Digital currencies have the potential to make significant sideways moves; an upward swing can create considerable gains in few hours, but the downward swing can wipe billions off in few hours.
Cryptocurrencies moved sharply higher in the final quarter of last year before crashing in the first month of this year.
Though the coin has breached the resistance level of $9,000 on Saturday, it continues to trade in the range of $8,500 with sideways movement. The range bound trading signals the tug of war between bulls and bears.
Regulators Again Weighed on Bullish Sentiments
U.S. regulators helped cryptocurrencies in resuming the upside rally from the three months lows they had hit early last week. Bulls have strongly capitalized on the rally over the previous seven days, but the European Union regulators added to bearish sentiments yesterday.
Consequently, the markets are observing the broader selloff in today’s trading.
European Union regulators warned traders that investing in cryptocurrencies is inappropriate and assets should be viewed as “highly risky”.
“The volatile nature of cryptocurrencies was showing clear signs of a pricing bubble,” the European Supervisory Authorities (ESAs) for securities, banking and insurance and pensions said in a joint statement.
South Korea is Now Thinking Differently
South Korea, one of the largest cryptocurrency markets, has recently announced several sets of rules to control illegal activities through digital currencies and now, it plans to introduce the licensing system to regulate virtual currency exchanges.
The ‘Bitlicense model’ is now in its focus. Based on this system, the government will only permit domestic exchanges to trade digital currencies that have a license, known as a “Bitlicense”. This approach will impose comprehensive reporting regulations and a lowest amount capital requirement. The system will also reduce the number of domestic exchanges and digital currencies that qualify.
Featured Image: twitter