On Tuesday last week, bitcoin reached a weekly high of $11,766. It then started a new downward price action that saw it touch $9,433 which was its lowest level since February,15.
The downward price action came during a calm week in the cryptocurrencies market. There was no major news from regulators and there was no hack to exchanges that was reported.
Instead, positive news came from South Korea, a country that was seen as being dovish on cryptocurrencies. Last month, the country’s finance minister announced that the country would move to ban cryptocurrencies exchanges and ICOs, following in the footsteps of China. Last week, a government minister suggested that the country would move to accept and even support the industry.
During the same week, more companies announced their intentions to test blockchain technology. As we wrote last week, remittance companies like MoneyGram and Western Union were testing how to use Ripple in remittances. Last week too, gaming company, Ubisoft – known for its titles like Assassins Creed and Farcry announced that it would test the technology. There is a likelihood that more companies will test this technology mostly because of FOMO (Fear Of Missing Out).
From the regulatory risk standpoint, we expect other countries to wait for the proposed actions from the United States. As you recall, a few weeks ago, the top regulators promised law makers that new regulations to govern cryptocurrencies will be out. The actions from South Korea that followed were possibly in response to the US actions. Will China also come back to the table? Possibly.
In the US, the state of Georgia announced that it would consider using bitcoin for tax payments.
During the weekend, the Nikkei Asian Review reported that North Korea was returning to cyberwarfare. This comes as the country continues to struggle with the heavy sanctions imposed since Donald Trump took the reigns. On Friday, his administration continued this trend by imposing more hefty sanctions.
According to the article by Asian Review, there was a likelihood that the new direction by Kim Jong Un could be more positive for the cryptocurrencies industry. As you recall, in the past, the country has carried out some large hacks including the Sony Hack. Early this month, Bloomberg reported that the country had hundreds of people specialized in hacking.
By doing large scale hacking, the country will be able to use bitcoin and other cryptocurrencies to do large scale transactions.
From a technical standpoint, this week, bitcoin could see some upward momentum. As shown below, using the one-month chart, the currency seems to be in the fourth wave of an impulse Elliot Wave. At this stage, there is a high chance that the currency could start another bullish trend.