Daily Trending News and Market Sentiment: Regulators, Hype Cycles, and Perfect Storms


If yesterday, reports of fading crypto sentiment in large swathes of Europe were meant to have any lasting effect on price, they didn’t. Instead, what we have witnessed over the past 24 hours was a willingness from long traders to retake USD 11,000.

They failed, and price has slumped back down to yesterday’s level around USD 10,665 (13:05 UTC, CoinDesk) as North America prepares to take over from Europe trading. The rest of crypto again marches to the tune of Bitcoin, with only Ethereum Classic (ETC) showing positive gains in the past 24 hours among the top 20 by market capitalization.

There has been no real news of impact on Tuesday, although a report emerging in Israel claims that over 2,000 startup applicants are now waiting for approval from the local regulator, the Israeli Capital Market Authority (ICMA). If true, then yesterday’s ING Austria report about waning crypto interest could have overlooked strong and growing interest in blockchain enterprise — arguably a stronger indication of the bright future of the industry than mere speculative interest in digital asset markets.

Financial innovation is the key driver in these blockchain-based fintechs, with ICMA boss Dr Moshe Barkat saying that the applicants included those attempting digital insurance, P2P platforms and credit providers, digital wallets, blockchain-based fintech ventures and other payment services providers.

Many of these services are already a mainstay in online communities, even without the clarity of regulatory compliance, and it could be that regulators all over the world will be forced to embrace the technology or fall behind in innovation.

The EU’s PSD2 regulations, which covers virtual currency in payment service providers — of which crypto exchanges are considered part of — seems to be ahead of the game in some respects, as is the Fifth Anti Money Laundering Directive (AMLD5), which is keen to ensure there is no anti-competition in terms of banks denying basic services to fintech firms. Detractors, however, point out the flaws that could actually backfire on regulators by inadvertently creating more entry points for fraudsters, as this Computer Weekly blog post details.

Whatever the big picture, one player in the shape of South Africa’s largest crypto exchange, Luno, believes that Bitcoin is currently in the throes of a “distinct hype cycle“, pointing to the fact that it has managed to register a 60% quarter-to-quarter increase in new clients even in the midst of high Bitcoin volatility.

Marius Reitz, Luno General Manager for Africa, makes a reference to the Gartner Hype Cycle, in which a new technology enters a period of heightened optimism and inflated expectations before reaching mass adoption. Luno stated:

“As the technology matures and the infrastructure improves, the use cases for cryptocurrency will become clearer.”

Earlier in August and late in July, we talked several times about economists and market observers who are adamant that a global economic crisis, or at least, economic instability in traditional markets such as the stock market, coupled with weak monetary foundations worldwide, would in fact be a good thing for Bitcoin.

Trump’s continued attacks against China and the EU, imposing trade tariffs, alongside demands on the Federal Reserve to cut interest rates (it did, but only half of what Trump desired), for a while seemed to put Bitcoin in a good light. This was insofar as Bitcoin being a solid alternative that was not under purvey of centralized authorities like states and central banks and, therefore, immune to manipulation maneuvers such as devaluation, artificial creation or influence exerted by powerful figures.

So far, Bitcoin price has not reflected that people are taking flight from conventional assets yet, although these staunch Bitcoiners believe it is only a matter of time before Bitcoin’s perfect storm takes place. Those like Rhythm trader is now pointing to accumulating signs of a rotten core in the financial structure globally, with a banking crisis in Ghana potentially wiping out USD 1.6 billion in savings of some 70,000 people there.

Will Bitcoin truly fix such things and prevent another Greece from occurring? Perhaps not quite in Ghana and not with those 70,000 people, of whom surely not many would have even heard of Bitcoin, much less be able to use the technology.

Nevertheless, we are reminded that it is only in times of crisis that people are forced to seek out alternatives, so perhaps we need to view the long term to understand how the future might look like for Bitcoin when public sentiment is wholly against the status quo in money, banking and finance.


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