- Summary:
- The US’s approach to cryptocurrency may have influenced the prices of Bitcoin and Ethereum due to stricter and harsher crypto regulations.
Table of Contents
- Stricter crypto regulations influence prices
- BNB price low due to leadership challenges
- Investors fear stricter regulation
- What would happen to crypto if fully regulated?
- Crypto has the potential to change the world
- What should investors expect from regulators?
- What do you think about the current crypto regulatory landscape?
Cryptocurrency regulation is widely demanded by investors and crypto users, as the lack of it not only interferes with their access to successful coins but also exposes them to risks from the government’s vehemence and inconsistency in accepting it.
While some countries have banned cryptocurrency completely, most are skeptical about allowing people to use it freely. On the contrary, countries like El Salvador welcome crypto with open arms, making Bitcoin legal tender to ease inflation and escape from the dollar dependency.
But lately, governments and official institutions focused increasingly on regulating digital assets due to high demand. For example, in the US, the SEC approved BTC and ETH exchange-traded funds, so their prices boomed since investors were free to invest in them. If more cryptocurrencies were approved, such as the Binance Coin, it would be easier to make a Bitcoin price prediction 2025 since there wouldn’t be any uncertainty around it. Unfortunately, the current reluctance to accept a larger capacity of cryptocurrencies affects their prices.
Stricter crypto regulations influence prices
The US’s approach to cryptocurrency may have influenced the prices of Bitcoin and Ethereum due to stricter and harsher regulations regarding crypto taxes and exchanges. On the other hand, a few government bills have also approved crypto laws in light of this year’s elections.
For example, a recent bill on crypto seems to be against CBDCs and non-compliant stablecoins, such as Tether. Although the asset is pegged to the US dollar and is one of the safest current cryptocurrencies, this bill would lower its dominance on the market.
BNB price low due to leadership challenges
Binance has been experiencing difficulties recently regarding leadership and shareholders, which has affected trading volumes worldwide. Several regulatory issues in the US and Nigeria and additional technical challenges influenced the price to decline considerably recently due to an ascending triangle after an all-time high.
Even the BNB Smart Chain is seeing less activity than before, with users interacting scarcely with the network. It may be that crypto users are fleeing towards other networks, such as Ethereum or Solana, where leadership is better established, and the only issues there are linked with scalability and network fees.
Investors fear stricter regulation
Most investors cease or slow down their cryptocurrency activities when stricter regulations arise. Although more regulation would make the market efficient, governments chose a rigid approach to leveraging them, making investors fearful, and lowering the greed from the Fear and Greed Index.
The index captures the market momentum, allowing users to get a glimpse of the general sentiment over investing and trading at one point or another. When the tool indicates investors are fearful, users should leverage their buying opportunity, but when individuals are greedy, it’s best to wait for a better investment opportunity. The Fear and Greed index offers valuable information based on market volatility, momentum, social media, and surveys. However, the dominance of a particular coin and changing trends are essential factors to consider.
What would happen to crypto if fully regulated?
Assuming how crypto would perform after government regulation is quite challenging, as it doesn’t act like fiat money. Still, we can identify a few scenarios based on the current data and trends. Ideally, crypto would perform better following proper laws because there would be less risk revolving around coins, so investors would be willing to improve their strategies to generate more income.
On the other hand, if it’s restricted, regulation could significantly hinder investments and trading. Considering how difficult it is to regulate these digital assets due to different financial labels, governments might impose stricter laws to make things more straightforward.
If we look at what happened with BTC ETFs, we can see how regulation can lead to a surge in trading, but it doesn’t mean it will happen to any assets. NFTs, for example, will have to wait until regulation due to their high volatility and stealth risks, while AI-based cryptocurrencies, which are pretty recent on the market, will have to undergo the changing AI regulation.
Crypto has the potential to change the world
Despite difficulties and controversies, cryptocurrency and blockchain are valuable tools that will help countries emerge into the next technological era, where Web3 networks will rule the internet. The metaverse, smart contracts, and redefined data ownership will become mainstream. The Web3 world will bring decentralization and transparency into regular databases, which are currently lacking.
Still, Web3 challenges are considerable, especially considering the complexity of introducing them to our traditional systems. At the same time, the security risks and technology requirements for emerging into Web3 are significantly difficult to access. However, cryptocurrency and blockchain are a few steps away from the new internet generation.
What should investors expect from regulators?
According to previous and current crypto bills, most governments seem skeptical about their safety and use cases. The SEC has already stated that most cryptocurrencies have no real value, which is why it took so long to regulate Bitcoin, the first digital asset based on cryptography.
Therefore, at least for now, investors should forecast a similar movement toward cryptocurrency despite supposed new regulations and openness. Although El Salvador made Bitcoin legal tender, this action has had significant repercussions, as the economy wasn’t ready for such a technological leap.
On the other hand, as cryptocurrency spreads worldwide and helps communities access financial services, we should see an improvement in the following years regarding the use and acceptance of any type of crypto, not only Bitcoin and Ethereum. Therefore, investors should approach a long-term investment strategy to increase their chances of significant income and safe trading.
What do you think about the current crypto regulatory landscape?
Cryptocurrency and blockchain are emerging technologies with a massive potential to change the world, but governments are doubtful of their usage since their prices fluctuate significantly. However, the lack of regulation and uncertainty around the market influences prices. We can see the link in the BNB coin, whose value decreased considerably in light of current regulations and leadership challenges.