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Bitcoin is still under pressure from yesterday’s EBA warning. On BTC-E, we opened at $626.29, from here, bitcoin fell to $621 then proceeded to rally back to $625. As you can see on the chart below, BTC prices are stuck at the $625 figure. We expect more losses going forward and a move below $625. The next minor level of support is at $610 but the $600 round figure should provide strong support for BTC/USD.
The EBA opinion has been a hot topic in the past 24 hours. In it, the regulatory body outlines no less then 70 possible risks surrounding virtual currencies. The risks are ranked into low, medium and high ‘‘in the interests of pursuing efficient and effective regulatory or supervisory intervention.” Here are just a couple of what the EBA says are high risks:
- User suffers loss when an exchnage is fraudelent
- User experiences drop in value of VC (virtual currency) due to significant and unexpected exchange rate fluctuation
- User losses VC from hacks
- Criminals are able to launder proceeds of crime because they can deposit/transfer VCs anonymously
- Market participants are controlled by criminals, terrorists or related organisations
- Restorative justice of victims of crime is hindered by criminal using VCs to avoid seizure of assets
- Criminals can use VCs for anonymous extortion
- Tax evaders are able to obtain income in VCs, outside monitored FC payment system (medium risk)
On the ”plus side” the EBA thinks that ”many of the potential benefits are likely to materialise outside the EU, in regions where the payment infrastructure may be less developed or less trustworthy.” Overall, this coupled with the EBA request for the creation of a central ”Scheme Governance Authority” is negative for bitcoin in the Eurozone. It remains to be seen how the EBA warning to Europe’s financial system with affect the two major bitcoin exchanges based in the EU, BitStamp and BTC-E.
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July 05, 2014 at 08:46AM
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