The crypto-asset market remains in a kind of funk. Having been knocked down by You’re here‘s ad that he would no longer accept Bitcoin (BTC) as payment for his cars, he was dragged lower by a constant stream of government and regulatory pushback.
China’s crackdown on mining to the regulations warnings against Binance, a number of government actions have been used to keep the crypto moving sideways or backwards. However, while industry watchers for the most part agree that such actions have had a negative influence on the market, they also agree that they have not been as negative as they could have been.
In fact, commentators speaking to Cryptonews.com argue that Bitcoin’s stubborn attachment to a $ 30,000 resistance level is as much a sign of resilience as it is of weakness. At the same time, they argue that government and regulatory action cannot bring cryptocurrency under control in the long run, with Bitcoin in particular being designed to escape centralized control.
Governments take action, cryptocurrency falls
“The actions of the government, in particular in China, have had a significant short-term negative impact on the crypto market, ”said Lou Kerner, partner at Blockchain co-investors.
China recalled its financial institutions under an old anti-speculation law on May 18, when BTC had already risen from around $ 58,000 to $ 45,000. This news then sent BTC plunging all the way to $ 35,000 in three days, with the rest of the crypto-asset market following suit.
“This was followed in June by a severe crackdown on Bitcoin mining in China. Along with other government measures, many Chinese were forced to liquidate, at the same time as demand for crypto in China declined, ”Kerner said. Cryptonews.com.
Other analysts agree with this assessment, although they suggest government / regulatory actions are not the only cause of the current market woes.
“I think the biggest factor negatively impacting cryptocurrency prices has been the impact of recent Chinese government and regulatory actions in the United States and elsewhere. The recent rally in the dollar has been the other culprit, ”said Fawad Razaqzada, analyst at Think about the markets.
Besides China, the United States has been another site of government interventions related to crypto. Over the past few weeks we have seen calls of Tax service (IRS) for stricter regulations, surveys in Binance since Commodity Futures Trading Commission (and the Department of Justice and IRS), and requests lawmakers for stricter rules against ransomware attacks.
It’s just the United States. Regulatory and government actions have taken place elsewhere over the past month, Great Britain and EU at Singapore, Thailand, and others. During this period, the total value of the crypto-asset market has grown from over $ 2,000,000 to around $ 1.3 million.
Resilience to regulation
Still, most analysts say the market has performed better than some might have expected, especially given the extent of the crackdown in China.
“I think these government actions absolutely had a negative short-term effect on prices. However, we have now seen that bitcoin does not want to go below $ 30,000 – it has no longer collapsed to $ 3,000, “said Mark Jeffery, founder / CEO of the Emergency Response Network. Guardian circle.
He suggested that pushing bitcoin down is like “trying to hold a beach ball underwater.” He also highlighted how, at this stage, he is benefiting from an increasing number of hodlers and whales, or large holders of BTC, ready to accumulate coins in a downturn.
“Older portfolios just refuse to sell no matter what. They have known that bitcoin has been worth better than the dollar for ten years now, ”he said. Cryptonews.com.
Fawad Razaqzada also said that encouragement should be drawn from the fact that bitcoin has not fallen back to $ 10,000, where it was before the market started to recover towards the end of 2020.
“Well, looking at bitcoin prices, they’ve been fluctuating between $ 30,000 and $ 40,000 for almost two months now. The fact that we are not seeing a significantly lower price due to increasing levels of regulation and government actions indicates resilience and strength for Bitcoin and other cryptos rather than weakness, ”he said. he declares.
However, even though bitcoin has reached a seemingly strong support level, it should be remembered that government actions, along with other factors, caused it to drop nearly $ 65,000 fairly quickly.
“The strong negative market reactions to these moves highlight the infancy of the market and the buyers’ lack of depth to step in as Chinese sales accelerate and Chinese buyers slow down,” Lou Kerner said.
Anathema to the government
Despite the obvious fact that bitcoin has halved from its all-time high of around $ 65,000, industry figures are convinced that there is little that governments can do much to keep it going for the long term.
“But I think in the end, trying to shut down Bitcoin is like trying to shut down the Internet: you can’t,” said Mark Jeffery.
He suspects that we will see an increasing number of “attacks” from governments and regulators.
“We will definitely see KYC exchange requests [know your customer] increase – the idea of anonymous wallets and transactions is anathema to the government: they like a financial panopticon. Their reasons given are AML [anti-money laundering] and terrorism, which are legitimate to some extent, but are not, I guess, the real reasons, ”he said.
“If these things are necessary for every KYC wallet that connects to it, I don’t see how they survive. I also don’t see how this is enforced, but the government could theoretically start imposing fines and arresting anyone who deploys a DEX or DeFi smart contract, ”he added.
Nonetheless, Lou Kerner noted that not all countries will take an intolerant approach to cryptocurrency, because the case of El Salvador strong points.
“In the long run, crypto is much bigger than any country or group of countries,” he said. “Punishing countries will see a brain drain, when they can, as manufacturers seek to build more regulatory-friendly jurisdictions.”
Fawad Razaqzada also said it would be difficult to remove the use of cryptocurrencies altogether.
“I don’t think the authorities will be able to completely restrict access for everyone, everywhere. It is clear that governments are threatened by the rise of cryptos as an alternative form of payment that could potentially replace or at the very least supplement fiat currencies. “