Major cryptocurrencies traded lower on Friday after international banking regulators’ decision to classify Bitcoin as the riskiest of assets and the Chinese authorities arrested suspects for using digital token for money laundering.
The Basel Committee on Banking Supervision on Thursday proposed that a 1,250% risk weight be applied to a bank’s exposure to Bitcoin and certain other cryptocurrencies.
In China, police arrested over 1,100 people suspected of using cryptocurrencies to launder illegal proceeds from telephone and Internet scams in a recent crackdown, the Ministry of Public Security said. The arrests came as authorities in China stepped up their crackdown on cryptocurrency trading.
The Top 10 digital currencies traded up to 6 per cent lower at 9.30 hours (IST) on Friday. The crypto market has also turned skeptical of El Salvador’s decision to legalise Bitcoin.
El Salvador has become the first country to adopt bitcoin as legal tender. This is likely to dampen the ability of central banks to act as lender of last resort. Salvador’s experiment will provide the first opportunity for analysts to gauge the cryptocurrency impact on an economy.
“We witnessed a very choppy session across the crypto spectrum in the past 24 hours. Most of the digital tokens tanked. Bitcoin, however, was the talk of the town after El Salvador announced its decision to accept Bitcoin as a legal tender,” said Edul Patel, CEO and Co-founder, Mudrex.
The IMF has raised some serious concerns with El Salvador’s Bitcoin move.”Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis,” said an IMF spokesman. “We are following developments closely, and we’ll continue our consultations with the authorities.”
According to ZebPay Trade Desk, “The week has been in the red for most assets in the crypto space. The market has seen a fall in prices, volumes, and market capitalization. This suggests that the overall sentiment in the market is still bearish, however, post the market reset, the volatility has also reduced among these assets.”
Bitcoin’s recent bounce has yet to dispel doubts about its vulnerability. While the momentum may cheer bulls, a JPMorgan Chase said backwardation in the futures market – where the spot price is above futures prices – is a reason for caution.
Global regulators have proposed to introduce capital requirements for banks dealing in cryptos. The announcement from the Basel Committee on Banking Supervision is another sign that the world of traditional finance is responding to the rise of crypto assets.
Tech View: ZebPay Trade Desk
Bitcoin Cash is a peer-to-peer electronic cash system. It creates the infrastructure required for fast payments, micro fees, privacy, and high transaction capacity (big blocks). It is the 12th largest cryptocurrency with a total market cap of $12 billion.
It is a permissionless, decentralized cryptocurrency, and hence requires no trusted third parties or a central bank. BCH has a limited supply of 21 million coins, hence scarce. Transactions are very fast, and transaction fees are as less as $0.01. Today, many merchants accept BCH as a means of payment.
BCH, post making the low of $467.8 showed good recovery and surged almost by 72% up to $807.27. The asset then resisted at these levels and prices retraced almost by 32%.
Technically, on the daily time frame, the asset is trading sideways in a ‘Symmetrical Triangle’ pattern (During this period of indecision, the highs and the lows seem to come together at the point of the triangle with virtually no significant volume). Hence, Breakouts on either side with good volumes will further decide the trend.
Support: $539.19 and $467.80
Resistance: $721.55 and $868.55
Time is in UTC and the daily time frame is 12:00 AM – 12: 00 PM UTC
(Views and recommendations given in this section are the analysts’ own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the asset/s mentioned.)