Impact of Hostile Regulations on Bitcoin (BTC) Price
Bitcoin (BTC) and other cryptocurrencies are described as volatile assets because of massive price movements recorded in the market. Several factors like whale movements, technical indicators, investor sentiment, and inflows affect Bitcoin price.
Hostile regulators can also affect the price of the asset or reduce investment in the market. As financial assets, cryptocurrencies must be subject to some form of regulations but the leanings of regulators in several jurisdictions affect market prices.
Bitcoin regulations can be grouped into the good for market confidence and the bad which leads to a stiff market and plunging Bitcoin price. Here are the impacts of hostile regulation on crypto prices.
Steep Losses
Over the years, anti-Bitcoin legislation has led to outflows from the market. These regulations often target a sector or an outright ban on a service. A key example is China’s miner clampdown in 2021 citing climate concerns.
Bitcoin miners moved shop out of the country with the ban reducing the hashrate and slowly affecting the price of the assets. The move led to similar laws by global authorities cutting down energy usage. Miners are key components of Proof-of-Work blockchains so a move to curb related activities will impact the market negatively.
Reduced Investment
Crypto Venture Capitalist (VC) firms often invest in friendly markets and jurisdictions with certain rules. Last year, several blockchain executives in the United States bemoaned the approach of the Securities and Exchange Commission (SEC) because of frequent lawsuits.
As a result, the SEC was accused of carrying out regulation by courts and criticized for driving out investment. Last year, Coinbase made an international expansion plot flagging regions that have clear rules with several commentators calling on authorities to roll out a comprehensive legal regime.
Friendly Laws Good For Bitcoin Price
Crypto regulations if applied properly are good for the market as it ushers in new levels of legitimacy for Bitcoin and other assets. An example is the Markets in Crypto Assets (MiCA) regulation in Europe hailed as a landmark legislation. Regulation also protects investors and removes bad actors from the market preventing a Bitcoin price crash.
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