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Bitcoin and Ethereum prices rise as regulatory actions create investor confidence boost

29.06.2021

Perhaps it is inevitable that the cryptocurrency markets would receive the regulatory action that has made huge news over the past two days as a positive, and that the values of the two most popular cryptocurrencies, Bitcoin and Ethereum, would begin to rise.

That is exactly what happened today, as Bitcoin gained ground against the US dollar and was trading this morning (UK time) 1.6% higher compared with the previous day, trading at $35,249.

Ethereum made even higher gains, with today’s value 8% higher than previously, standing at $2,158 in the early hours of the morning.

The regulatory clampdown by the Chinese government, which was inevitable, had knocked the price of almost all cryptocurrencies over the past few weeks. The enforcement which began in May this year centered on both the trading and mining of cryptocurrencies as well as issuing an instruction to the country’s financial giants they would have to stop dealing in crypto.

Since then, we’ve seen the top three mining regions in China start making moves against miners, and the government reportedly met with major banks again last week to reiterate that banks are not allowed be involved with cryptocurrency transactions.

Regardless of this action which created a theory that mining would become less intensive with the demise of some of the huge rigs in China that were using free electricity and mining on a massive scale, demand remains very strong.

The rise in prices also demonstrates that investors and traders are unfazed by Britain’s financial markets regulatory authority, the FCA, having issued a warning to consumers that Binance, one of the world’s largest bitcoin exchanges is not permitted to undertake regulated activities in the country, and subsequently ordered it to cease its activities with customers in the United Kingdom.

According to many economists, confidence in the value of cryptocurrency is up because investors view the increasing regulatory clampdowns on unlicensed exchanges as a sign that the market is maturing and that companies will have to ensure that they operate under regulatory licenses, which in turn will likely lead to an increased level of trust with cryptocurrency traders and customers of exchanges.

This is very much in line with Coinmetro’s ethos, in that Coinmetro began its operations under a fully licensed regulatory remit, and has always been a regulated cryptocurrency exchange. Since then, the company has gained an E-Money Institutions (EMI) license, and intends to become a regulated MTF in the near future giving it status as a challenger bank which can offer fully licensed payment solutions, e-wallet storage, cryptocurrency exchange services and multi-lateral trading facility functionality.

On a regional basis, the concentration by the cryptocurrency community on regulation is gaining pace.

In India, for example, gold has long been the commodity of choice. It is a tangible asset that has a global value and has been viewed in India for decades as a means of securing assets in times of economic strife, inflation, government related issues and as a means of keeping value in a country in which the economic climate is as diverse as the nation itself.

Nowadays, Indian investors are moving from gold into cryptocurrency, digital asset-related investment in India is now up to approximately $40 billion within the last 12 months, a figure which absolutely trounces that of the previous 12 months and represents a growth that has taken place alongside increasing controls by global regulators.

Over the course of these last few months, speculators have been very astute in gauging the market. When the Elon Musk’s Tweet-driven flash crash happened in May, investors pragmatically and calmly bought in at low prices, and the value moved up again as per the general sentiment.

This generally does not happen with traditional financial instruments.

Therefore, the investing community’s sentiment is a worthwhile measure of confidence, and given the regulatory interest that is now surrounding cryptocurrency and is resulting in action rather than just words, prices are up, meaning that the majority of investors clearly see this as a good thing, which it certainly is.