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This post is a translation of the weekly cryptocurrency analysis by Crypto Lab, a wholly owned subsidiary of Monex Group (Tokyo, Japan). Monex is the parent of TradeStation Group.
BTC dropped quickly to $7,000 on May 17, only to rebound back above $8,000. Now prices have encountered some resistance at the top of that range.
Legislative progress in Japan was one positive factor. Another catalyst was the BSV rally associated with speculation of the U.S. government recognizing Craig Wright as Satoshi Nakamoto. There were also negatives like a delay in Van Eck’s exchange-traded fund (ETF).
The recent gains in BTC spurred interest and account growth at Japanese exchanges. The buzz has spread to the U.S. amid the potential for a virtual-currency ETF. There have been concerns about Tether and Bitfiniex, but odds don’t seem to favor a major price collapse.
Short-term price adjustments, with profit-taking and consolidation, are now likely after two months of big moves. The May 17 low of $6,600 is the main level on our radar. On a shorter time frame, we’re eyeing $7,300 as support.
The Nikkei Shimbun reported on May 21 that the revised bill of the Financial Instruments and Exchange Act and the Fund Settlement Act moved from Japan’s (lower) House of Representatives to the (upper) House of Councillors. The bills include measures to strengthen regulations on virtual-currency exchange companies. They establish the term “cryptographic asset” and address margin-based trading.
Legislators are expected to approve the laws. Once they do, virtual-currency margin transactions will be regulated under the same Financial Instruments and Exchange Act covering foreign exchange. Exchanges will be required to hold “matching funds (same / equal amount of cryptographic assets)” for the virtual currency stored in the hot wallet.
On May 18, Enjin Coin (ENJ) announced a test version of its blockchain software development kit (SDK) for Java. The technology will facilitate developing blockchain games using Java.
ENJ is a project in Singapore that aims to build an online game ecosystem based on the cryptocurrency Ethereuim (ETH). Enjin lets users trade encrypted items held by an address with other users by linking with ETH’s wallet address inside the game.
ENJ has been focused on Korea, with prices spiking 700 percent in the single month of March.
On May 21, the stablecoin Tether (USDT) admitted in court that some of the reserve had been invested in BTC. “Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin,” said David Miller, Bitfinex’s lawyer, according to
a report in The Block.
In the case, New York State Supreme Court judge Joel M. Cohen took issue with tether being invested in BTC. He said its link to a volatile cryptocurrency seemed to run against USDT’s goal of stability.
Tether admitted on the April 30 that U.S. dollars backed only three-quarters of its tokens. This revelation potentially hurts USDT’s credibility because it was intended to serve as a stablecoin linked to the greenback.
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