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After the bullish remarks by the heads of U.S. agencies responsible for regulating markets revived confidence in the markets as Cryptocurrency markets reversed declines from the last couple of days. SEC Chairman Jay Clayton and CFTC Chairman Christopher Giancarlo, at a Congressional hearing discussed the scope and extent of regulation for cryptocurrencies. Both of them came out sounding mostly positive about the technology but indicated to the dangers of cryptocurrencies.
Bitcoin, shot up by more than $2,000 after the hearing after reaching a low of $5,873 during the week. At the time of writing, Bitcoin traded at $8,380, up 1.97% from its prices 24 hours ago. There was an increase in the trading volume of Bitcoin following the rise in the price, which fell after the price crashed.
There was an accompanied increase in other cryptocurrencies as well. Chinese coin NEO, amongst the top most-traded cryptocurrencies, rose by 31% after the announcement and is currently trading at $115.11.
Due to the revival in the cryptocurrency markets, the bulls are back in action. The head of APAC business development at Gatecoin, Thomas Glucksman in an interview with CNBC said that due to three factors namely: flow of institutional capital, increased regulatory recognition of exchanges and major technology development like Lightning Network, the cryptocurrency prices will reach new highs this year.
The full Senate hearing can be found in this link courtesy of Crypto Stream.
Equity Market and Cryptocurrency Market
With the recent slump in both cryptocurrencies and global equities, the question arises is there a correlation between the equity market and cryptocurrency market? Within few days of each other recently, both crashed and it is alluring to conclude that crypto markets are predecessors for the movement in the equity market. Analysts at Morgan Stanley commented on the same and said “The idea is that as institutional investors seek out the increasingly higher level of risk/return, that Bitcoin may represent the most risk/potentially highest return available, and hence could be evolving quickly into a primary barometer,” they wrote. “And our conversations with investors certainly give weight to that view.”
However, it was found by writers are Bloomberg that for the most part, the correlation between the equity markets and cryptocurrency markets has been below 0.4. As both markets surged, the correlation increased during late 2017.
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