The recent weakness in the crypto market has not invalidated the six-week-long ascending trend, even after a failed test of the channel’s upper band on Feb. 21. The total crypto market capitalization remains above the psychological $1 trillion mark and, more importantly, cautiously optimistic after a new round of negative remarks from regulators.
As displayed above, the ascending channel initiated in mid-January has room for an additional 3.5% correction down to $1.025 trillion market capitalization while still sustaining the bullish formation.
That is excellent news considering the FUD — fear, uncertainty and doubt — brought down by regulators regarding the cryptocurrency industry.
Recent examples of bad news are, a United States District Court judge ruling that emojis such as the rocket ship, stock chart and money bags infer “a financial return on investment,” according to a recent court filing. On Feb. 22, a federal court judge ruling on a case against Dapper Labs denied a motion to dismiss the complaint alleging that its NBA Top Shot Moments violated security laws by using such emojis to denote profit.
Outside of the U.S., on Feb. 23, the International Monetary Fund (IMF) issued guidance on how countries should treat crypto assets, strongly advising against giving Bitcoin a legal tender status. The paper stated, “while the supposed potential benefits from crypto assets have yet to materialize, significant risks have emerged.”
IMF directors added that “the widespread adoption of crypto assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks.” In short, those policy guidelines created additional FUD that caused investors to rethink their exposure to the cryptocurrency sector.
The 5.5% weekly decline in total market capitalization since Feb. 20 was driven by the 6.3% loss from Bitcoin (BTC) and Ether’s (ETH) 4.6% price decline. Consequently, the correction in altcoins was even more robust, with 9 out of the top 80 cryptocurrencies down by 15% or more in 7 days.
Stacks (STX) gained 53% after the project announced its v2.1 update to strengthen the connection to Bitcoin-native assets and improve its smart contracts’ control.
Optimism (OP) rallied 13% as the protocol released the details of its upcoming superchain network, which focuses on interoperability…
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