How regulation affects the crypto price

[robbiearchibald10]

There’s been a lot of discussion around regulating crypto over the last couple of years, and strides have started being made. Keeping an eye on crypto news is a good idea for any trader, but news about regulations seems to be a pretty big one. So, how will new laws impact digital assets? Let’s take a look at how regulation affects the crypto price.

https://twitter.com/realDonaldTrump/status/1149472282584072192

The research
The introduction of new regulations drives down the price of Bitcoin and other cryptocurrencies, says new research.

According to a 2020 paper published in the journal Research in International Business and Finance, news of increased cryptoasset regulations tends to have a negative effect on the price of Bitcoin. The report looks into five news categories: anti-money laundering, exchange controls, issuance (securities) regulations, and state-backed cryptocurrencies - all of which seemingly drive prices down.

The report looked at 120 regulation news events, reported on by traditional media outlets like Reuters, BBC, Bloomberg, and the Financial Times. All of the events were reported on during 2017 and 2018, and belonged to at least one of the five categories.

The study’s authors estimate that the effect of each regulatory event impacts the price of around 300 cryptocurrencies - mainly of Bitcoin, just because of its huge market cap. They discovered that four out of the five events had a significant effect on prices, with anti-money laundering and issuance regulation being the most significant. However, reports of risk concerns from government don’t seem to impact the prices.

Exchange regulations have caused prices to drop by around 1.78%. News of harsh AML regulations caused a dip of 2.46%, but the largest was issuance regulations, which caused prices to drop by an average of 2.67%.

Contrastingly, news of the relaxation of a specific regulatory policy is seen as good news by the markets and is generally followed by an appreciation in cryptocurrency value. Take President Xi Jinping’s October 2019 speech for example - Bitcoin’s price surged above $10,000 after the speech, a level it hadn’t reached for more than a month.

https://www.youtube.com/watch?v=a53YgjlGM2c

Why news about regulation?
Cryptocurrency holders generally value freedom above all. News of encroaching regulations of digital assets threatens the foundations of the entire cryptoasset industry. While regulations are meant to reduce risk and help wider adoption in the long run, early crypto holders often eschew government interference - and for good reason. Considering that the crypto industry is still in its early stages, we’ll have to see how it matures for us to gather the true impact of regulations on the market.

Overall, regulations are likely to drive mass adoption, and drive up prices in the long run. Still, it’s pretty clear that crypto holders aren’t happy about increased regulation. The findings of this study also have a pretty huge impact for investors, who should keep an eye out for regulatory news when trading Bitcoin and other crypto. Regulatory news could drive the price up or down, and knowing which way it’ll go is a huge boon.

Now that we’ve taken a look at how regulation affects the crypto price, you might be looking to trade. Check out marketplaces like Vertex.Market, for a world leading peer-to-peer trading experience which includes over 1000 tradable cryptocurrencies without the need of KYC and over 30 payment methods, including local and international bank transfers.

https://www.youtube.com/watch?v=Ay5EDAIeaj4

New regulations

We’re going to be seeing a lot more cryptoasset regulations in the future. The faster the industry advances, the sooner regulations will tighten. Still, we’ve seen how regulation affects the crypto price, and it’s not pretty. News of certain types of regulation drives down the crypto price, and others make it increase. Traders can be fickle - but it’s only natural that heightened regulation would make crypto stalwarts nervous. Cryptocurrency should be decentralized by nature, but governments and financial institutions are worried and are trying to gain some control. How they’ll continue to expand regulation remains to be seen, but the end result will probably turn the cryptoasset industry into something that it’s actively been trying to avoid. Either way, if you’re a trader, it’s probably best to keep a keen eye on regulatory news in the digital asset industry.

https://vertex.market/blog/how-regulation-affects-crypto-en

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[Gozie51]

I don't know the kind of regulation that you are referring to. Do you mean the type that is total, that reveals an independent investors identity even if the transaction won't go to an exchange but to a personal wallet or the type that an exchange can limit or monitor. I think that independent transaction regulation will be difficult to do .

[hugeblack]

I think that the article ignored the concept of regulation. Will regulation be linked to a specific country or is it an agreement between all countries of the world to accept cryptocurrencies?
As for the effect, it varies according to the concept of crypto and how it will be implemented. Judging it as the issue was black or white would be a mistake because the matter may lead to a rise or fall in the price, in contrast, but legal recognition makes it difficult for the price of cryptocurrencies to collapse to zero, and thus the opportunity to increase the price is more likely.

[alyssa85]

Exchange regulations have caused prices to drop by around 1.78%. News of harsh AML regulations caused a dip of 2.46%, but the largest was issuance regulations, which caused prices to drop by an average of 2.67%.

In other words it's made practically no difference, especially as the spread between buying and selling (bid-offer spread) is usually about 2% for most cryptocurrencies, especially the less liquid ones.

[BITCOIN4X]

~snip

Legality in certain countries will cause people to start believing to be involved in digital currencies. It is clear that this will strengthen the foundation of cryptocurrency because there are many people who use it for various purposes.

I am just not sure because the legality of cryptocurrency in a country can increase its price globally, its just that I support that the recognition and legality of cryptocurrency can have a positive effect on economic growth and also the adoption of cryptocurrency.

[Captain Corporate]

 Its always a trouble whenever a nation wants to add more regulations, with less regulations its easier to do whatever you want without worrying about laws, my nation doesn't have any laws for crypto for example and we can do whatever we want and as long as the money coming in or out of our bank accounts are not huge we won't have any trouble at all. Its such a new concept that I actually talked with many accountants about what I can do regarding my bitcoins and they couldn't find me any answers because there is no example to follow. Deregulating bitcoin in bigger nations would allow us to have much better prices for all coins, however we can't convince governments to deregulate neither, we are already underregulated compared to other financial comoddities.

[Twentyonepaylots]

I don't know the kind of regulation that you are referring to. Do you mean the type that is total, that reveals an independent investors identity even if the transaction won't go to an exchange but to a personal wallet or the type that an exchange can limit or monitor. I think that independent transaction regulation will be difficult to do .

I guess he's referring to the first one. And that being said, it would've caused minimal changes to bitcoin's amount even if multiple countries put up regulations on bitcoin. Even if bitcoin transactions get tracked, it's still decentralized, making it harder for countries and governments to tax it accordingly. Honestly I don't mind bitcoin being put up for regulation. It's a small price to pay for being legalized and approved.

[TrevorS]

By and large, now nothing is happening within the framework of regulation that could at least somehow affect the prices of cryptocurrencies.
I believe that there are only two options when this can happen. This is either the approval of cryptocurrencies by regulators to one degree or another, or their prohibition.
These things are really able to influence the price and provoke players to action.

[rizkyalhabsy]

it depends what regulation is it.i just think when something become valuable,goverment always take it serious,try to control all of it.And bitcoin cant be controlled like that.
"Goverment has no chance against P2P"

[bitbunnny]

To my opinion regulation could affect Bitcoin price in positive way. Regulation that would define position, nature and status of cryptocurrencies, how it should be legaly theated, what is illegal and what isn't, how users are protected, how to include cryptocurrencies into financial and economy system that is all that could help for better adoprion, especialy by businesses. At the end that would also affect the price.
Problem is that many interprete regulation only in negative way and as a government attempt of centralization and surveillance of cryptocurrencies which to my opinion isn't true.

[sheenshane]

Actually you have started a good discussion here but why you are only given a copy/paste content from the article and you only give youtube link as your references? The full content was copy/pasted from here. https://cryptobriefing.com/regulations-drive-down-bitcoin-prices-research/. Hmm. it might ruin your account now and that is your big mistake because we have a rule here.

Forum rule number 33.

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33. Posting plagiarized content is not allowed.[e]

Archive:

[Assface16678]

By and large, now nothing is happening within the framework of regulation that could at least somehow affect the prices of cryptocurrencies.
I believe that there are only two options when this can happen. This is either the approval of cryptocurrencies by regulators to one degree or another, or their prohibition.
These things are really able to influence the price and provoke players to action.

We all now that the bitcoin and the cryptocurrency are one of the most controversial today because some people looking forward into the future that we are now going to digitally convert all of the things even the transactions we made like paying bills, buying kinds of stuff and paying for services but still it depends on the country if they accept this changes because today yet there are few countries does not want to adopt with the use of transitions. That was true; there are only two choices that will happen if they will choose the method of crypto to their country or still stick to the traditional way of transaction.

[Linkkoin]

I think that the article ignored the concept of regulation. Will regulation be linked to a specific country or is it an agreement between all countries of the world to accept cryptocurrencies?
As for the effect, it varies according to the concept of crypto and how it will be implemented. Judging it as the issue was black or white would be a mistake because the matter may lead to a rise or fall in the price, in contrast, but legal recognition makes it difficult for the price of cryptocurrencies to collapse to zero, and thus the opportunity to increase the price is more likely.

FATF recommendations are of global application. And it can have an impact leading to the situation, where small individual traders (or people who wanted to buy crypto as a way of paying for something) will have to go for lengthy and very detailed verification procedure - and lose their interest in the crypto as such. On the same moment, institutional investors focused upon speculation will be more interested (as for them regulations means more predictability and trust in the whole environment).
As a result, the crypto price can become more stable (banks trading bots), and for individuals who do not trade with leverage, it may not be interesting that much anymore.

[asus09]

Most effective effect for bitcoin after regulating with some country because many people will use bitcoin as investing and trading where can make bitcoin most popularity digital currency in the world, many people know with bitcoin and they trust how bitcoin become best solution investing assets at the future by giving bigger profit every time.

[travwill]

it depends what regulation is it.i just think when something become valuable,goverment always take it serious,try to control all of it.And bitcoin cant be controlled like that.
"Goverment has no chance against P2P"

That's exactly what they understand. They will not be able to ban or track after the ban all transactions and moving coins.
Therefore, the state will never prohibit cryptocurrency without a backup plan, or full control. We have nothing to fear, but the state will try to tax everything.

[Yamifoud]

No, it is not all about crypto regulation but it is all about how a certain person imposed his/her power. His governing power has taken seriously and his pronouncements simply create FOMO which triggers investors/traders/holders to dump their coins.
I understand how SEC regulations affect the market and push someone into a limit. However, if we trusted crypto since before, we are no longer been bothered even SEC will impose strict regulations towards crypto.

[criza]

it depends what regulation is it.i just think when something become valuable,goverment always take it serious,try to control all of it.And bitcoin cant be controlled like that.
"Goverment has no chance against P2P"

But, what if somehow the Government got a hold and somehow sble to regulate the entire crypto currency system? What would happen? For me, I think it would be a disaster because, somehow it would lose its main purpose; its censorship. This would cause a lot of trouble for the crypto currency users.

[Wexnident]

But wouldn't local trading escape the confines of regulations made by countries? And it's not like they could label those illegal, since in the first place, Bitcoin was free for all to use. Of course, this could possibly bring it down, since a regulated coin is never a wanted one, but the regulations imposed would actually be filled with limitations since again, Bitcoin is free for all to use. They can't really grasp hold of it at any point in time, that is unless they are willing to invest big amounts of money to buy out Bitcoin (Which isn't really going to help in the long term).

[CryptoBry]

Regulations will be here to stay and in 2020 there will be more that we should expect as more and more government bodies are now recognizing the potential of cryptocurrency in terms of contributing something to the global economy. As far as "not good" effects of regulations can be concerned, in my view, all of these are just short-term. With regulations, there is now that legitimacy issue being addressed and with all the scams and hacks going on with this industry getting the trust and confidence of the people may not be that easy, much more if there will be no regulations in place. Years from now, it would be the good side of regulations that can be highlighted, and that can be the time when this industry will be showing more maturity. For now, let's brace for some side-effects of the regulations imposed by governing bodies and try to adopt into it as going against them can be futile (of course, if we are living in a crypto island then that can be fine).

[julius caesar]

They cannot regulate the price of it since no one can control the cryptocurrency. All they can do is to possibly control the market price by just hoarding it so that the volume in the current exchange will not go up. We all know that the higher the volume, the higher the possibility that the price of it will go down.