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Cryptocurrency Market Analysis February 23, 2018

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cryptocurrency price analysis

Regulators – Boogeyman of the Cryptoworld

The cryptocurrency world has been shaken for the past couple of months by the measures, which governments have been taking in order to regulate this market. China has stopped the activity for the local exchanges and prohibited external transfers to foreign exchanges. The SEC has had crypto discussions and the IRS is working with Chainalysis to scan for tax evaders. Many countries have banned ICOs and are strongly against investments in such vehicles. Japan – the one with already existing regulations – is knocking on the doors of exchanges in order to strictly monitor their activity. These examples could easily be listed in a couple more pages.

Although right now everyone looks at regulations as killing crypto businesses and investments, from our point of view this is a misconception. In a decentralised world, some of the power is given back to individuals, yet it does not make the environment safer because there will always be actors trying to benefit in an illicit way from the trust of other people. ICOs serve as an example. In 2017 thousands of ICOs have been launched, with many good ideas backed by experienced teams, which most probably will reach their targets and provide promised services according to their whitepapers. But these are few and far between. Many ICOs have just been launch for startup founders to get their hands on easy money. 

The trend clearly shows ERC20 token to be most commonly used in creating new ICOs. These can be easily built in just several minutes by a medium experienced developer. Such tokens do not bring added value to the crypto space but due to lack of regulations and supervision, they are released and millions of dollars will be lost by their owners, without the possibility of being recovered.

Despite the sentiment that regulating a decentralised economy is seemingly a drawback, it shall bring stability and trust towards the remaining tokens. Most governments, if not all of them, are supporting the innovative technology underlying cryptocurrencies. However, they also have the obligation to fight with money launderers, tax evaders, and scammers in order to protect bona fide investors. Understandably, regulators take a slow and measured approach to cryptocurrencies.

Bulls or Bears?

As per the usual, markets tend to panic when an external factor is expected to have an impact on the environment, though it is not fully understood by the masses, and the price dips. This is what happened to bitcoin and altcoins in late December 2017 and January 2018.

Due to regulatory risks, bans, and smart money selling their coins, a sell-off started on the crypto market. The price of bitcoin plunged from close to $20,000 to $6,000, providing a huge discount for whales to come into the market. As all the headlines were showing “Anonymous investors buys 400 millions USD worth of bitcoin”. Nobody with access to this kind of funds would invest as much in a low probability investment opportunity, or we are wrong?

Nevertheless, many analysts and investors all over the world have expressed their opinion that blockchain technology has the potential to disrupt a big number of classical business models. The crypto asset market is still in its early development stage. A new regulatory environment will pave the way for more smart money to enter this market. A new passion to have better control over finances and less trust in centralised institutions adds up to a strong list of arguments, which reinforce the idea that the crypto market, still dominated by bitcoin, is poised to continue its rally.

Price Analysis

Bitcoin

The price action of bitcoin (BTC) vs USD shows that after hitting the $20,000 Resistance, the price started a corrective move inside a descending channel, which stopped at $6,000, a four-month low. Currently, we can say that the main trend of the price is downward, by looking at LH and LL (Lower Highs and Lower Lows). The rally which has brought back the back towards $12,000 has met a strong resistance area built on a convergence of previous resistance levels and trend line. A drop from here back to retest the local support from $9,000 is more likely than a breakout from this channel. The fundamental uncertainty is still fueling bears and the accumulation area has yet to be developed. A retest of $9,000 or even lower of $7,500 support area could gather enough buying power for bulls to come back and break above $12,000, aiming for new highs above $20,000.

Ethereum

Ethereum (ETH), as well as other altcoins, followed pretty much the same path as BTC, though it has not corrected as much. It hit its all-time high in January and the dip stopped at around $600 per ETH. This is considered a strong support area for the future price action of this pair. A rally brought the price back to the $1,000 resistance area which worked as a charm, since the price was reflected and now is on a downwards move, targeting the $750 local support. We are expecting this pair to act very similar to BTCUSD and build an accumulation area before breaking above the downtrend line.

Ripple

Ripple (XRP), on the other hand, had a much more volatile and aggressive behaviour than our previously analyzed tokens. The price shot through the roof in a strong buy period, fueled by the Asian buyers, especial investors coming from South Korea, reaching a new high at $3.32 per XRP. The sell-off corrected 88.6 (Fibonacci retracement) of the latest rally, and the token is currently traded below $1 per token. A support area has been built around 75 cents per token, while the resistance level sits at $1.21 per token. Similar to the BTC and ETH, we consider an accumulation area is developing as we speak, providing time for bulls to regroup and push the market above the current resistance levels.

Buroka TechThis cryptocurrency market analysis is being presented by Buroka Tech. Buroka Tech is cryptocurrency-focused technology provider for financial institutions. 

Bitcoin

Almost a Quarter of High-Tech Consumers in South Africa Now Own Cryptocurrency

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High-Tech Consumers in South Africa

A new study titled “Digital Lifestyle Measure report” conducted by MBIT found that 23 percent of high-tech consumers in South Africa own at least one cryptocurrency, with bitcoin being the most common holding. 

New Report Shows High-Tech Consumers Hold Crypto

In the”Digital Lifestyle Measure report” report, each level of tech consumer (high, medium, and low) was grouped according to DM segmentation. A high-tech consumer is identified and tagged as a “DLM5 consumer”, and for the low-tech consumers, a “DLM1 consumer” was used. 

To place each of the participants in the right groups, the survey made use of a question and answer (Q&A) method. Each person was categorised according to how well they were able to answer the provided questions. The questions mostly focused on their private digital lifestyle and technological gadgets they own and can operate well.

The result of this survey shows that only six percent of the low-tech consumers (DLM 1) own crypto, while 23 percent of high tech consumers own cryptocurrencies. The remaining percentage was then shared in the order: DLM 2: seven percent, DLM 3: twelve percent, and DLM 4: eight percent.

cryptoThe report also stated that of the DML5 population, about 42 perfect of them are of the notion that cryptocurrencies are here to stay. Same goes for 30 percent of the DLM 4 consumers group.

Conversely, 41 percent of the low-tech consumers (DLM1 consumers) did not know what cryptocurrencies are all about, according to IOL

From the DLM 3 consumer group, about 34 percent of them cannot say what the future looks like for cryptocurrencies but 26 percent of them claimed cryptocurrencies to be the “future of financial transacting.”

The report has further shown that high tech consumers who are continually paying for something electronically, are more likely to buy crypto in the long run.

Based on the google trends data, South Africa currently has the highest levels of interest in bitcoin across the world. Hence, it should come as no surprise that tech-savvy South Africans are the ones investing in digital currencies and tokens. 

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Ecobank Report: Most African Regulators Are Taking a “Wait and See” Approach to Cryptocurrency Regulation

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African Regulators

While there has been a substantial increase in the adoption of cryptocurrencies in Africa compared to three years ago, there has been minimal effort from African countries to try and regulate cryptocurrencies despite their increased use in various African nations according to a new report by Ecobank.

Ecobank tracked “the current state of cryptocurrency regulation in all markets in Sub-Saharan Africa” through the regulatory responses that have been issued by central banks or financial regulators. In the report, the pan-African bank found that most African regulators are taking a “wait and see” approach when it comes to cryptocurrency regulation.

The report stated: “Many African governments and regulators recognise both the risks and the potential positive impacts of cryptocurrencies, and some also appreciate the difference between cryptocurrencies and the underlying blockchain technology. But they have been reticent in authorising cryptocurrency transactions, and mostly remain apprehensive about the potential risks. African countries appear to be looking to their neighbours to regulate and innovate first, and learn from their mistakes, rather than being the first mover.”

The reported noted that the main reason why African governments were being skeptical about licensing the use of cryptocurrencies was their citizens getting overexposed to cryptocurrency investments and there being a future crash that would cause a ripple effect in the broader economy.

African Regulators’ Stance

African RegulatorsOut of the 39 jurisdictions surveyed, more than 21 countries in the region are yet to make a public declaration on the use of cryptocurrencies.

So far, there have been three countries that have taken a stance on cryptocurrency. Namibia tops the list having banned the commercial use of digital currencies. However, South Africa and Swaziland are the only two countries in Sub-Saharan Africa that have adopted “a generally favourable and permissive stance, but without full legality”.

The remaining countries fall somewhere in between and “refuse” to directly regulate cryptocurrencies claiming that bitcoin and other digital currencies “operate in the grey area between legality and illegality” and have issued warnings to their citizens and investors against using or investing in them. The bank also noted that conversations regarding the speculative nature and instability of cryptocurrency prices have overshadowed their benefits and the potential they bring.

The bank went ahead to note: “Unfortunately, the spectacular rise and fall in the traded value of cryptocurrencies has drowned out broader discussion on the potential benefits this new technology could bring. The transformational impact that could be delivered by tokenising products and services on the blockchain has been compared to that of the Internet. Crypto tokens and currencies could enable consumers to transact instantly, cross-border and for free, provide them with KYC-compliant digital IDs, and incentivise their behaviour and change the way they engage with governments & service providers.”

Ecobank will continue to track cryptocurrency regulation in Sub-Saharan Africa and provide regular updates that will reflect the regulation progress in the African nations.

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Paxful Continues #BuiltWithBitcoin Charitable Initiative in Africa with the Construction of a Second School

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#BuiltWithBitcoin

Peer-to-peer bitcoin exchange Paxful announced the newest chapter in its #BuiltWithBitcoin charitable initiative: the construction of a school in Rwanda – for students aged six to fifteen – in the Nyamata Sector of Rwanda’s Bugesera District. This will be the second bitcoin-funded school that Paxful has raised funds for.

bitcoinContinuing its partnership with NGO Zam Zam Water, Paxful has kickstarted the project with a $20,000 donation. The total construction cost of the school is estimated to be $100,000. The remaining balance, Paxful hopes, will be raised through its fundraising campaign.

Donations can be made via Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Dash.  Paxful will match all community donations until the $100,000 goal is met.

“The #BuiltWithBitcoin initiative is a testament to the power of cryptocurrency,” said Ray Youssef, CEO of Paxful. He added:

“We firmly believe that it can improve lives and make the world a better place.”

The planned school is expected to be almost twice the size of the first bitcoin-funded school and will serve up to 300 primary school students upon completion. Furthermore, the school will include a cafeteria, a 35,000-liter potable water well, solar panels for sustainability, and many other resources for the education and enjoyment of students, staff, and faculty, according to a company press release.

“Education is a crucial tool for helping those in developing nations increase their standard of living, so we are very pleased to partner with Paxful to serve these bright young students,” said Yusuf A. Nessary, founder and president of Zam Zam Water. He added:

“This is only a small glimpse into what we can and will continue to do with the power of cryptocurrency.”

Paxful began the #BuiltwithBitcoin initiative in 2017 to promote philanthropy and charity within the cryptocurrency industry. The company plans to construct 100 African schools, as well as donate money for wells and other projects.

To contribute to #BuiltwithBitcoin, send all donations to Zam Zam Water:

BTC (Bitcoin): 3Q5CESP85hhXTLSy2HDbSyNchb5Bi8D7ku
BCH (Bitcoin Cash): 15YGniLxo77kfMUWGoRNT6ShUQC93MvaXg

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