South Korean Authorities Intend To Cool Cryptocurrency Markets Down
5 months ago admin2 Comments Off on South Korean Authorities Intend To Cool Cryptocurrency Markets Down
Just a simple signal from the government of South Korea can have a deep impact on Bitcoin prices. The government there is concerned about cryptocurrency market speculation and it is threatening to tighten its regulatory grip on exchanges. This includes the shut down of exchanges and legislation to tax cryptocurrency traders. Markets have responded accordingly, with Bitcoin prices taking a hit followed by many other popular altcoins. Nevertheless, Bitcoin and other altcoins have seen this before. China cracked down on cryptocurrency markets in September. Prices dropped, and then rallied shattering record high after record high, until apparently, South Korean authorities decided to cool the markets down.
Bitcoin Should Recover Despite the South Korean Crackdown
Just like Bitcoin prices and those of other cryptocurrencies recovered following the Chinese crackdown, they should be able to thrive after the South Korean attempt to cool markets down. Investors always seem to find a way to circumvent attempted government intervention in cryptocurrency markets. A threat to close local exchanges for instance, will only drive South Koreans to look for foreign exchanges to do their business with. This is especially true if we consider the sheer strength with which South Korean investors poured into cryptocurrencies during the second half of 2017.
South Korean Market Makers Are Not Going Away
South Korea may account for as much as 20% of Bitcoin trading volumes; South Korean investors are market makers. As the government starts regulating gateways into cryptocurrencies without addressing the demand, they might actually achieve the opposite. Bitcoin and other altcoin prices could move higher than world averages in the local market, triggering more interest from a public that has been captivated by these digital assets.
On the other hand, those who already own Bitcoin and other cryptocurrencies, will face more obstacles to cash out. The solution for them would be to keep their coins and continue trading on exchanges abroad, while they use their profits to buy as many goods and services as they can with their coins, without going through the local currency.
South Korean Government Policy to Cool Cryptocurrency Markets Down Can Backfire
Looking at Bitcoin and other cryptocurrency markets right now, it is possible to see how South Korean government policies to cool the markets down may backfire. Bitcoin seems to have found a floor around the $13,000 USD mark, while other cryptocurrencies find their footing close to all-time highs. Other altcoins are even thriving in this market, and there are also quite a few investors taking time off for the holidays. It seems there is enough potential for other investors elsewhere to pick up the slack after the South Korean crackdown. Somehow after key governments announce a crackdown on Bitcoin and other cryptocurrencies, the markets seem to bounce back and test new highs. South Korean investors who are already in will profit, and those who are looking to get in, will find a way. This attempt to cool markets down can backfire, just as it did in China a few months ago.