January 2020: Positive Gains for Bitcoin
Tags: Driveinsider, Finance, Crypto, Bitcoin, Cryptocurrency

The beginning of 2020 has seen a return to positive trajectories for many cryptocurrencies, with Bitcoin seeing its biggest January gains since 2012.

Entering the new year around $7,150, by January 17th BTC/USD was teetering on the $9000 mark, currently trading at $8,900. Altcoin are seeing similarly positive gains, with ETH/USD currently trading at $176.95 and XRP/USD at $0.2450.

So what’s propelling this return?

While it’s unwise (if not impossible) to attribute the recent gains to one thing, taking a look at recent developments within the crypto markets and industry, as well as broader world news, reveals several likely contributing factors:

The killing of Iranian general Qasam Soleimani in a US drone strike created concerns that a conflict in the Middle East was imminent, seeing risk-off assets gold and government bonds rally, and with them — bitcoin. Bitcoin block rewards for mining are also set to halve in May — from 12.5 to 6.25 BTC — which buyers have long predicted would encourage a rally similar to what we are seeing. In partnership with consultancy giant Accenture, previous chairman of US financial regulator the Commodity Futures Trading Commission, J Christopher Giancarlo, is supporting an attempt “to digitise the US dollar.” Giancarlo’s team created the Digital Dollar Foundation, with the goal of supporting ‘stablecoin’ initiatives and encouraging the US Federal Reserve to create a central bank digital currency (CBDC). The People’s Bank of China recently finished testing its own CBDC, with trials anticipated to begin in Q1 of this year, with major tech firms including Alibaba and Tencent set to test the ‘digital yuan’. As we previously wrote, greater crypto industry regulation helps grow legitimacy and with that, value. On 10 January the Financial Conduct Authority (FCA) announced that it is now the anti-money laundering and counter terrorist financing supervisor for cryptoasset businesses. The FCA provided a list of the main compliance requirements:

Identify and assess the risks of money laundering and terrorist financing which their business is subject to;

Have policies, systems and controls to mitigate the risk of the business being used for the purposes of money laundering or terrorist financing;

Where appropriate to the size and nature of its business, appoint an individual who is a member of the board or senior management to be responsible for compliance with the MLRs;

Undertake customer due diligence when entering into a business relationship or occasional transactions;

Apply more intrusive due diligence, known as enhanced due diligence, when dealing with customers who may present a higher money laundering / terrorist finance risk. This includes customers who meet the definition of a politically exposed person;

Undertake ongoing monitoring of all customers to ensure that transactions are consistent with the business’s knowledge of the customer and the customer’s business and risk profile.

New cryptoasset firms doing business in the scope of the money laundering regulations must register with the FCA “before conducting businesses.”

While there are certainly factors beyond those included on this list, these developments likely contributed in some part to the positive rally we are currently seeing. However, to what degree they continue to contribute, and whether the rally holds, is still to be seen.