Bitcoin and ether somewhat stabilized after a big sell-off at the beginning of the trading week. The sell-off came after profit taking ahead of the FOMC meeting. The regulator is expected to announce another rate hike. BTC usually goes down after such decisions as demand for risk assets decreases, making investors choose safe havens and government bonds. We will discuss how bitcoin may react to the outcome of the FOMC meeting a bit later.
Right now, we would like to focus on investors' concerns about the SEC's intention to impose regulations on the crypto industry. Billionaire and Dallas Mavericks owner Mark Cuban says that the SEC might soon draw up strict rules regarding the registration of new tokens, which will be a nightmare for the crypto industry.
US senators have recently split into two camps, with one camp strongly in favor of tight regulation and the other being an openly pro-crypto faction. Thus, US Senator Pat Toomey has recently slammed the watchdog for its actions against Coinbase when it identified nine crypto tokens as securities. Coinbase disputed the allegation by the SEC. However, it became a wake-up call for the crypto market.
The SEC has a clear understanding of how and why certain tokens are classified as securities. Nevertheless, the Commission keeps it a secret.
So, Cuban believes the SEC is now working on a set of rules for registering crypto tokens that will seriously harm the industry. He sees it as yet another attempt to make taxpayers pay even more money. In fact, a US senator has recently proposed to exempt Americans from paying taxes every time cryptocurrencies change hands. It is about small transactions. Senator Patrick Toomey (R-Pennsylvania) joined with Kyrsten Sinema (D-Arizona) to push the exemption from tax requirements for crypto users making small investments or purchases. They have introduced a bill that would exempt them from reporting any transactions up to $50 or any trade in which they earn less than $50.
In addition, the SEC has been heavily criticized for its approach to regulating the crypto sector. Last week, Congressman Tom Emmer accused the watchdog of "cracking down on companies outside its jurisdiction." He said that the SEC was "politicizing regulations, baiting companies to come in and talk to the Commission, then hitting them with enforcement actions," thereby "discouraging good-faith cooperation."
Still, there are those who have an opposite point of view. Elizabeth Warren, US Senator from Massachusetts, recently noted in an interview that too many crypto firms have been able to scam customers and make off with their money. She insists on tougher regulations, urging the SEC and Congress to take action to regulate cryptocurrencies.
In terms of technical analysis, bitcoin is now bullish but the market will unlikely resume growth before the Fed's decision. Should the instrument continue falling, speculators will try to protect $20,720 support. BTC is likely to get back to the $19,960 and $19,230 lows, and even reach $18,625 in case of a breakout and consolidation below this range. Otherwise, if demand for bitcoin increases, the price should go above $21,430 and $22,184 resistance for the uptrend to begin. If it consolidates above the barriers, the instrument may head towards $23,070 and $23,600 highs and even to $24,280. A more distant target stands at around $25,780.
In case of a breakout at $1,420, ether is likely to plunge to yesterday's low of $1,350 or even to $1,275. Support is seen at around $1,190. Growth may continue if ether returns to $1,490 resistance. Should it go higher, the price may hit the $1,560 and $1,650 highs. If so, a medium-term uptrend may exted to $1,740. In case of consolidation, the target will stand at $1,830 resistance.