Bitcoins or cryptocurrencies, also known as digital currencies belong to an asset class of their own which makes it more interesting for Investors to place money on. Contrasting gold, of which we have a long history of how it behaves in each circumstance, cryptocurrencies are not so familiar and have a mysticism as to how they operate and what drives their prices. However, Bitcoin’s common ground with metals is that they are mined like gold or silver. At the moment, approximately 16.95 million are held, bought or sold in the market, leaving potential miners with a little less than 4 million bitcoins waiting to be discovered.
Users are now getting more and more familiar with blockchain where all transaction history of bitcoins is stored and it allows two party’s to make an exchange without a third person physical or not interfering . Furthermore, blockchain permits financial institutions to verify transactions.
On the other hand, on a recent review by Bank of International Settlements (BIS) which seemingly does not encourage cryptocurrency investors, has put pressure and questioned blockchain as a solution to security matters. The bank has referred to blockchain as a poor efficiency and huge energy consuming technology which cannot control the cryptocurrency markets tendencies towards criminal activities or its significant price volatility.
People are seen to be losing their faith and patience with the crypto market.
The fact that the instruments remain unregulated, provokes the worsening of the situation and is confirmed in its diminishing price value. It was noted in a report that some new introduced companies are working with the Securities and Exchange Commission in order to be able to provide protection to the customers on Crypto activities. An example of the pre mentioned protections is carrying out know-your-customer procedures and guiding funds to particular exchanges at customers’ requests. This is exactly what the crypto market is starving for as it will place reliability and more control on the investor side. Initially, this could hurt prices of Crypto even further, but eventually will restore stability and true valuation of the digital market.
On a bigger scale of financial institutions, it was brought to our attention from various reports that Coinbase is also making moves to improve the crypto industry. They practically provide a crypto vault that protect user’s coins, though charge a pretty penny for this service. This service, requires for 10M USD and over deposits and they charge a 100K entry fee for setup purposes. We share the opinion that costs will eventually drop when more people are familiar with the service.
Furthermore, Coinbase is very serious about safekeeping customer’s funds in respect of Crypto’s and expects to win approval soon to provide services for clients requiring a so-called qualified custodian that meets tough U.S. standards for guarding assets. Despite of which company has taken these steps, they are a very positive advancement for the future and could be portrayed like the first steps on the moon.
The past months have been very punishing for the crypto market, keeping in mind 10 days ago a Korean firm was cyber attacked and lost 30M USD worth of Crypto’s. Eventually crypto holders came to grips of the risk of their funds invested and cut their positions with the total crypto market valuation losing approx. 50B in total value. However, the positive first steps of employing security measures have been mentioned above and could be the positive news the market has been awaiting. For the long run in our opinion, the seed to prosperity and investment reliability has been planted and when enacted could move in a fast pace all over the investment world.
Bitcoin, is very close and could break our (R1) resistance level at $6,700 and may bounce higher to our (R2) $7,120 resistance level
However, Bitcoin moved in a sideways manner in the latest sessions between the $6,700 (R1) resistance level and the $6,100 (S1) Support level. The $6,700 (R1) resistance level is stronger than expected and should the bulls take over the market it may breach it and extend further to $7,120 (R2) resistance level. This movement could be a trend breaker should the break of the pre mentioned resistance level be clear.
On the other hand this wave is also capable of travelling from the $6,100 (S1) Support level and at its full capacity, it may extend to $5,700 (S2) Support barrier.
Research by IronFX