He crypto market returns to the scene today due to the volatility it is generating in the prices of the main references. There have been a number of news items that may generate further leakage and skepticism from traders in the shortest term, despite the fact that on a broader horizon there have not yet been major movements of great significance.
But the obstacles in this market are beginning to increase. The latest news confirms it. Among other great information of relevance is the latest decision by the Financial Conduct Authority (FCA) of the United Kingdom to prohibit derivatives of bitcoin and other cryptocurrencies for retail investors, considering that they are products that can harm consumers.
The FCA considers that these underlying assets do not conform to a basis that can be relied upon for their value to be assured, in addition to stating that the secondary market for cryptocurrencies is home to great speculation, activities that do not conform to the law and that can be the breeding ground for financial crime.
The regulated also exposes that a high dose of volatility is occurring in the segment of crypto assets that it does not have a clear correlation with the underlying used by retail consumers. Hence, you have made the decision to declare these assets as inappropriate and that they do not comply with the law.
However, it is not the only one of the headwinds in this part of the market, given that the cybersecurity mogul arrest, John McAfee, at the Prat airport is a negative sum for the potential that cryptocurrencies can have in the most immediate short term. And is that the accusations of the United States Department of Justice detailed that McAfee avoided declaring millionaire income from cryptocurrency promotions, consulting jobs, rights to your life story for a documentary, and possession of property and assets with the goal of evading taxes.
Between 2014 and 2918 McAfee did not file despite receiving very large income, according to the US agency, and I would be receiving money through bank accounts and payments with cryptocurrencies. A practice that re-sows a certain degree of obscurantism on this type of assets that is increasingly related to fraudulent practices.
The accusation coexists in time, in addition, with the lawsuit of last October 5 presented by the Securities and Exchange Commission US (SEC) before a New York court, according to which the cybersecurity mogul promoted up to 7 initial coin offerings (ICOs) on Twitter between 2017 and 2018, for which he obtained “secret compensation.”
The positive catalysts in which these assets are attached
There is no doubt that this information does not reward digital assets such as bitcoin and ethereum, which are 10% below the annual highs and 46% away from the historical highs, in the case of the most popular cryptocurrency in the market environment. On the contrary, there are positive data pointing to an improvement in sentiment over a longer time frame. Above all, if central banks bet on the regulation of digital currencies.
Along these lines, the European Central Bank recently published a report in which it spoke of the possibility of creation of a European digital currency, on which a public consultation will begin on October 12. Of course, the Eurosystem will decide in the second half of 2021 if the project will see the light.
This format it would be accessible to all citizens and businesses and would be used in the same way as banknotes: safely and quickly. The Bank of Europe stressed that it would be used as a complement to cash and in no case as a substitute element. But the opportunities are there.
“We must be prepared to issue a digital euro if necessary”, commented Christine Lagarde, President of the ECB. With the increase in the demand for electronic payments in the euro area and the large drop in the use of cash as a means of payment, a greater interest in this type of model would have been generated.
Finally, and focusing on the long term, Adam Vettese, Market Analyst at eToro, explains that the volatility of assets such as bitcoin are even lower than such well-known values as Tesla. “Detractors of the world’s largest cryptoasset accuse Bitcoin of excessive volatility, but recently it has lived in a sea of calm compared to Tesla stocks,” he deepens.
Since the end of June, the electric vehicle maker has witnessed a higher percentage of daily movements than bitcoin with a large increase in volatility in recent weeks. “In the last 27 days, bitcoin experienced volatility below -1.25% in 14 days, while Tesla only reached this level 6% of the time in the same period,” he concludes