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June 26, 2018

Japan FSA sets measures for Cryptocurrency Anti Money Laundering

Cryptocurrency Market 'Markets under transitional period'.

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Cryptocurrencies market undergoing restructuring.

Bitcoin prices bounced upwards on Monday, with its movement being most noticeable in the afternoon European session and was considered as a market mover for the day.

The digital currency created some confusion as to the reason behind the upward movement and also the fact that it displayed a positive sentiment to the market after a long time of depreciation.

During the past Friday, the digital currency had a drop in value, falling near $6,000, when Japanese financial regulator requested several cryptocurrency exchanges to take strong measures to prevent money laundering.

Here, a case must be made to clarify whether this is positive or negative for the digital finance world.

With this measure, authorities are trying to prevent criminal activities within the crypto market and promote a more fair and reliable market base for the long term.

The FSA found that specific exchanges did not maintain the necessary protections for investors and so they imposed improvement/suspension orders.

As expected, Bitcoin’s price was hurt and fell upon the release of the news which was seemingly negative for the currency.

In our opinion, Bitcoin is and will continue to undergo a transitional period until it’s able to provide insurance and real market value to potential investors.

If prices drop, it does not necessary mean its bad news for the industry for the long run.

It could also mean that the crypto currencies price are now reflecting a more reliable market value Bitcoin represents.

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Furthermore, the founder and chairman of Alibaba (NYSE:BABA) Group Jack Ma made some recent comments on Bitcoin, indicating that Blockchain could be doing amazing things for the crypto industry in the future, yet warned that Bitcoin could be a bubble and people should be on the lookout and take precautions.

We share the opinion that Bitcoin was a bubble back in December 2017 when it reached a price just below $20,000, and is currently on a more realistic price level.

After all the negative publicity and measures coming from the US and Europe, we now see South Korea, New Zealand and Australia take on new measures to curb speculative investment into the digital currency world or even avoid any financial disasters.

Starting with South Korea, in a long term effort the government banned anonymous trading of cryptocurrencies back in January 2018. This action had the effect of minimizing prompted premiums that investors paid in order to trade Bitcoin.

These premiums created gaps in prices traded for Bitcoin in comparison to international prices.

It is said that a premium of 47% has now dropped to 0.6% thanks to counter measures which ultimately decreased the difference of inflated to actual Bitcoin prices and are now very close.

Moreover, the central banks of New Zealand and Australia have chosen not to issue their own official cryptocurrencies, stating that they prioritize the protection of their banking systems health.

RBA officials added that even though they may benefit from introducing their own Crypto’s, digital currencies have not demonstrated reliability as a payment method and are vulnerable to cyber-attacks.

As a conclusion, we would like to stress the fact that at the time being governments are taking precautions and trying to modify the crypto market with the most obvious outcome Crypto’s decreasing in value.

However, even if this fact is negative and repels investment it could be the best thing happening for the long term as it will shape and reform the industry to something better and bigger.

BTCUSD Daily Chart

It must be noted, that neither support nor resistance levels have been broken since our last report in the previous week.

Bitcoin has been moving in a sideways movement since the 11th of June between the $6,700 (R1) resistance level and the $6,100 (S1) support level and we support the case that the cryptocurrency will remain between these levels.

If the market is overtaken by a bearish movement, we may see Bitcoin moving downwards breaking the $6,100 (S1) support level and aiming for the $5,700 (S2) support barrier.

On the other hand, if the Cryptocurrency is overbought we could see it aiming for the $6,700 (R1) resistance level and stabilize above that level.

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