The U.S. government is set to tighten regulations to mitigate the growing risks associated with the crypto industry. This development comes after increased scrutiny following the collapse of FTX and Terra Luna in 2022.  In a press release on January 27, the White House put forward a comprehensive roadmap designed to protect investors and hold bad actors accountable. The roadmap highlighted several measures for more effective regulations in the crypto industry.  A Two-Pronged Approach By U.S. Government The U.S. government revealed that it had spent the past two years identifying the risks of cryptocurrency and finding ways to mitigate them. To ensure these measures are implemented, the White House intends to utilize a two-pronged approach.  Firstly, the U.S. government has developed a framework for individuals and organizations to safely and responsibly develop digital assets. This includes addressing the risks they pose as well as highlighting poor practices within the crypto industry.  Secondly, agencies have been mandated to increase enforcement and develop new regulations where needed. While there’s an increase in public awareness programs designed to help consumers understand the risks of buying cryptocurrencies.  Related Reading: US Federal Regulators Warn About Crypto Activities The White House also pointed out that Congress had a major role in expanding regulators’ powers and passing transparency laws for cryptocurrency companies. It also warned about passing legislation that would reverse the current gains and tie cryptocurrency with the U.S. financial system.  In addition, the government intends to commit significant resources toward digital assets research and development, and this would help technologies power digital currencies and protect investors by default.   Crypto Industry Still Reeling From FTX Collapse The crypto industry is still recovering from the bearish markets resulting from several CeFi platforms’ high-profile collapses. 3AC, Voyager, BlockFi, and FTX were among the top platforms to file for bankruptcy, with the quartet holding more than $100 billion in assets.  The nature of FTX collapse brought about increased scrutiny of the crypto industry. Congress testimonials exposed the risk-averse nature of crypto companies’ executives as details emerged that Sam Bankman-Fried misused clients’ funds through his trading firm Alameda Research.  The ripple effect was massive as several individuals and firms exposed to the platform suffered huge losses, with some companies forced to shut down. These events caused concerns and reactions from within and outside the crypto space. It is, therefore, unsurprising that the U.S. government is looking to tighten its grip on regulations.  Related Reading: Crypto-Friendly Bank Silvergate Suspends Dividend Payouts Months after the FTX crash, there’s still increased skepticism about the crypto industry. There’s an increase in the amount of bitcoin withdrawn from exchanges, and earlier this month crypto bank, Silvergate revealed that clients withdrew almost $8 billion of their crypto deposits.  Featured image from Pixabay, chart from TradingView.com

The conditions of the cryptocurrency market have changed drastically; according to an analysis by QCP Capital, the options market in its current state makes the crypto industry look like a major crisis, such as the shutdown of crypto exchange FTX after filing for bankruptcy, never happened. Related Reading: Bitcoin Exchange Outflows Reach Highest Value Since FTX Crash, Bullish? Trading desk QCP Capital published observations on the crypto industry, revealing some key points to consider for the coming months. The Crypto Market Comes Back To Life QCP’s analysis points out that Bitcoin (BTC) risk reversals have been trading in positive territory over the past week, which tells us that calls (buys) have been more expensive than puts (sells) since 2021 across multiple tenors. This is unusual for the sector as BTC typically has a persistent put skew, mainly due to miner/treasury hedging activity. The chart below depicts this market behavior and the bullish sentiment impacting the options sector. Put skew drives the price of puts higher and calls lower. This difference in pricing between options is called skew and, under normal circumstances, puts trade with higher volatility than calls precisely because investors are hedging some of their bullish positions. For the trading desk, this means that the sentiment in the cryptocurrency market has shifted from bearish to bullish, a culmination of what has been happening in the macro market and the slight recovery in the economy. Bulls Might Get Their Hearts Broken On Valentines Day Ethereum’s (ETH) implied volatility (IV), which represents the expected volatility of a stock or currency over the option’s life, has fallen, indicating complacency as the market prices out fears of a price collapse, according to the analysis. The enthusiasm in the market can be measured by the amount of “fear of missing out” (FOMO) that has set in, with many chasing prices and the top by buying high delta calls and going long in the spot market over the past week. With the upcoming “Big Bad” Federal Open Market Committee (FOMC) meeting, the trading desk expects the market to be more cautious and conservative. According to QCP, the following potentially problematic date will be February 14th, when the following CPI report will occur, which can potentially “break the heart of the bulls.” For QCP, this is the same scenario the market experienced in December. Similarly, the price may experience a topside breakout characterized by a highly sharp and violent movement. Bitcoin is currently trading at $23,200 and seems to be paving the way for the conquest of new levels. It has gained 0.7% in the last 24 hours and 10.3% in the last seven days. Bitcoin is trying to break the next obstacle represented by the $24,400 level. Ethereum is trading at $1600, up 0.3% in the last 24 hours, with sideways price action. The next resistance wall is at $1,691, a zone the bulls have not visited since September 2022. Ethereum has gained 3.8% in the last seven days. Related Reading: U.S. Institutions Are Driving Bitcoin Prices, Matrixport Research Cover image from Unsplash, charts from Tradingview.

Dogecoin (DOGE) and other altcoins are stealing some of Bitcoin’s shine as the benchmark crypto stalls at its current levels. However, the recent rally could spell trouble for optimistic traders and investors waiting for a continuation of the trend. Related Reading: Cardano Adds 50,000 New Wallets As ADA Market Cap Surges As of this writing, Dogecoin (DOGE) trades at $0.08 with sideways movement in the last 24 hours. Over the previous seven days, the meme coin still records an 8% profit. In the crypto top 10, DOGE stands amongst the best performers, surpassed only by Cardano (ADA) and Polygon (MATIC). Dogecoin’s Rally Stirs The Crowds, Is A Retrace Imminent? Data from Coingecko indicates positive development for meme coins. The sector records around $20 billion in total market cap, a 2% increase in 24 hours, and $1 billion in trading volume over the same period. In addition to Dogecoin, Shiba Inu (SHIB), Baby Dogecoin, and Bonk have captured the attention of crypto investors. The second of these assets experience a 23% rally in the past week alone, hinting at the increase in risk appetite from digital asset enthusiasts. The Bitcoin rally deep into the $20,000 territory has flipped the crypto market’s sentiment. As a result, Dogecoin and other meme coins are resurging and outperforming more significant digital assets. Additional data from analytics firm Santiment registered increased levels of positive interaction across social media platforms. This suggests that users are more willing to take long positions, swelling the liquidity to the downside. In other words, people are experiencing fear of missing out (FOMO), as recorded by Santiment, increasing the chances of a pullback. Market makers could squeeze long positions before resuming the bullish momentum. As seen in the chart below, the altcoin sector has recently seen important growth. Tokens such as APTOS and LCX saw around 40% of weekly profits. Related Reading: XRP Whales Accumulate Massive Tokens – Is A Bull Run Coming? Santiment wrote: Altcoins are on another impressive run, with several notable assets up 20% or more. After a 5-day crypto dip, prices are seeing little resistance. Social spikes & FOMO may cause a top, or traders will scoff at this run (allowing rallies to continue).