Regulation is Good for BTC Price Action
Cryptocurrency Regulation
Modified Date:- Published Date:-Categories: Bitcoins
Regulationis Good for BTC Price Action
Bitcoin-focused financialservices firm NewYork Digital Investment Group (NYDIG) has released a report in whichit found that increased regulatory clarity was beneficial to the price andadoption of Bitcoin.
The report notes that regulatory clarity is often cited as asignificant hurdle for institutional adoption, however NYDIG has maintained theopposite view, believing that adoption would grow once investors “know the rulesof the road”.
To test its thesis, the company looked at historical eventsrelated to digitalasset regulation across a number of international jurisdictions.These events encompass matters including tax, accounting, payment, mining,the legal status of exchanges and other service providers, or even the legalityof cryptoassets themselves.
It then tracked the subsequent price returns of bitcoin inthe following day, week, month, six months and year, with a focus on thelonger-term windows. The returns were then evaluated in both absolute andrelative (ie, average) terms.
The report noted that, other than China, which hasimplemented countless bans on mining and digital asset ownership, most otherjurisdictions were “supportive but with guardrails”.
Asidefrom China, where regulations had a deleterious impact on price, acrossall other jurisdictions the study offered clear evidence that on both anabsolute basis and relative basis, increased regulatory clarity was favourablefor the price of bitcoin. This was particularly the case across six- and12-month timeframes.
The implication then is that regulatory clarity, despite itsflaws, is appreciated by investors. Noting that retail only accounts for aquarter of volume, it’s little surprise that regulation brings with it positiveprice action across longer timeframes.
It seems that the overall opinion of people in America is that regulation will have a positive impact on cryptocurrency prices. In China, they have made it illegal to own or trade digital assets or ICOs, which could also lead to increased demand for USD BTC by new investors who no longer have access to these markets.