Primed for Reversal
In recent months, the cryptocurrency market has been battered and bruised. Declines from all time highs, a shrinking market cap, and ICOs galore has left many investors stressed and scrambling for gains anywhere they can find them. At the beginning of 2018, the value of the entire cryptocurrency market was approximately $830 billion. As of March 18th, the market was worth roughly $275 billion. This is a 66.9% decline in overall market value in just over three months.
Persistent FUD, the collapse of major crypto scams, and fear of regulatory oversight has pushed many from the market into price-stable holdings such as USDT, or to sell out of their cryptocurrencies altogether. The market is primed for a bear to bull reversal, and we may be seeing that happen right now.
This year’s G20 summit in Argentina has global financial regulators and central bankers discussing cryptocurrencies and what to do about them. Investors are looking for favorable news, and are keen for any bearish signals from the summit to reinvest. One such signal may be a recent statement made by Financial Stability Board Chairman Mark Carney in a letter to G20 members: “The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time.” The news was quickly followed by a ~5% increase in the price of Bitcoin, and a reversal of the preceding downward trend. Continuing positive news may give investors the encouragement needed for a market reversal.
In the United States, Donald Trump’s new Economic Advisor, Larry Kudlow, has signaled plans for continued tax reform that could see current the capital gains tax rate lowered. Current US tax law views cryptocurrencies as property, and views any and all exchanges, including crypto-to-crypto, as taxable events. Traders will benefit from a decrease in capital gains tax rate when it comes time to pay the IRS.
Investors will likely see continued regulatory attention and sentiment throughout 2018 and beyond. This may be beneficial, however, as regulatory oversight can bring legitimacy and stability into the risky sector. Regulation will help eliminate scam ICOs, as well as blatant Ponzi schemes, such as Bitconnect.
At the time of writing this article, major cryptocurrencies are seeing significant 24-hour gains: With all top-10 currencies gaining double digit percentages, and the overall market cap exceeding $320 billion. Could this be the bull market investors have been waiting for? Could this be the beginning of a run that sees Bitcoin and other currencies reach new highs? Investors will be sure keep their ears to the ground, their eyes on the screen, and their fingers on the button to buy.
