The market for crypto-derivatives, e.g. Bitcoin, Ethereum, XRP and other cryptocurrencies has taken a severe hit. The UK Financial Conduct Authority (FCA) has banned its trading for retail customers. In the official announcement, the regulator declared that the above products are “harmful” to consumers for 5 main reasons.
Firstly, the regulator stated that the underlying assets do not have a reliable basis to protect their value. Second, the FAC believes that abuse, illegal activities and financial crime are widespread in the secondary crypto market. In addition, the FAC argues that cryptocurrencies are extremely volatile and that end-users “do not have a sufficient understanding” of the underlying assets. Finally, the FCA claims that investing in derivatives of cryptocurrencies is “harmful” investment. The regulatory authority states:
These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products (…) which includes well-known tokens such as Bitcoin, Ether or Ripple (XRP). Specified investments are types of investment which are specified in legislation. Firms that carry out particular types of regulated activity in relation to those investments must be authorised by the FCA.
UK’s FCA targets Bitcoin, Ethereum and XRP derivatives
The UK regulator claims that the ban on crypto derivatives will save UK consumers around £53 million a year. In addition to the ban, the FCA has determined to prohibit the distribution and marketing of any derivatives to UK consumers. Specifically, the FCA mentions the following derivatives: options, futures, contracts for difference (CFDs), and exchange-traded notes (ETNs).
The measures apply to companies and firms “operating within or outside the United Kingdom”. The Executive Director of Strategy and Competition for the FCA, Sheldon Mills, stated:
This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here.
Significant price volatility, combined with the inherent difficulties of valuing cryptoassets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives. We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection.
According to the FCA’s announcement, the prohibitive measures will take effect from 6 January 2021. The regulator has asked companies and firms that trade in crypto derivatives to stop their operations before this date. In the meantime, the regulator advises investors to “stay alert” for crypto-scams. From now on, they qualify all companies offering crypto derivatives products to retail consumers as “possible scams”.
In a separate document, the FCA also clarified that its measures will affect firms that issue or create crypto derivatives, firms that distribute them (brokers, financial advisors, and investment platforms), marketing firms that reference the referred derivatives, traders, consumers, and retail consumer organizations. With regard to consumers, the FCA states:
Retail consumers with existing holdings can remain invested following the prohibition, until they choose to disinvest. There is no time limit on this, and we do not require or expect firms to close out retail consumers’ positions unless consumers ask for this.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 10,578.29.
The projected upper bound is: 11,272.03.
The projected lower bound is: 9,846.85.
The projected closing price is: 10,559.44.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 50.8684. This is not an overbought or oversold reading. The last signal was a sell 8 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 47.15. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 61 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -68. This is not a topping or bottoming area. The last signal was a sell 17 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX BTC= closed up 43.420 at 10,588.590. Volume was 88% below average (consolidating) and Bollinger Bands were 55% narrower than normal.
Open High Low Close Volume 10,545.160 10,617.880 10,513.370 10,588.590 85,826
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 10,648.33 10,884.13 9,515.52 Volatility: 21 41 58 Volume: 378,553 623,075 582,513
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX BTC= is currently 11.3% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of BTC= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on BTC= and have had this outlook for the last 10 periods.
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