[2018-02-08] SEC, CFTC Breathe Life Into Floundering Crypto Market

[nickbelski]

Bitcoin and its crypto brethren received an unlikely lifeline from American trading regulators on Tuesday this week, which ended in a complete turnaround after a nasty market crash.

The Commodities and Future Trading Commission and the US Securities Exchange Commission held a highly anticipated hearing on Tuesday, focused on their stance towards cryptocurrencies, initial coin offerings and Blockchain technology.

The discourse came at a crucial juncture, as the overall cryptocurrency market endured a spiraling sell off which saw Bitcoin reach lows below $7,000, a figure not seen in over five months.

Industry experts and pundits took to social media platforms, posting updates from the hearing which saw CFTC Chair Christopher Giancarlo and SEC Chair Jay Clayton make some highly influential statements about the current stance towards the overall cryptocurrency and Blockchain space.

With a prevailing sentiment of fear, uncertainty and doubt, a negative stance from the two bodies that hold the future of mainstream cryptocurrency trade could have been as good as a death knell.

But both bodies unveiled balanced and positive sentiments towards cryptocurrencies and Blockchain technology.

Giancarlo delivered an upbeat address saying “if there was no Bitcoin, there would be no distributed ledger technology,”  when he was asked about the value of Bitcoin.

He also made it clear in his written testimony that cryptocurrencies are here to say and that regulation needs to nurture the sector while protecting investors.

“Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response. The evolution of these assets, their volatility, and the interest they attract from a rising global millennial population demand serious examination.”.

Clayton echoed the sentiments of the CFTC chair, but he also produced a discourse that gave credit to the cryptocurrency industry for adding a new paradigm to the financial system:

“Distributed ledger and other emerging technologies have the potential to further influence and improve the capital markets and the financial services industry.”

Clayton also hammered home the importance of fair regulatory frameworks that will create an environment that benefits all parties involved.

“Said simply, we should embrace the pursuit of technological advancement, as well as new and innovative techniques for capital raising, but not at the expense of the principles undermining our well-founded and proven approach to protecting investors and markets.”

Source: https://cointelegraph.com/news/sec-cftc-breathe-life-into-floundering-crypto-market

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[CryptoBry]

I agree. Had it been a negative-laden hearing, Bitcoin might have experienced a big dive on its price after having the big dip in the past many weeks. Bitcoin price right now is still struggling and is already looking for a comeback but it needs some good impetus so that the market can show some confidence on its future. I am then hoping that the hearing provided us the kind of attitude and sentiment that the whole government of USA will be having in the coming months and years. USA has a lot to gain if it will soon formally recognized Bitcoin either as currency or even as an asset. Together with Japan, these two countries can be enough to push Bitcoin up and will give the whole cryptocurrency movement a new blood to refresh its outlook.

[BitHodler]

I honestly didn't expect much negativity to come from this, but I was fairly surprised by how 'friendly' the end result of this hearing turned out to be. I am all in favor of fair regulations suiting all involved parties.

We just have to accept that while we would like to see Bitcoin overthrow banks and the government, we actually need the government to cooperate and to regulate this market, because without that, Bitcoin wouldn't be where it is right now.

No regulations means no institutions and other professional parties, and that while their capital is needed to push this market far beyond its current levels. Bitcoin alone has the potential to become a $10 trillion dollar asset.

The more doors you open for them, the more valuable we'll see Bitcoin become.

[squatter]

Bitcoin and its crypto brethren received an unlikely lifeline from American trading regulators on Tuesday this week, which ended in a complete turnaround after a nasty market crash.

The Commodities and Future Trading Commission and the US Securities Exchange Commission held a highly anticipated hearing on Tuesday, focused on their stance towards cryptocurrencies, initial coin offerings and Blockchain technology.

The discourse came at a crucial juncture, as the overall cryptocurrency market endured a spiraling sell off which saw Bitcoin reach lows below $7,000, a figure not seen in over five months.

It's funny how the media always tries to explain price moves with news. They had a convenient catalyst here, but the market bottomed on Monday, way before the testimony took place. I don't think many people expected negative press, either. Both agency heads have been very cool-headed and hands-off regarding cryptocurrencies. ICOs are probably going to see more enforcement actions, though.

[Betwrong]

~
No regulations means no institutions and other professional parties, and that while their capital is needed to push this market far beyond its current levels. Bitcoin alone has the potential to become a $10 trillion dollar asset.
~

In case that happened 1 Bitcoin would cost roughly $500,000 and I absolutely agree with you that it is likely to happen at some point in the future. Just yesterday one of the Winklevoss twins, Cameron Winklevoss, told CNBC that Bitcoin is still a very under-appreciated asset and that it has the potential to rise 30-40 times from where it is now, which corresponds to $240,000 - $320,000 for 1 Bitcoin. It may take some time of course, maybe 5-10 years or even more, but I think we will come to that point eventually. Meanwhile according to predictions from some financial industry experts Bitcoin will hit $50,000 this year, which is IMO very likely.

[1Referee]

Meanwhile according to predictions from some financial industry experts Bitcoin will hit $50,000 this year, which is IMO very likely.

I wouldn't really pay too much attention to what 'experts' are saying. Bitcoin has to move forward in terms of being a tool allowing people to use it to make and take payments at ultra low cost. That ultra low cost is something Bitcoin can't provide anymore in its current form, which is why we badly need something to to increase the capacity and at the same time lower the fees. Segwit is a great first step if being utilized on a very large scale, but it's nothing more than a temporary 'solution' - it's just buying time. The real difference has to come from LN, which is what people are desperately waiting for. I honestly only see Bitcoin reach $50,000 (likely next year) if LN comes out of its testing phase completely, and be deemed safe enough to be used on a large scale. I am not teased by how certain services are already successfully testing LN. It's nothing more than a bullish indicator for what has to come later, and that's really it.

[Samarkand]

Meanwhile according to predictions from some financial industry experts Bitcoin will hit $50,000 this year, which is IMO very likely.

Bitcoin has to move forward in terms of being a tool allowing people to use it to make and take payments at ultra low cost. That ultra low cost is something Bitcoin can't provide anymore in its current form, ...

I would disagree with the bold part of your post.

The mempool contains less than 10k transactions right now and you can send literally
every amount of BTC for less than 0.1 $ in fees and get a confirmation within 1-2 blocks.
Try it out if you don´t believe me and send a transaction with a fee of 5 sat/byte or a comparable fee.
You will be surprised!

Bitcoin transactions haven´t been this cheap in a long time. Since the spam attacks
stopped and the mempool finally cleared transactions are fast again - and obviously as
secure as always.

[1Referee]

Try it out if you don´t believe me and send a transaction with a fee of 5 sat/byte or a comparable fee.

I surely believe you. However, the thing is that this is just a temporary occurrence, where from this point it's just waiting for the market to become more active again, and once that happens, we'll see the spam attacks show up as well. It's almost a guarantee that we will experience stacked mempools again with +200,000 unconfirmed transactions waiting to get into a block. If you look at the charts showing all the peaks of how many unconfirmed transactions there were at a given point, one thing becomes clear, and that's how we have been breaking new records in terms of the number of unconfirmed transactions. I honestly don't see this 'trend' come to an end for now, unless Core 0.16 starts stimulating the economical majority more than ever before to utilize Segwit.

[Samarkand]

...

I surely believe you. However, the thing is that this is just a temporary occurrence, where from this point it's just waiting for the market to become more active again, and once that happens, we'll see the spam attacks show up as well. It's almost a guarantee that we will experience stacked mempools again with +200,000 unconfirmed transactions waiting to get into a block. ...

It might very well be possible that you are right with this prediction.

On the other the only 2 spikes of the mempool above 200k unconfirmed transactions
where prior to the Bitcoin Cash launch (May - June 2017) and from December 2017 - January
2018. If we assume that the spam attacks were conducted by people, who wanted to
fabricate a need for bigger blocks the incentives are not as attractive anymore.

Bitcoin Cash clearly had no success in spite of a congested Bitcoin blockchain.
I´m not sure if they will start spamming the mempool again, because it didn´t
have the desired effect the first two times they did it.

[Betwrong]

Meanwhile according to predictions from some financial industry experts Bitcoin will hit $50,000 this year, which is IMO very likely.

Bitcoin has to move forward in terms of being a tool allowing people to use it to make and take payments at ultra low cost. That ultra low cost is something Bitcoin can't provide anymore in its current form, ...

I would disagree with the bold part of your post.

The mempool contains less than 10k transactions right now and you can send literally
every amount of BTC for less than 0.1 $ in fees and get a confirmation within 1-2 blocks.
Try it out if you don´t believe me and send a transaction with a fee of 5 sat/byte or a comparable fee.
You will be surprised!

Bitcoin transactions haven´t been this cheap in a long time. Since the spam attacks
stopped and the mempool finally cleared transactions are fast again - and obviously as
secure as always.

Just checked this up on https://bitcoinfees.earn.com/ and indeed the fees are surprisingly low today. Although they recommend 130 satoshis/byte for the fastest and cheapest transaction, you can pay as low as 5 sat/byte for your transaction to be confirmed within 3 hours.

I'm wondering whether it's possible to stop the spam attacks forever? And also whether the spam attacks were the main reason of the high transaction fees? But I'm not sure whether those questions belong to this topic. Sorry, if they don't.

[veleten]

...

I surely believe you. However, the thing is that this is just a temporary occurrence, where from this point it's just waiting for the market to become more active again, and once that happens, we'll see the spam attacks show up as well. It's almost a guarantee that we will experience stacked mempools again with +200,000 unconfirmed transactions waiting to get into a block. ...

It might very well be possible that you are right with this prediction.

On the other the only 2 spikes of the mempool above 200k unconfirmed transactions
where prior to the Bitcoin Cash launch (May - June 2017) and from December 2017 - January
2018. If we assume that the spam attacks were conducted by people, who wanted to
fabricate a need for bigger blocks the incentives are not as attractive anymore.

Bitcoin Cash clearly had no success in spite of a congested Bitcoin blockchain.
I´m not sure if they will start spamming the mempool again, because it didn´t
have the desired effect the first two times they did it.

Bitcoin Cash though has seen the least price drop of the top 10 cryptocurrency and even recoverd around 20-25%
probably due to the recent address format change
doesn't make it anything but an altcoin with a larger block size
in any case the hearing results are unexpectedly positive
it looks like the goverments are cooperating behond the scenes
with the news perfectly timed to prevent the further market crash from happening