• Globar regulators increasingly want to engage in the cryptocurrency industry.
  • BTC/USD settled at an important technical level, down from weekly high.
  • The poll of experts shows a marginal decrease in expectations in the short run.

The cryptocurrency market started the downside correction after a strong rally initiated by risk reversal play at the beginning of January and reinforced by various altcoin pumps, including  Craig Wright's saga and Ethereum Classic hard fork. At the time of writing, the total capitalization of all digital assets in circulation amounts to $226 billion; an average daily trading volume settled at $89 million, while Bitcoin's market share recovered to 66.4% after a short-lived dip below 66.0%.

Central banks caught up in a crypto frenzy

Global regulators are increasingly interested in the concept of digital money. The central banks of Hong Kong and Thailand announced a joined project that will help to facilitate payments between the countries. They are looking into the idea of Central Bank Digital Currency (CBDC) to reduce risks and ensure transparency of cross-border transactions. The project is known as Project Inthanon-LionRock.

Also, central banks of England, Canada, Japan, the Eurozone, Sweden, and Switzerland have also joined forces to study and share their knowledge and experience related to CBDC. They are particularly interested in the use cases for the new type of money, including cross-border interoperability and economical benefits. The group will be headed by the deputy governor of the Bank of England Sir Jon Cunliffe and co-chaired by Benoît Cœuré, a former ECB board member and head of the BIS innovation hub.

Notably, many officials emphasized that these initiatives came as a response to the emergence of digital currencies in a private sector. Thus, Facebook's Libra announced in 2019 and Telegram's Gram is viewed as a real threat to the existing monetary order.

In a separate development, the World Economic Forum (WEF) revealed  CBDC Policy‑Maker Toolkit, the first framework for central banks that are interested in creating their digital coins. A community of over 40 regulators and financial institutes have been working on this set of guidelines to help central banks evaluate, design and potentially deploy CBDC.

Meanwhile,  according to the latest report of the Bank of International Settlements, over 80% of central banks are considering the idea of CBDC, though only 10% of them have proceeded to real development or pilot projects. Moreover, an overwhelming majority of the surveyed institutes confirmed that
public use of cryptocurrencies for domestic or cross-border payments was not significant.

Bitcoin's market data

Bitcoin's market volatility recovered from the weekly low, though it is still below the recent high reached on January 15. Notably, the volatility rise was accompanied by the price decrease. At the current levels, over 70% of all Bitcoin addresses are in the money, while a break-even price by most of the accounts is around $12,000.

The first digital asset hit the highest level of 2020 at $9,184 and retreated below $8,300 before recovering towards $8,450 on Friday. Bitcoin was less volatile than some altcoins that experienced strong rallies during the week. As a result, its market share dropped to 65.3% on Wednesday and recovered to 66.5%.

BTC/USD: technical picture

BTC/USD daily chart

From the technical point of view, BTC/USD has returned to the pivotal area created by 50% Fibo retracement for the upside move from December 2018 low to July 2019 high. Once this barrier is out of the way, the upside is likely to gain traction with the next focus on $8,650. This area served as strong support at the beginning of the week, so we will need to see a sustainable move higher to mitigate the downside pressure and create a pre-condition for a recovery. Once it is out of the way, the upside is likely to gain traction with the next focus on $9,000. This is an ultimate short-term target for Bitcoin bulls protected by SMA200 daily.

On the downside, the pivotal support is seen at psychological $8,000. This area is reinforced by SMA100 daily and the upper boundary of the broken downside wedge. This barrier will be a hard nut to crack for Bitcoin bears. Most likely, it will attract new buyers that help initiate an upside recovery. However, once it is out of the way, the sell-off is likely to gain traction with the next focus on $7,650 (SMA50 daily).

The  Forecast Poll of experts has worsened slightly since the previous week. The expectations on monthly and quarterly timeframes remained bullish, while the weekly expectations are now bearish now.  The average price forecast on all timeframes moved above 8,000. Notably, the quarterly price forecast retreated below $10,000, which means that the experts are less optimistic about Bitcoin in the long run.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Cryptos feed

Latest Crypto News & Analysis

Editors’ Picks

BTC/USD freefalls from $7,300, breakdown to $6,500 still looms

Bitcoin price rejection from levels around $7,300 failed to find support at $7,000 and $6,800 respectively. The price is doddering at $6,773 amid a building bearish momentum. However, the RSI and the MACD have remained positive.

More Bitcoin News

XRP/USD bulls in control as they look to conquer $0.1876 resistance line

XRP/USD went up from $0.1785 to $0.1794 in the early hours of Friday. In the process, the buyers managed to stay in control for the fifth straight day as they broke above the bullish pennant structure. 

More Ripple News

Ethereum Price Prediction: ETH/USD focus shifts $160 despite resistance at $150

Ethereum is slightly in the green on Friday following a relatively bullish week. It calls for celebration among the bulls after the price action achieved the short term goal of stepping above $140 resistance.

More Ethereum News

EOS Price Analysis: EOS/USD remains bullish despite charting death cross pattern

EOS/USD has gone up from $2.295 to $2.318 in the early hours of Friday as it continues to consolidate itself within the pennant structure. In the process, the buyers managed to chart a hattrick of bullish days ...

More EOS News

BEST CRYPTO BROKERS/EXCHANGES

Bitcoin Weekly Forecast: Coronavirus will either kill Bitcoin or make it stronger

Bitcoin is about to finish the second positive week in a row. The first digital coin has recovered from $5,680 and came close to psychological $7,000 during the week.

Read the weekly forecast

BTC

ETH

XRP