Crypto Needs Regulation If It’s Going To Survive, Says SEC Boss

The Chairman of the Securities and Exchange Commission (SEC) has called for the crypto space to work with regulators. The Financial Times reported that Chairman Gary Gensler had asked Congress to empower his agency so they will be better able to govern the market. It is still not clear yet which agency has oversight of the cryptocurrency industry, as regulators mainly classify bitcoin as more of a commodity than it is a security.

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It is estimated that less than 10% of the world currently knows about crypto. But nevertheless, it is still a large enough number that has prompted regulators to start looking into ways of properly regulating these digital assets. It is no longer just retail investors who are trying to make some quick profit on highly volatile markets. Institutional investors have also thrown their hat in the ring, like in the case of Michael Saylor’s MicroStrategy.

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Finance Is About Trust

Gensler believes that if the market is to grow, then it needs to embrace regulation. The SEC chairman explained that regulation would provide trust in the market, which is important if the market does not want to become irrelevant over time. “Finance is about trust, ultimately,” Gensler said. Gensler’s focus is mostly on trading platforms, given that this is where the majority (~95%) of activities in the crypto market are carried out.

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Gensler had earlier suggested that crypto platforms register with the Securities and Exchange Commission (SEC). This was met with disdain from investors who do not want governmental control over cryptocurrencies. But Chairman Gray Gensler has again urged these platforms to register with regulations. “Talk to us, come in,” said Gensler.

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“There are a lot of platforms that are in operation today that would do better engaging and instead there is a bit of begging for forgiveness, rather than asking for permission.”

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There have been crackdowns going on in the crypto space on exchanges. Most prominent of these have been the crackdowns on Binance by various countries. BlockFi locked in a regulatory showdown down with three states, and most recently, Uniswap being investigated by the SEC.

Crypto Market Will Benefit From Regulation

Regulation may not be an easy topic in crypto, but it does not make it any less important. Exchanges already realize that if they wish to grow in the long-term, they are going to have to work with regulators.

To this end, Sam Bankman-Fried, CEO and co-founder of FTX exchange, said in an interview that he was taking regulation “extremely seriously.” The CEO believes that working with regulators will ensure the survival of the industry. Adding in that exchanges working with regulators will ensure that the rules being created do not harm the market, “killing the use for it in the first place.”

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It is still not clear where most crypto products fall when it comes to regulatory practices. But Gensler believes decentralized finance platforms fall under the purview of the SEC. “It doesn’t matter whether it’s a stock token, a stable-value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities,” Gensler said to the Aspen Security Forum. “These products are subject to the securities laws and must work within our securities regime.”

Crypto total market cap char from TradingView.com

Crypto total market cap char from TradingView.com


Crypto total market cap finds comfortable position above $2 trillion | Source: Crypto Total Market Cap on TradingView.com
Featured image from Reuters, chart from TradingView.com

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Bitcoin Institutions For The Bitcoin Age

Fear, greed and awe — the three rails to Bitcoin adoption and how the Bitcoin Tree Forum can help.

If you care about freedom, economic empowerment, the environment or human flourishing in general, Bitcoin represents a profoundly powerful force for good. Sadly, however, this truth is far from self evident and can in fact be wholly counter-intuitive to the uninitiated. Combine this with the maelstrom of misinformation surrounding Bitcoin and the inherent complexity of the domains it affects and we Bitcoiners have a bit of a PR fiasco on our hands. Thus far, good ole fashioned fear and greed have been the most effective ways for people to cut through the aforementioned bramble in order to partake in this monetary revolution. Greed to partake in Number Go Up (NGU) technology and fear that the madness in the current system demands a reliable hedge.

Might it be possible to appeal to some of humanity’s more noble impulses? What about wonder, awe, transcendence or that feeling of participation in something much greater than oneself? Such feelings are often experienced when encountering the great cathedrals and monuments that are the crowning achievements of civilizations, as well as while experiencing the grandeur and beauty of the natural world. I believe we can tap into this positive vein of human nature and convey Bitcoin’s finer qualities on a visceral level by planting trees. Not metaphorically. Literally. Big f-ing trees. Giant sequoia trees, ideally. As the world’s largest tree, the mighty sequoia can live thousands of years, stand over 250 feet tall and grow over 25 feet in diameter. To behold a sequoia is to behold one of nature’s marvels and to glimpse briefly and ever so slightly the creative genius of the universe. By pushing our time preference lower, Bitcoin helps us more fully participate in that creative power in our everyday lives. The Bitcoin community would be well served if more pre-coiners grasped this ennobling potential.

With Bitcoin we can undertake more complex endeavors and coordinate more deeply across time and space. What better, more cost-effective, more accessible way to demonstrate this low time preference behaviour and the net benefits to our species than to embark on a mission to plant sequoia groves in every village, town and city with a suitable climate so that our descendants can revel in their glory 1000 years from now? Bitcoiners planting trees is a good start, but I believe this activity could be the seed of something bigger.

So here’s the vision: 1000 years from now Bitcoin is everywhere and so is a new civic institution called the Bitcoin Tree Forum (Bitcoin Tree Cathedral or Local Bitcoin Forum are other possible names in keeping with its intention). The Bitcoin Tree Forum is a grove of old growth trees planted by Bitcoiners and stewarded by Bitcoiners as an act of service to the generations to come. It serves as a place to gather and coordinate human effort towards projects that promise long-term value to the community. It’s a meeting place for citizens to lower their time preference and partake in something bigger than themselves. At the center of the grove is a publicly accessible Bitcoin node that serves as a portal for communities to transfer value between one another and facilitate other, yet to be imagined use cases. Bitcoin is a public utility and as such I believe it should have public interfaces.

When we’re talking about trees, the bigger and older, the better. Hence the giant sequoia should be considered first, if the local climate permits. Other awe-inspiring trees such as baobab or banyan trees can be used in warmer climates. Another version of this could involve productive food-bearing trees, such as fruit trees or chestnut trees, whose produce could serve as a recurring revenue stream along the lines of what Joel at Untapped Growth is doing with cattle. The important thing is for Bitcoiners to establish positive long-term projects in the physical world and trees are a wonderful, highly accessible way to do this.

A Bitcoin Tree Forum doesn’t have to be public. It can be as simple as a grove of unmarked trees planted by a Bitcoiner. It can also have a Lightning QR code metal plate anchored nearby to route any inspired person’s donations to the Human Rights Foundation or a Bitcoin development fund. In its fullest form it can be a grove of sequoias planted at city hall with a Bitcoin node running inside a weather-proof case, hosting weekly gatherings for like-minded people doing the work of building civilization. The node-grove can also act as a direct economic connection to a sister city on the other side of the world, thus facilitating cultural exchange and enrichment. Think of it as a hyper-flexible, opt-in parallel local government helping to re-engage citizens in bettering their communities and thus engendering a kind of civic renewal.

If enough Bitcoiners embrace this concept, an incentive structure can be layered on top of it funded by donations. This voluntary cultural enterprise could be called Proof of Growth. For those willing to participate, whether they be individuals or municipalities, submission of some form of proof that their trees are still alive qualifies them for a lottery administered at each halvening (details of this are admittedly tricky). Beyond incentivizing the planting of trees, this Proof of Growth festival would have the benefit of helping to bootstrap a civically-engaged culture centered around the most important Bitcoin-native event. As early adopters of Bitcoin, we have the opportunity to lay the foundations of a new culture. We should not take that opportunity lightly. Proof of Growth could be one such attempt.

To get things started, I’ve begun a humble sequoia nursery in my backyard with 70 trees so far. I hope to partner with forward-thinking citizens, business owners and mayors to begin founding the first Bitcoin Tree Forums as soon as possible. For those interested in participating, I invite you to visit BTreeC.com and sign up for the newsletter. You can also follow me on twitter @btcfangorn. For the skeptics, I invite you to at least plant some trees, the bigger and longer lived, the better. Plant a sequoia if you can. Someone 3,000 years from now will thank you.

The best time to begin a Bitcoin Tree Forum was January 3rd 2009. The second best time is now.

This is a guest post by Fangorn. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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Traders know not to ‘go long’ when this classic trading pattern shows up

Buying an asset in a downtrend can be a risky maneuver because most investors struggle to spot reversals and as the trend deepens traders take on deep losses. In instances like these, being able to spot descending channel patterns can help traders avoid buying in a bearish trend.

A “descending channel,” also known as a “bearish price channel” is formed by drawing two downward trendlines, parallel to each other, which confine the price action of the asset.

Descending channel basics

In a downtrend, the price action forms a series of lower highs and lower lows. A descending channel is drawn by joining the lower highs and the lower lows using parallel trendlines. The main trendline is drawn first where two or more lower highs are connected. Then a parallel line, also called the channel line, is drawn connecting the lower lows.

The price action inside a descending channel continues to move south as bears sell on any relief rallies to the main trendline.

Descending channel pattern. Source: TradingView

The asset in the chart above is in a downtrend, forming lower highs and lower lows. The main trendline is drawn by joining two lower highs (marked as ellipses) while the parallel channel line is drawn by joining the two reaction lows.

When the price reaches the channel line, bulls believe that the price has become attractive and they buy, but the bears are in no mood to allow the bulls to have their way. They sell when the price reaches the main trendline and the trend remains down.

The trading inside the channel is usually random but bound between the two parallel lines. A break below the channel indicates that the bearish momentum has picked up and that could result in a spike down.

Conversely, a breakout of the descending channel suggests a possible change in trend. Sometimes these breakouts result in a new uptrend, but on other occasions the price action forms a range before resuming the downtrend.

Descending channel breakouts

THETA/USDT daily chart. Source: TradingView

The chart above shows THETA token in a descending channel where the main trendline is formed by joining the two lower highs made on April 16 and May 9. The parallel line drawn from the reaction low on April 18 forms the channel line.

As seen above, the price action is largely caged between these two lines. The bulls pushed the price above the channel on June 17 but could not sustain the higher levels. The bears again quickly pulled the price back into the channel, trapping the aggressive bulls.

There were a few spikes below the channel line but the long tails on the candlesticks show that bulls used these dips to buy. This shows how the lines act as strong support and resistance.

Finally, the price broke above the channel on July 24 and after a minor consolidation, the recovery continued. This confirmed a legitimate breakout, indicating a possible trend change.

XMR/USDT daily chart. Source: TradingView

Monero (XMR) topped out on June 23, 2019, and then started a downtrend. The main trendline of the channel was formed by connecting the lower highs on July 8, 2019, and Aug. 8, 2019, while the channel line was drawn from the low on July 16, 2019. The XMR/USDT pair continued to trade inside the channel until Jan. 4, 2020.

The bulls pushed and closed the price above the channel on Jan. 5, 2020. This signaled a possible change in trend. The target objective can be arrived at by adding the height of the channel to the breakout level.

In the above case, the depth of the channel was $31.50. Adding this to the breakout level at $51.80, gave a target objective of $83.30. The pair easily exceeded the pattern target and turned down from $96.90 on Feb. 15, 2020.

This suggests that traders should use the target as a guide but decide on closing the position after analyzing other supportive indicators and patterns.

Descending channel breakdowns

LUNA/USDT daily chart. Source: TradingView

Terra’s LUNA token topped out at $22.40 on March 21. Thereafter, it started trading inside a descending channel pattern. The bears pulled the price below the channel line on April 18 but they could not sustain the lower levels. The bulls pushed the price back into the channel on April 23 and trapped the aggressive bears.

The sellers again broke below the channel line on May 19. Attempts by the bulls to push the price back into the channel failed on May 20 and May 21, confirming a valid breakdown. The pattern target of the breakdown was $5.10 and the LUNA/USDT pair bottomed out at $3.91.

Take care to not mix up bull flags and descending channels

BTC/USDT daily chart. Source: TradingView

Bitcoin (BTC) rallied sharply from $17,572.33 on Dec. 11, 2020 to $41,950 on Jan. 8, 2021. Subsequently, the price corrected inside two parallel lines, which was a bullish flag pattern but could have been easily mistaken for a descending channel.

Thomas Bulkowski, author of the book Encyclopedia of Chart Patterns, says when a pattern is less than three weeks long, it is a flag, but longer than that can be considered as a channel.

In the above example, the correction lasted for just over three weeks and the price resumed its up-move after breaking out of the flag.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.