WEEKLY CRYPTOCURRENCIES OUTLOOK: THE CAUTIOUS TRADE CONTINUES
In the past week, bitcoin continued its slow climb, reaching a weekly high of $11,700 on Friday. During the week, ethereum lost about 50 basis point while Ripple gained by 2.34%.
During the week, several blockchain-related news was reported. First, in the United States, Overstock announced that it was under investigation by the Securities and Exchange Commission (SEC). For starters, Overstock is a $1.5 billion e-commerce company and one that is very pro-blockchain. The investigation relates to the company’s subsidiary, tZero’s ICO conducted in December.
Another major news last week was the acquisition of Poloniex by a company called Circle which is backed by the likes of Goldman Sachs. Poloniex is one of the largest cryptocurrencies exchanges in the world. The transaction was valued at more than $400 million.
In addition, during the week, multiple people filed class action suits against Coinbase, the largest cryptocurrencies exchange in the world. One of the suits alleged that the employees of the exchange are involved in insider trading, which inflated the price of Bitcoin Cash (BCH). The other suit alleges that the company engages in unlawful business practices.
Last week’s drop by ethereum was as a result of increased competition in the development of decentralized applications (DAPP). Recently, traders have become concerned that new platforms like NEO and Stellar were likely to take market share from ethereum. Ethereum is the second largest cryptocurrency in the market with a valuation of more than $84 billion. The relatively new NEO and Stellar have a market capitalization of $7.84 bn respectively and $6.85 bn respectively.
Last week, Monero was among the biggest gainers, rising to above $375. Its market valuation rose to $362 while its market valuation rose to $5.75 billion. This rise could continue as traders anticipate a hard fork which will lead to a new Monero alteration called MoneroV. When this happens, Monero holders will receive 10 coins of MoneroV for each Monero token they own at the time of the split.
This week, the focus among cryptocurrencies traders is likely to be on central banks. On Tuesday, the Reserve Bank of Australia will complete its two-day meeting. This will be followed by a meeting by the Canadian Central Bank, European Central Bank and Bank of Japan. Traders will wait for the statements from the top central bankers on their plans for cryptocurrencies. Last week, Germany’s finance ministry suggested that they would not place any taxes on cryptocurrencies provided that users used them as a means of payment.
Unless there are major negative news on cryptos, the expectations are that they will continue to cautiously move higher. Bitcoin is likely to test the $12,000 level while ethereum is likely to test the $900 mark.
As we have seen in the past few weeks, traders have continued to get cautious about their trading. Recently, the US created a taskforce made of leaders in key agencies to help create regulations of the cryptocurrencies. In the short term, this was good for traders as it reduced the chances of a complete ban. However, since no one knows the full outcome, it presents risks to traders.