Bitcoin held support at $20,000 and is attempting a slight rebound near the $20,500 level by the end of the week. The last few hours for the industry have definitely not been kind, although the news has a mixed tone amid a positive analyst report from Bank of America Global Research:
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Analysts at BofA conducted a survey with 1013 respondents. More than 90% of them said they would purchase cryptocurrencies within the next six months. Interestingly, 30% of the respondents conveyed that they do not intend to sell their cryptocurrencies. 58% of those surveyed own digital assets, with 42% reporting a desire to purchase them in the future. According to the bank, the commitment to the digital asset market is still strong despite huge declines and economic problems. Bitcoin and Ethereum remain the most accumulated projects during the declines;
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Yesterday, the chairwoman of the US Treasury Department, Janet Yellen met with the heads of Wall Street banks and funds to discuss the regulation of the cryptocurrency sector. The results of the meeting have not been disclosed so far;
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The bankruptcy of Luna and the related algorithmic stablecoin UST, which mimics the US dollar, have made regulators more determined to regulate the industry. At its peak, both projects were capitalized at nearly $60 billion. The recent payout problems of decentralized crypto lending network Celsius and the troubled situation around solvency of cryptocurrency fund Three Arrows Capital with nearly $18 billion in funds under management cast a shadow of concern over the cryptocurrency market and may affect the accelerated deliberations of Congress. A decision from Congress remains necessary to enact regulation;
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According to recent, as yet unconfirmed press reports, Three Arrows Capital is considering selling its assets under management, which would involve potentially billions of dollars thrown at the sale, in the recently poorly liquid crypto market. This could trigger another avalanche of sell-offs and pull Bitcoin's price below $20,000;
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The continual postponement of Ethereum's transition to version 2.0 has investors worried despite assurances from developers that there is a near 90% probability that the changes will be implemented this year, resulting in a drop in the token's price. Additionally, stETH (staked Ether) tokens locked in the Beacon Chain are already starting to diverge by nearly 6% from the price of the underlying ETH. The limited pool of liquidity in the exchange system, the Curve pool (from where up to 15,000 ETH migrated daily recently) will potentially prevent or hinder sales at good prices to institutions involved in stETH, who may want to send them to less transparent exchanges, from where sales can be made at even larger discounts. The cryptocurrency sector is clearly beginning to suffer from the decline in liquidity;
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Kyrgyzstan's National Bank has warned against investing in cryptocurrencies. Kazakhstan, on the other hand, where a fair number of cryptocurrency diggers still operate, is working to create transparent regulations and a 'financial hub' for the blockchain industry; it has allowed cryptocurrency exchanges to have bank accounts;
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Bitcoin was once again criticized by Microsoft co-founder Bill Gates, who pointed to the speculative nature of the market for digital assets, whose valuations in his view are based on the 'greater fool principle'. Gates' close friend, the legendary Warren Buffett, has also commented similarly on industry valuations in the past;
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Warnings from banks and heated criticism are characteristic of periods of industry decline, and in the past similar situations have indicated high levels of market panic, which in turn may generate short-term opportunities for bulls.
