A new report from the Bank for international settlements (BIS) argues that the price of bitcoin is largely fluctuates depending on news related to regulation.
In particular, the report, which was compiled by Raphael Auer and Stig by Claessens argues that:
Although it is assumed that cryptocurrencies are independent of specific jurisdictions, in fact, their price, volume, and number of users largely react to news from regulators.
Among the examples given by BIS: news March 2017 that the Commission on securities and exchange Commission (SEC) rejected the proposal of the investors Cameron and Tyler Winklevoss about creating a bitcoin ETF.
Five minutes after the appearance of this news the price of bitcoin fell by 16%. Another example is the recommendation by the Japanese financial services Agency (FSA) six cryptocurrency exchanges to improve internal procedures for working with clients (June 2018). Again, the price of bitcoin declined sharply, although this time from the moment the news before the market response after a few hours.
Nija the graph shows the results of both events on the price of bitcoin:
The BIS report provides other examples and all this data inadvertently lead to the question: why cryptocurrency is so dependent on the position of the regulators?
Auer and Claessens believe that this is partly caused by dependence on exchanges and cryptocurrency exchanges, where, ultimately, the exchange of cryptocurrency on the currency provided by various States.
Part of our interpretation lies in the fact that cryptocurrencies rely on organization-specific regulators (exchanges and cryptocurrency exchanges). Players of the cryptocurrency market, despite its global and national neglect of Fiat currencies, still depend on the jurisdictions and banks. These factors greatly fragment the market and make him dependent on the opinions and attitudes of regulators.
Our analysis shows that, despite the international nature of crypto-currencies, actions of regulators can have a strong impact on the cryptocurrency markets, at least from the point of view of prices and volumes.