The bear market in cryptocurrencies is fading and the suggestion of new regulations in various countries is no longer powerful enough to maintain selling pressure.
One strategy traders have used to find the bottom has been monitoring the flow of negative and positive news. When you see that bad news is not impacting the price any more, that’s usually the sign that there is no more blood left in the trade and the only side going to pop is the upside.
However, some conservative investors want to see positive headlines before they jump back in. Both approaches have their own merits and depending on the investor’s appetite, neither supercedes the other.
The news flow in the crypto market is changing, and there are more positive headlines than the negative ones . The question is: which crypto is leading the way? The two names which come to mind are Ripple and Bitcoin, which have both made strong comebacks.
The below chart from cryptocompare shows the percentage gain/loss for Bitcoin and Ripple for the last three months
Recent weeks have seen dramatic news emerge about Ripple. Earlier this month, Santander announced that their upcoming mobile payment app will use Ripple’s xCurrent tech (not XRP token, we should note) to service their clients in Spain, Brazil, the UK and Poland.
Elsewhere, the UAE exchange announced it has signed with Ripple to use its RippleNet product to make cross-border payments. The UAE wants to become paperless by 2021, and its government has explicitly stated plans to adopt blockchain technology in every aspect of business and government affairs.
Most importantly, Saudi Arabia’s Central Bank has announced it is going to work with Ripple on a pilot program to assist the country’s banks in trying the technology. Saudi Arabia, under the energetic new leadership of Mohammad bin Salman, is undergoing a sweeping package of economic reforms at present. These changes have put technology at the centre of the country’s growth strategy, with blockchain likely to be crucial to these plans.
That said, Saudi Arabia is not the first central bank to toy with the idea of Ripple’s technology. The Bank of England began a trial with Ripple last year. The BOE has not made its position clear about adopting any specific technology but companies such as Tibado, which offer fiat-denominated digital coins, have also had consultations with the bank. When I met with Tim Jones, from Tibado, his view was that the adoption of digital currency is a must for central banks.
What about Bitcoin? For all the drama of 2018, the core questions of volatility and differing legal statuses around the world remain. Confusion persists among investors if this is a currency, commodity, a medium to store value or something which could also be labelled as a reserve currency.
The positive news for Bitcoin is that Moody’s, a rating agency, doesn’t think that Bitcoin’s future listing would hurt CME’s risk rating. The key takeaway is that the Bitcoin’s volatility would have been the biggest threat for the CME. However, the application of higher margin requirements by the CME, in combination with other measures, kept things in check. One could say these measures changed the nature of the Bitcoin’s volatility — we can’t know for sure if this is permanent, but we aren’t seeing the kind of moves that we used to.
The European Central Bank’s governor has also said there is nothing stopping the European central bank to hold a position in bitcoin as the Bitcoin futures are listed by US exchanges.
These positive stories, looked at together, seem to have stemmed the tide in crypto markets: but have they done so permanently?