Bitcoin Future Uncertain Amid Regulatory Concerns
The recent bearish market has kept the future of the flagship currency in utter doubt. With the reaffirmation of SEC Chair Gary Gensler on Tuesday to continue crypto clampdown, traders have become more concerned than ever. This is confirmed by BTC market indicators. On Tuesday, BTC started showing weakness as it continued to incur losses.
For 46 straight days, BTC traded above the $42k level, but in the last three days, the coin has accumulated so much loss that it has erased the gains recorded in August. From historical data, indicators show that it took nearly 79 days for BTC to rebound from its bearish state to trade above $42k the last time. This has sparked fears that the crypto world could witness another calamitous period.
What Are the Real Causes of Recent BTC Underwhelming Performance?
Traders have stated several reasons why this could be happening. They had hoped some good news would come out of the Federal Reserve meeting on monetary policies where it is expected to discuss its options on whether to curtail the $120B monthly stimulus program or not. Interestingly, this took place around the same time China’s equity market rebounded 1%. This aroused some rumors that China could be the cause of recent BTC performance.
Traders also reveal that the call for crypto regulation is another possible cause of BTC’s declining prices, citing the slight global market recovery. The recent comment by Gary Gensler, U.S. SEC Chair, further shows that the regulatory body won’t back out from its plans to continue crypto clampdown. For the past six months, Gensler and the SEC have been hitting the crypto industry hard. According to Attorney Grant Gulovsen, the clampdown would get even uglier with no idea how it would affect the market. It implies a looming dark cloud, and the impact of the clampdown will be the bearish market.
Gulovsen added that investors dislike uncertainties, regardless of the market. With these regulatory concerns, the future of Bitcoin is somewhat bleak. BTC prices previously went down in this manner due to Elon Musk’s statement regarding mining energy consumption on May 12. Investors observe the buy/sell option alongside the skew indicator to see if Bitcoin will risk collapsing further.
Bitcoin Futures Increase Investors’ Fear
Futures markets are instruments that help traders’ lives easier. With this, traders don’t need to analyze futures premiums. Future prices were introduced to help stabilize exchanges’ visibility, and it is usually charged from buyers requesting more leverage. If the situation flips to sellers, the funding rate becomes negative, so they pay the fee for being over-leveraged.
The last few days have seen a constant shift to the red zone. This, alongside the skew data, validates investors’ fears. The negative energy surrounding regulations will further exacerbate the situation, and more crypto platforms will be scrutinized.
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