Great outflow from the cryptocurrency exchange. Will the regulations help prices?

Binance, the largest in the world giełda kryptowalutlimits daily withdrawal limits. After the announcement of the introduction of new regulations, 80 were withdrawn from the stock exchange in just three days. bitcoins worth about $ 3 billion.

- In the financial world, cryptocurrencies are associated primarily with a certain freedom and anonymity of transactions. It was originally assumed that any attempts to regulate this market would violate the fundamental premises of its creation, would also lead to a decline in interest and, in general, undermine the need to participate in cryptocurrency trading. - notes Daniel Kostecki, the main analyst of Conotoxia Ltd., a company providing Forex services for portal users Cinkciarz.pl.

No regulation, no future?

Daniel Kostecki

However, it happened otherwise. Although many countries and institutions do not recognize cryptocurrencies and warn their citizens or customers against them, there are also examples of actions in the opposite direction. Suffice it to mention that the concern Tesla he accepted payments for the vehicles he produced in bitcoins. The state of Queensland in Australia, known for its tourism, honors cryptocurrency payments in many ways. Recently, it got loud too about Amazon's plans, which is to prepare for the cryptocurrency offensive and initially implement payments in bitcoinsand then in Ethereum i cardanoto finally create your own token.

- Such and similar activities require regulation. If the cryptocurrency market is to operate alongside stock exchanges, brokers and intermediaries in the purchase of financial instruments, it must be subject to similar rules - comments an analyst from Conotoxia Ltd.

Limitation of the withdrawal limit and the great capital flight

The registration in the Cayman Islands has just made a significant step towards regulation Binance exchange. According to its CEO, it is to generate approximately USD 0,8-1 billion in profit annually. The stock market announced that daily withdrawal limits will be adjusted to 0,06 bitcoin for accounts that have only undergone basic verification. This change applies to new accounts, and for the existing ones, it will be introduced in stages from August 4 to August 23 this year. Previously, the daily withdrawal limit for users without account verification was 2 bitcoins per day.

The announcement of the changes resulted in a huge outflow of capital from cryptocurrency exchanges. In the last three days alone, 80 have been withdrawn from Binance. Bitcoin worth around $ 3 billion, according to CryptoQuant data.

- It can be assumed that these are funds that do not want to be subject to the KYC process (full customer verification), and the scale of cryptocurrency outflows from exchanges may even increase before August 4 - estimates Daniel Kostecki.

The price paradox of regulation

The largest cryptocurrency exchange has taken a step to increase the compliance of its regulations with those applied in various parts of the world. It also appears to intend to work with regulators as the next legal framework is introduced. Such a move may paradoxically increase the price of cryptocurrencies.

- The ongoing process of tightening the verification and tax regulations means that cryptocurrencies, the origin of which is not clear, may disappear from the exchanges, and the supply overhang will decrease. Declining supply, and in significant amounts, can in turn help drive cryptocurrency prices up. Thus, regulations, instead of harming prices, can help them in such a perverse way - comments Daniel Kostecki.

Bitcoin's price seems to have risen steadily since July 20, when it hit a low of $ 29. dollars. Since then, BTC has increased to over 40. USD, which seems to be the largest systematic increase in the price of the cryptocurrency since March. In the last 10 days alone, the USD exchange rate of bitcoin has increased by almost 40%.

The above publication does not constitute an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of April 16, 2014. It has been prepared for information purposes and should not constitute the basis for making investment decisions. Neither the author of the study nor Conotoxia Ltd. are responsible for investment decisions made on the basis of the information contained in this publication. 77,31% retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford the high risk of losing your money.