The crypto market continues to see a big sell-off as authorities worldwide are mounting pressure to clamp down investments in projects related to distributed ledger technology. On Tuesday, the Committee on Banking, Housing, and Urban Affairs conducted a hearing on Virtual Currencies. Jay Clayton, Chairman, U.S. Securities and Exchange Commission, provided testimony to the Banking Committee.
Three vital details were present in his statement. Firstly, cryptocurrencies, which do not follow AML & KYC regulations will be considered illegal. Secondly, there is no possibility of allowing Bitcoin or cryptocurrency ETFs at this point in time due to concerns over liquidity and volatility. Finally, all ICOs will be considered as securities and should register with the SEC.
The first fact clearly implies that anonymous, private currencies may see a ban soon. Secondly, ICOs will have a tough time raising funds from US investors. While the SEC chairman’s statement kept the crypto market weaker, the new head of Bank for International Settlements, Agustín Carstens, call for unified action against the cryptocurrencies sparked another round of sell-off. Read more here.
Let us look at the major developments related to the coins that command a large market capitalization.
Bitcoin & Tether
Bitcoin, which is the prime target of regulators, lost about 68% of its value from the historic high of $19,704 to hit a low of about $6,000 yesterday. However, most of the cryptocurrency specialists are looking at developments related to Tether, a cryptocurrency, which is pegged to the US dollar at a 1:1 ratio.
There have been concerns that Tether does not hold enough dollar reserves. Tether’s management is also a part of the Bitfinex crypto exchange. Therefore, many crypto traders have alleged that Tether is indirectly used to propel the value of cryptocurrencies, without enough dollar reserves. Tether has refuted the allegations in the past. The matter took an ugly turn last week when its auditor Friedman LLP was relieved of the responsibilities. Tether then hired the disgraced Madoff associates as auditors.
Sooner, Tether may have to provide a detailed auditing report. If it does not hold enough dollar reserves in accordance with the 1:1 ratio, then Bitcoin may see another round of sell-off.
Ethereum
Most of the decentralized applications were built on the Ethereum platform. Still, the latest round of selling pushed Ether, the native currency of the Ethereum platform, to a low of about $553. That did not stop Vitalik Buterin, the creator of Ethereum, from spending money on a good cause. Buterin donated $2.40 worth of Ether to the SENS Research Foundation, an institution involved in treating-age related diseases. Additionally, Buterin has also tweeted his support for Internet Archive, a non-profit digital library offering millions of free books, movies, & audio files, while asking donors to send contributions in the form of cryptos.
Ripple
Ripple is fundamentally a very strong project. It is backed by numerous banks and soon it may replace the entire SWIFT system. However, when the crypto market is in a bad mood, Ripple gets a big hit. Yesterday, Ripple once again posted double-digit losses to hit a low of about $0.51. Crypto specialists feel that Ripple is a centralized coin. That makes it a hard sell among crypto investors. Additionally, the Bitmex research team has published a report that raises several questions about Ripple’s ecosystem.
Our Forex Trading Plan
Bitcoin. This leading cryptocurrency has been much beaten in the past few days, and a strong bounce-back is expected. Technically, the charts indicate major support at 6,000. Furthermore, the Williams’ percentage range indicator reflects an oversold scenario. Therefore, a long position seems to be the best option at this point in time.
We may open a long position in Bitcoin through the platform offered by a Forex broker. The ideal entry and exit levels are 6,800 and 9,000, respectively. A stop-loss order will be definitely placed below 5,600, in case we open a long position near the levels mentioned above.
Our Binary Options Trading Plan
Ripple. Ripple bounced back strongly after touching a low of about $0.51 yesterday. However, historical charts indicate that the downtrend is far from over. The stochastic indicator is still in the bearish zone. Therefore, we prefer to bet on a decline in the Ripple coin.
We may use a binary broker’s platform to bet on a downtrend in the Ripple coin. While investing in a put option contract, we will choose a date around February 15 for its expiry. Furthermore, we will pick the contract only when Ripple trades near $0.75 in the cryptocurrency market.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
