After bitcoin's most important bullish rally, there was disturbing news that the market may take with a degree of skepticism. Following India and the US, the G20 countries decided to create a set of common rules to regulate the cryptocurrency market. The decision to develop and approve common mechanisms for controlling the activities of digital asset market participants was unanimously adopted by representatives of the G20.
The news involves the creation of a regulatory framework that governments will use as a guideline to regulate cryptocurrencies in local markets. There is no other concrete data on the document, but it is likely that there will be a local aggravation of the correction, as the market reaction is always impulsive, and the regulation is always perceived negatively. This news can hardly impact the strength of the long-term uptrend, but it is not the only announcement about the upcoming tightening of crypto market regulation.
The main cause for concern is US Treasury Secretary Janet Yellen's meeting with representatives of the Senate Banking Committee. The official assured that the legal standards of anti-money laundering and anti-financial crime agencies are appropriate for regulating cryptocurrency companies that do not conduct transactions with clients' digital assets. Considering how the market reacted to the adoption of the law that equated cryptocurrency exchanges with brokers, we should expect a similar reaction, as the news is similar in context.
I assume that in the longer term, the growing control of the cryptocurrency industry may be an important argument in expanding the institutional and personal opportunities of bitcoin and the cryptocurrency market. This conclusion can be drawn from the SEC's position and the words of the regulator's CEO Gary Gansler, who sees the prospects of the digital asset industry but believes investors are unprotected due to the lack of clear regulation. Even though the regulator has only protected most investors from tens of thousands of percent profit in 10 years of lack of legal control over bitcoin, regulations are necessary.
First of all, it will significantly expand the investment opportunities of bitcoin and launch the eagerly awaited spot ETF. One month after the launch of the futures counterpart, we can see that the market understands that the potential of these marketplaces is strikingly different. In addition, legislative regulation of the cryptocurrency market will greatly accelerate the adoption of digital assets as financial instruments and means of payment.
Despite the obvious bright sides, the market reacted negatively to the news, which as of 1 p.m. had led to a 2% drop in total market capitalization. Bitcoin has fallen to $56,600 amid the negative news, which is a worrying sign. The asset is still unable to break out of the trading range of $53,000-$59,700, where it has been hovering for two weeks. The cryptocurrency needs to confidently stay above the lower boundary of the current trading range. Bitcoin once again rebounded from $55,700 and recovered to the middle of the area. I assume that now the market could try to make an impulse breakthrough of $60,000 when BTC starts to approach the upper boundary of the range.
On the hourly chart, everything is going to break the lower boundary, as bitcoin formed the triangle pattern. At the same time, technical indicators are declining: MACD has dipped below zero and the stochastic oscillator is forming a bearish cross, which indicates a weakening of the upward momentum. Taking this into account, we may see either another retest of $55,700, which is likely to end with a breakdown and further rebound, or the market will immediately start a massive buyback and the price may break through $60,000 during bullish momentum.
