Bitcoin Bounces Off $319, CSBS Joins the Regulatory Party
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Bitcoin continued the downward trend today, spiking to a low of $318.10 few hours ago. From here, BTC/USD reversed and hit a high of $328.39. We are currently quoted at $327.51 on BTC-E, $332 on OKCoin and $334 on BitStamp. The chart below shows the V-shaped reversal during the past 12 hours.
While prices briefly breached $319 per coin, we didn’t even get an hourly close below the figure. Thus, I consider this support level to be still valid. However, another retest of $319 would likely lead to a break lower. Other notable support levels on the downside include the $300 round figure and $285. Lower still, the $266 mark, the highest high for bitcoin during most of 2013, will be an important milestone. A decisive break below $266 may lead to long-term BTC losses. On the upside, look at $350 for clues on potential reversal. A clean break above here would likely spell an end to the losses, at least in the short-term.
More headwinds for the bitcoin economy as yet another US regulatory body is looking to craft rules for the fledgling cryptocurrencies sector. The Conference of State Bank Supervisors released a draft proposal for regulating digital currency businesses. The proposed rules focus on AML/KYC and customer protection. Licensing and supervision requirements will apply to firms that exchange virtual currency for fiat currency or virtual currency for other virtual currency. It will also cover transmission as well storage of cryptocurrencies. If the rules come into effect, companies holding user funds will be required to keep records of the names, addresses and IPs of the parties to the transactions, as well as identifiable information of the virtual currency owner.
While the Conference of State Bank Supervisors has no regulatory power on its own, it can influence local and state regulators. The period of public comments on the proposal will last until 15th February 2015.
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