The dynamics of the crypto market are said to be largely determined by the news situation. The market reacts both positively and negatively to reports from the realm of regulation – this is the result of a new report from the Fed. A recent report by the Federal Reserve Bank of Dallas Globalization Institute illustrates the reactions of the crypto market under Bitcoin’s dominance to specific message types. According to the results, transaction volumes and user base of the crypto market react significantly to news about regulatory measures.
The scope of the effects depends on specific, regulatory news categories:
“Events related to general bans on cryptocurrencies or their treatment under securities law have the greatest negative effects, followed by messages to combat money laundering and terrorist financing, and to limit cryptocurrency interoperability with regulated markets.”
Bitcoin responds to SEC and Zuckerberg
In particular, the report points to two specific events that were closely correlated with the development of the Bitcoin price. On March 10, 2017, the U.S. Securities and Exchange Commission (SEC) vetoed a possible Bitcoin ETF. Within five minutes of the decision being announced, the Bitcoin price plummeted 16 percent.