This Week in Crypto
The entire crypto market rose by 10 percent last week although it is still below the $300 billion level in market cap. However, the market is still struggling to show short term recovery, and moved up and down between $280 billion and $350 billion. This was the trend throughout the rest of weeks this March.
The market, which failed to sustain its momentum this March, is likely to continue being volatile in the short term in the coming days as low trading volumes are being realized in major exchanges. The low volume in March is a repeat of the lack of volume in the past few months as several factors including bans on advertising and regulations played to this result.
Some analysts believe that a trend of this nature is normal for any asset in any market after a major correction. Therefore, it is likely that the slump may last for many months before beginning its rally. The cryptocurrency market is showing difficulties in short term recovery from a 72 percent correction, the third largest correction to date for Bitcoin.
All the top 10 cryptocurrencies have had no easy time in the last 7 days so far. Cardano and Litecoin appears to have decreased most by more than 28 percent in the last 7 days so far. NEO and Ethereum are close at 26 and 25 percent respectively. Bitcoin Cash lost by 23 percent, Ripple and Stellar by 19, IOTA by 17, Bitcoin by 15 and EOS by 13 percent.
Last week was also disappointing for crypto projects as Twitter announced intended ban on crypto and ICO-related bans although with limited exceptions that the businesses must be verified to advertise their products and services (the ban includes ban on ads relating to initial coin offerings (ICOs), cryptocurrency wallets, and exchanges).
Twitter now joins Google and Facebook which banned crypto and ICO-related ads starting last two week and January respectively. The manner in which Google and Facebook banned the ads is questionable since, unlike Twitter, they do not allow for verification to promote businesses, which raises concerns about the issue of legitimate crypto businesses. On a positive note, Jack Dorsey, the CEO of Twitter Inc said he expects Bitcoin to become a leading currency of the internet within just 10 years.
Further, G20 countries last week were largely positive on cryptocurrencies classifying them as assets. However, they finally called for a report that recommends the regulation on cryptocurrencies, to be done by July about cryptocurrencies. While some governments like Brazil said they will not regulate cryptocurrencies, some see cryptocurrencies as fueling money laundering: cryptocurrencies definitely drew mixed reactions from G20 countries last week in Buenos Aires, Argentina.
Frederico Sturzenegger, Argentina’s Central Bank chief said cryptocurrencies needed to be examined. It is likely that most of the leaders want to see cryptocurrencies as crypto-assets and not as currencies. They recognize that the blockchain technology can improve the efficiency and inclusiveness of the current financial systems and economies as well as broaden them. Still, the leaders seem to indicate that cryptocurrencies raise some issues in relation to consumer and investor protection, tax evasion, market integrity, money laundering and terrorism financing.
"We commit to implement the FATF [Financial Action Task Force] standards as they apply to crypto-assets, look forward to the FATF review of those standards, and call on the FATF to advance global implementation. We call on international standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed.”
There certainly is no doubt that the leaders are for crypto regulation, but to what extent is not yet clear, with specifics to be waited upon on July. Previously, SB chief and Bank of England governor Mark Carney wrote a letter to the G20 finance ministers arguing that since the value of all the cryptocurrency is below 1 percent of global economy, it is certain that cryptocurrencies do not pose risks to global financial stability at this time.
Meanwhile, Overstock is investing $3 million into Barbados based Bitt, a blockchain to facilitate payments to the Carribean.
Bitcoin is still dominant at 45 percent according to CoinMarketCap which tracks 1594 cryptocurrencies and 9790 markets. This week, Bitcoin gained only 1 percent last week with massive sideways movements in the week. It swing from $7000 to $9,000 and is back to the $7,000 level as at the time of this writing. It is to be remembered that Bitcoin rally ended last Thursday after global regulators continued to enhance clampdown.
The price recovery is not likely in the short term unless trade volume in the entire market surges. The cryptocurrency showed stiff resistance at $9,000 and experts said the probability of a pullback above that level is more likely in the short term given the current scenario.
Ethereum was up 4 percent last week to around $539, which, however, is far from its known record of above $1000. Ethereum ended at a loss last week, compared to EOS (EOS), Stellar (XLM), Cardano (ADA) and IOTA (MIOTA) that had some small positive gains at the end of the week.
Further last week, Trump signed an order to ban any U.S. resident from engaging in transactions related to Venezuela’s “Petro” although it could be ambiguous to implement it. Petro continues to anger its opponents after raising $5 billion as reported, and the President supports it although the Venezuela’s Congress has termed it illegal. Many say its linkage with Russia is the reason for its ban by Trump.