10 June 2022
US legislation: One small step for crypto, one giant leap for traders
US legislation on crypto
A comprehensive bill was filed on 7 June, referred to as the Lummis legislation, which wants to define which coins are commodities, which are securities, and which are stable coins.
The bill will also define consumer protection, privacy, taxation, and several other components for a regulatory framework. Some crypto traders feel the legitimacy might poison the crypto space, but not all regulation is bad regulation. After all, there are almost 20,000 coins out there, and nobody can possibly have the time to follow all of them. Legitimacy will draw a clear line defining which coins are trusted, and which are not.
The legislation plans to integrate crypto into the US financial system, making it a trusted asset backed by the government. Spearheading the bill is Bitcoin proponent Senator Cynthia Lummis who believes that weeding out the opportunistic coins is a must.
“Burn it to the ground, bitcoin will be the phoenix that rises from this.”
Senator Cynthia Lummis
Lummis is supported by 22-year Wall Street veteran and blockchain consultant, Caitlyn Long, who adds financial expertise to the bill. DeFi proponent and digital entrepreneur Michael Saylor along with US Politician Ted Cruz are also on the legislation panel, both heavily in favor of Bitcoin global adoption.
Crypto winter: fundamental forecasting
Currently, all coins are at a low after a heavy overselling throughout 2022, and when New York announced the curbing of the state’s carbon footprint by cracking down on crypto mining, crypto sentiment tumbled further in the eyes of the media.
Crypto traders have been waiting patiently for the next price catalyst to end the winter, and the idea that the US Government might legitimize cryptocurrencies could stir interest in the crypto space once again. Even though legitimacy could mean regulatory restrictions, the news can be perceived as bullish.
Nearly every cryptocurrency is set to be defined as a commodity, according to the 70-page legislation. If crypto does get government categorization, the crypto space will likely react energetically.
What does this mean for altcoins?
As mentioned, the bill is known to be very Bitcoin friendly, and the impact on altcoins is still difficult to forecast. Historically, when the BTC price moves, the main altcoins usually experience a price echo.
Of course, this might be the ideal circumstance to see coin price divergence as altcoin holders run back to grandfather Bitcoin in anticipation of a rally. Either way, it’s definitely worth keeping a closer eye on the crypto space in the coming days and weeks.
Bitcoin forecasting: technically speaking
Crypto forecasters commonly use the Moving Average Convergence Divergence (MACD). Whenever the two moving averages cross, traders generally expect to see a trend reversal, which is happening, but there are more technical indicators to support the fundamental assumption.
According to Market Analyst Omar Alaa, the chart at the time of writing shows the price is moving in the support area along with an inverted hammer pattern, which may indicate potential upward movement. Also, the RSI Shows reversal signs from the bottom.
When both fundamental and technical analysis are in agreement, it’s always worth further investigation.
The bottom line
Bitcoin and crypto prices tend to react in waves that are often triggered by news events or financial announcements, and this one is a big one. Legislation to legitimize crypto and eventually add it to the US economy is a big step forward in the global adoption of digital currencies. Keep your finger on the crypto pulse, make your own research, and be ready to trade accordingly. As this story unfolds, we’ll be at the ready to update you.