price began to rise again, leaving many skeptical about the true price level. Of course, upon reaching $17k again we saw a major pullback.
The price currently sits around $10k, and has been consolidating around that range between $9-$11k. Decreasing liquidity in the market is one to take notice of, however, the recent dip is common to see.
Since BTC was at $6k, volume has declined and has not slowed up. Clearly, there is less ‘new money’ entering the market, and trading on a day-to-day basis has been slower. Decreased volume strongly correlates to the consolidation we saw over the course of the past two weeks.
Investors are growing weary about the regulations that are set to come throughout 2018. The Security and Exchange Commission warned months ago about cracking down on ICO’s. On Wednesday, the SEC provided a statement on unregulated cryptocurrency exchanges.
Bitcoin’s price upon this announcement dropped sharply below $10k, which had investors worry about what comes next.
The SEC cracks down on crypto
The SEC has warned of future stricter regulations to come forth after dealing with the ICO’s, who up until now have acted outside of the law.
“Many platforms refer to themselves as exchanges, which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange,” the SEC writes. “Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the SEC does not review these standards or the digital assets that the platforms select.
“Many of these platforms give the impression that they perform exchange-like functions by offering order books with updated bid and ask pricing and data about executions on the system,”
“But there is no reason to believe that such information has the same integrity as that provided by national securities exchanges.”
Bankers Bullish on Cryptocurrencies
Circle Internet Financial Ltd, the Goldman Sachs-backed crypto start up, has acquired Poloniex for $400m.
Rumors have swirled in recent weeks that Circle has been in talks to buy the cryptocurrency exchange @Poloniex. I can confirm here for the first time that, yes, Circle has completed the acquisition. (A source familiar with the terms told me the price tag came to roughly $400 M.)
— Robert Hackett (@rhhackett) February 26, 2018
Circle, founded in 2013, is a peer-to-peer payment platform that allows instant text-sent transactions through its mobile app Circle Pay. Circle aims to provide an open global-source token marketplace with the implementation of Poloniex in its arsenal.
They also plan to expand the exchange beyond just crypto assets, and in more countries than Poloniex currently operates in. Fiat-to-crypto exchanges such as coinbase and gemini are going to feel the pressure of competition.
“In the coming years, we expect to grow the Poloniex platform beyond its current incarnation as an exchange for only crypto assets. We envision a robust multi-sided distributed marketplace that can host tokens which represent everything of value: physical goods, fundraising and equity, real estate, creative productions such as works of art, music and literature, service leases and time-based rentals, credit, futures, and more.” – Jeremy Allaire and Sean Neville of Circle Ltd.
During the year, we can expect more legitimacy of crypto currencies with the implementations of regulations. Even U.S. District Judge, Jack Weinstein, agreed that crypto currencies are commodities and can be regulated by U.S. Commodity Futures Trading Commission.
Steps towards further regulation are increasing across the globe. At the 19th annual International Bar Association (IBA) conference on private investment funds, companies will discuss the regulatory plans for Europe. We are still in the early stages of the industry, but the pathway ahead is looking bright for blockchain.
Author – Afolabi Thomas