Crypto Industry News:
The European Securities and Markets Authority, the European Union's financial markets regulator, has published an article on decentralized finance (DeFi) and the risks it poses to the EU market.
In a 22-page report, ESMA praises the promised benefits of DeFi, such as greater financial inclusion, the development of innovative financial products, and increased speed, security and costs of financial transactions.
However, the article also highlighted the "significant risks" associated with DeFi. According to ESMA, the first is the liquidity risk associated with the highly speculative and volatile nature of many crypto assets. The body compares the 30-day volatility of Bitcoin and Ethereum to the Euro Stoxx 50 index, with the cryptocurrencies averaging 3.6 and 4.7 times the stock index.
ESMA does not believe that DeFi can avoid counterparty risk, even though it should theoretically be lower or non-existent due to smart contracts. However, these contracts are not immune to errors and flaws.
According to ESMA, DeFi is particularly susceptible to fraud and illegal activities because it lacks KYC protocols. Another important source of risk for users of decentralized finance is the lack of an identifiable responsible party and the lack of an appeals mechanism.
However, at present, DeFi and cryptocurrencies generally do not pose a "significant risk" to financial stability, the report said. This is due to their relatively small size and limited links between cryptocurrencies and traditional financial markets.
Technical Market Outlook:
The BTC/USD pair has broken out from the ascending channel on the H4 time frame chart and made another local low at the level of $26,520. The intraday technical support seen at $27,157 was violated, so it will now act as the key short-term technical resistance level. The weak and negative momentum on the H4 time frame chart supports the short-term bearish outlook for BTC, however the market conditions are now extremely oversold on the H4 time frame chart. Any breakout lower would likely extend the down move on BTC towards the level of $26,031.
Weekly Pivot Points:
WR3 - $28,205
WR2 - $28,019
WR1 - $27,907
Weekly Pivot - $27,834
WS1 - $27,722
WS2 - $27,648
WS3 - $27,462
Trading Outlook:
The bulls broken above the gamechanging level located at $25,442, so now the mid-term outlook for BTC is bullish. The last pull-back has reached the 38% Fibonacci retracement and the market is ready to continue the up move. The next target for bulls is seen at the level of $32,350. As long as the level of 19,572 is not clearly violated, there is a chance for a long-term up trend to continue.
