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Self-regulatory orgs for crypto keep ecosystem afloat pending clear regulations

In places where crypto has no solid legal framework, self-regulatory organizations act as a ladder for crypto companies to evolve.

The crypto market is growing at a rapid pace, with governments and various regulatory bodies actively trying to study and keep up with the growth.

While many policymakers around the globe have come to realize that banning the crypto market is not an option, many are yet to come up with a formidable framework to regulate the nascent market in their respective countries.

Even some of the most crypto-friendly countries have only managed to regulate parts of the crypto market such as crypto trading while a significant chunk of crypto-related activities still remains a gray area.

Thus, for a rapidly growing industry like crypto, which often remains under heavy government scrutiny, surviving becomes a complex task. This is where self-regulatory organizations (SRO) come into play.

Self-regulatory organizations have complete authority in developing policies, maintaining guidelines, enforcing policies and resolving conflicts. Although self-regulatory groups are private, they are subject to government scrutiny; if there is a discrepancy between the regulations of the two bodies, the government agency takes precedence.

Bradley, founder of crypto trading platform Y-5 Finance, told Cointelegraph:

“SROs are becoming more commonplace within countries lacking any official cryptocurrency regulation. Technology such as blockchain does not fit easily into traditional regulation and proponents of SRO state that they can help integrate a new complex industry into existing traditional agencies. SRO’s are self-funded and self-governed, and some have received criticism for taking the side of their members rather than the public.”

An SRO is a non-governmental organization formed by participants of a particular industry or sector to assist in the regulation of enterprises in that area. These SROs facilitate collaboration between industry experts and government policymakers and try to fill the regulatory vacuum until a widely recognized framework comes into play.

Financial Industry Regulatory Authority (FINRA), is a prime example of an SRO that works in accordance with the United States Securities and Exchange Commission (SEC) to enforce the regulatory bodies’ broader objective. Similarly, several crypto-based SROs have cropped up in various jurisdictions that have helped the crypto industry thrive.

Tony Dhanjal, head of tax at crypto taxation platform Koinly, told Cointelegraph:

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“In the absence of official or government-backed regulation, self-regulation and governance have been witnessed before in other industries. it demonstrates a degree of intent and responsibility toward ‘protecting investors.’ This further fuels confidence in the industry and accelerates innovation. SROs aim to ‘foster consumer protection and market integrity’ — they certainly seem to be making the right sounds.”

How SROs have helped across the globe

Over the past year, the crypto industry has managed to create the highest number of unicorns, or startup firms worth over $1 billion, as a significant chunk of investment from the traditional market has flowed into the crypto industry. The growing confidence of traditional markets in the crypto industry has been possible in part because of the self-regulatory measures that the industry has incorporated in the absence of government regulation.

Justin Newton, CEO of leading compliance digital identity verification technology firm Netki, told Cointelegraph:

“Eight years ago, I forecasted that regulations were coming to the cryptocurrency space, it was just a matter of when and under what conditions. It was clear even then that the industry would be best served by getting out ahead of regulators in terms of reducing risks and providing appropriate Anti-Money Laundering controls. We are more likely to get good frameworks if we design them rather than if we wait for regulators to force the issue.”

He went on to add that the crypto industry needs to be more proactive in offering solutions to the issues regulations attempt to address rather than fighting the inevitable interference from policymakers. He said that “self-regulatory bodies are a specific kind of organization that is created and empowered by legislation and regulation, which may not be the right fit for our industry, particularly due to the inevitable cross-border nature of the businesses participating in the ecosystem.”

There has been a global push for crypto exchanges to self-regulate. Japan and South Korea are considered pioneers of the self-regulatory industry and were among the first nations to establish SROs for crypto.

The Japan Blockchain Association (JBA) boasts 127 members and 35 crypto exchanges among them. It sets standards and promotes the development of a sound business environment and user protection system of virtual currency and blockchain technology. Over the years, the JBA has worked toward bringing awareness around the crypto market and holds regular meetings and discussions around the advent of new use cases with its latest focus being on nonfungible tokens (NFTs).

CryptoUK, a trade association with its own self-regulatory code of conduct, was founded by the United Kingdom’s seven largest crypto firms. The motto of the association is to help people in times of crisis, especially in case of a hack. Similarly, seven top crypto exchanges in India partnered with the Internet and Mobile Association of India to form a self-regulatory body.

South Korea’s blockchain association has 25 members and propagates the use of nascent blockchain tech among the masses. The SRO has been responsible for issuing crypto exchange guidelines and has also been a part of making crypto tax policies. The Korean blockchain association lobby has formally advised against the 20% crypto tax proposed in the country.

In the United States, the Gemini crypto exchange was the first to propose an SRO in the form of the Virtual Commodity Association. Later in 2018, a group of 10 financial and tech firms created the Association for Digital Asset Markets (ADAM). According to its website, ADAM now has 31 members and five partnering law firms.

Gabriella Kusz, CEO of the Global Digital Asset and Cryptocurrency Association — a global self-regulatory association for the digital asset and cryptocurrency industry — explained how the self-regulatory organization functions and works toward building policies to promote growth. She told Cointelegraph:

“Around the world, the Global DCA maintains a number of Memorandums of Understanding with other emerging self-regulatory movements so we can speak intelligently to the other global movements we are seeing develop credibly in this regard. In particular, we see excellent progress through leadership and stewardship in Nigeria through the Stakeholders in Blockchain Technology Association of Nigeria as well as with the Internet and Mobile Technology Association of India. Both of these are emerging self-regulatory movements, but they have sought to bring around a diverse and inclusive group of firms to advance standards, education and gentle advocacy to support public and private sector dialogue.”

Europe is currently lagging behind in terms of accommodating self-regulatory bodies, with Switzerland being the only stand-out nation.

Why should regulators pay attention to SROs?

The nature of a particular industry, the level of competition in the sector and its need for regulation usually will determine if an SRO is necessary. Either the member firms of the industry agree and create the organization themselves or the government could mandate the creation of an SRO. In many cases, SROs also serve as forums for producing educational materials or managing certifications within their industry.

Justin Hutzman, CEO of Canadian crypto exchange Coinsmart, explained the importance of how government regulations and SROs can go hand in hand. He told Cointelegraph:

“Along with country-specific regulations, the industry needs to take specific measures to self-regulation to meet certain global standards. Recently, CoinSmart and other exchanges from Canada, the U.S. and Singapore joined the Travel Rule Universal Solution Technology (TRUST) to boost its AML efforts. TRUST takes measures to reduce money laundering by ensuring that members are compliant with the travel rule while protecting user data.”

Self-regulatory organizations are adopting self-imposed standards for participants in the digital asset ecosystem that reflect compliance practices in traditional financial institutions. Regulators and legislative bodies around the world are beginning to address how digital assets will be regulated, but it could take years before standards are adopted. U.S. President Joseph Biden’s recent executive order on digital assets underscores the need for companies to address ethical practices and internal controls within their organizations.

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The growing prominence of self-regulatory organizations will contribute to the development of standardized compliance practices, allow for constructive engagement with regulators and accelerate institutional adoption of this emerging asset class. Organizations like the Association for Digital Asset Markets are building a foundation for this to happen.

Felipe Vallejo, the chief regulatory officer at Bitso, told Cointelegraph:

“We believe that the emergence of SROs and continued self-regulation set an excellent example for governments looking to assess risks and appropriate policy responses for crypto without stifling innovation.”

Self-regulation combats one of the drawbacks of every country potentially having different regulations, which makes it increasingly difficult for companies to operate on a global scale. Self-regulatory bodies have more opportunities to collaborate with each other and introduce global regulations that are consistent and meet the needs of investors and cryptocurrency companies.

Sold your SOL? Solana price eyes 35% jump as two technical signals flip bullish

Solana’s nearly 80% year-to-date decline is likely to follow up with some relief rallies, technicals suggest.

At least two technical indicators show Solana (SOL) could undergo a sharp price recovery in June, even after the SOL/USD pair’s 78.5% year-to-date decline.

SOL price nears bullish wedge breakout

First, Solana has been painting a “falling wedge” since May, confirmed by its fluctuations inside two descending, converging trendlines. Traditional analysts consider falling wedges as bullish reversal patterns, meaning they resolve after the price breaks above their upper trendlines.

As a rule of technical analysis, a falling wedge’s profit target is measured after adding the maximum distance between its upper and lower trendlines to the breakout point. So depending on SOL’s breakout level, its price would rise by roughly $20, as shown below.

*SOL/USD daily price chart featuring “rising wedge” breakout setup. Source: TradingView*

That puts the SOL’s price target at $58 if measured from the current price, or about 35% higher. But if the price retreats after testing the wedge’s upper trendline and continues to fluctuate inside its range, SOL’s profit target would keep getting lower.

The Solana token can rise to at least $44 after breaking out of its wedge pattern.

Bullish divergence

More upside cues for Solana come from a growing separation between its price and momentum trends.

In detail, SOL’s recent downside moves accompany an upside retracement in the readings of its daily relative price index (RSI), a momentum oscillator that detects an asset’s overbought (>70) and oversold (

*SOL/USD daily price chart featuring price-momentum divergence. Source: TradingView*

This situation, otherwise known as “bullish divergence,” shows that bears are losing control and that bulls would capture the market again.

Solana still faces bearish risks

Financial market veteran Tom Bulkowski believes falling wedges are poor bullish indicators, however, with a higher breakeven failure rate of 26%. Meanwhile, there is only a 64% chance that a falling wedge would meet its profit target, which leaves Solana with the possibility of continuing its downtrend.

Bulkowski asserts:

“The only variation that works well is a downward breakout in a bear market.”

Fundamentals around Solana agree with a downside outlook. They include a hawkish Federal Reserve and the negative impact of their tightening on riskier assets, including cryptos and equities.

As a result, SOL could move lower under the said macro risks, with its next potential downside target in the $19–$25 area, as shown below.

*SOL/USD weekly price chart. Source: TradingView*

This range was instrumental as support in the March–July 2021 session.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Crypto 401(k): Sound financial planning or gambling with the future?

Cryptocurrencies may be coming to Americans’ retirement plans. Some see it as a sound financial strategy, while others remain skeptical.

In April, United States-based retirement plan provider Fidelity Investments moved to allow 401(k) retirement savings account holders to invest directly in Bitcoin (BTC), the flagship cryptocurrency, making crypto a potential part of one’s savings for the future.

A 401(k) is a retirement savings plan offered by many U.S. employers that give the saver tax advantages and allow for several different investment options. Fidelity’s move will make it easier for Bitcoin to be among those options.

In a typical 401(k) plan, employees agree to have a percentage of each paycheck paid directly into an investment account created for the plan, while employers often match part or all of the employees’ contributions.

Fidelity is the largest retirement plan provider in the United States, and its BTC rollout will make the cryptocurrency available to more than 40 million employees — assuming their employers decide to offer it. Investors who take advantage of the initiative could effectively become tax-advantaged long-term BTC hodlers removing coins from circulation every month.

The company’s plan limits BTC allocations to a maximum of 20% and allows companies to make the threshold even lower. Offering cryptocurrency options for 401(k)s isn’t new, however. In June 2021, another retirement plan provider, ForUsAll, partnered with Coinbase to offer BTC exposure to its account holders.

ForUsAll even recently filed a lawsuit against the Department of Labor and Secretary of Labor Marty Walsh in the United States District Court for the District of Columbia, seeking the withdrawal of a compliance assistance release.

The release states that the department’s Employee Benefits Security Administration will “conduct an investigative program aimed at” 401(k) plans that include cryptocurrency. Speaking to Cointelegraph at the time, ForUsAll CEO Jeff Schulte said the government was “trying to restrict the type of investments Americans can choose to make because they’ve decided today that they don’t like a certain asset class.”

Questions of government overreach aside, it’s also important to consider whether including crypto assets in a retirement plan is a good idea. The Bitcoin network has been around for over a decade and has outperformed every other asset class so far, but as any analyst will say, past performance does not guarantee future results.

Crypto volatility and 401(k) plans

Considering that Bitcoin and crypto assets in general are recent financial experiments only a little over a decade old, some investors may find digital currencies too risky. Cryptocurrencies can be highly volatile, and their value has been known to plunge by up to 80% during bear markets — something that could prove disastrous ahead of someone’s retirement.

While employees aren’t forced to withdraw from their 401(k) plans when they retire, the point of the money being there is to provide them comfort during their sunset years. Waiting for the market to recover or simply accepting such significant losses could be devastating.

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Chris Kline, co-founder and chief operating officer of Bitcoin IRA — a cryptocurrency-focused individual retirement account provider — told Cointelegraph that there is a “growing conversation around the adoption of digital assets and their growing use case.”

Kline pointed to Senator Tommy Tuberville from Alabama, who recently unveiled a bill, the Financial Freedom Act, that seeks to allow Americans to add cryptocurrency to their 401(k) retirement savings plans.

According to Kline, part of the “retirement crisis we have in this country [the U.S.] is due to a lack of participation in 401(k)s.” He added that such moves could be a way to get newer generations engaged through their employer-sponsored plans and help Americans retire while testifying to the resilience and relevancy of crypto assets. Kline added:

“Crypto is certainly volatile, but its resiliency and relevancy in its short existence are remarkable. Having at least some exposure — and more importantly, experience in crypto — is becoming paramount to modern investing.”

Cryptocurrencies could have the same disruptive impact on money that the internet had on communications or that email had on post offices, Kline stated.

Speaking to Cointelegraph, Scott Melker, a cryptocurrency influencer and the host of the Wolf Of All Streets Podcast, noted that every investor should have “at least minimal exposure” to Bitcoin, with Ether (ETH) a second possibility worth considering.

According to Melker, even a small allocation in these assets potentially offers “idiosyncratic risk and the opportunity to invest in an asset [that] can go up when everything else is dropping.” Melker added that crypto markets crashing ahead of retirement might not be the biggest concern, saying:

“Any market can crash ahead of retirement, so this is not a concern specific to Bitcoin. Investors in tech stocks right now are largely underperforming crypto in their retirement accounts.”

Melker added that investors should be allowed to invest in any asset they prefer for their retirement, concluding that while self-directed IRAs are “popular for this reason,” 401(k) holders haven’t yet had such an option.

A volatile asset class for diversified portfolios

Over the past few years, more and more people have come to consider cryptocurrencies an investable asset class, with demand clearly present for retirement savings. In a survey conducted by Investopedia, one in four millennial respondents reported that they are already using crypto to help fund their retirement goals.

Employers, however, still have their doubts. The Plan Sponsor Council of America recently surveyed its members, which are employers sponsoring qualified savings plans, and asked whether they are considering adding crypto to their investment options. Only 1.6% responded affirmatively.

*Sculpture of a bear and a bull on a seesaw, representing the changing markets, in front of Fross and Fross Wealth Management office in The Villages, Florida. Source: Whoisjohngalt.*

Speaking to Cointelegraph, Daniel Strachman, managing partner at A&C Advisors and an independent trustee of the Arca U.S. Treasury Fund, said that cryptocurrencies are nevertheless “something that a diversified portfolio should include.”

According to Strachman, an individual’s level of exposure to crypto assets should depend on several factors, including age, income, other assets and more. To him, it’s “all about investor education,” as there “needs to be significant information, content and educational programs available to investors, regardless of the size of their assets.”

Cameron Collins, an investment analyst at Viridi Funds — a company offering crypto and clean energy investment solutions — echoed Strachman. He told Cointelegraph that sound cryptocurrencies like Bitcoin “are great investments and deserve a place in 401(k) plans.”

According to Collins, memecoins and scam tokens with “no fundamental value” do not deserve a place in these types of investments, and policymakers — along with investors and plan administrators — should be made aware of this important caveat.

Cryptocurrencies, he said, offer “extreme upside potential” but lack investor protection, which can be a significant drawback. The upside potential may, however, be all an investor needs.

Giving prudent managers more opportunity

Having more options to invest across different assets, including cryptocurrencies, may give a prudent manager “more opportunity to optimize that long-term rate” of return, according to Thomas Perfumo, head of business operations and strategy at crypto exchange Kraken.

Speaking to Cointelegraph, Perfumo noted that retirement is often associated with low risk, but “This heuristic misses the market,” as $1 compounding over 30 years at an 8% rate will grow to surpass $10, while that same $1 compound over 30 years at a 6% rate grows to $5.74.

According to Perfumo, optimizing that rate of return over the long run is “how an individual builds wealth, overcomes the burden of inflation and ultimately accrues enough to retire comfortably.”

Perfumo added, “Risk tolerance evolves over a person’s lifetime. Someone closer to retirement, who may already have a significant amount of savings, will likely have a lower allocation to risk-on investments like cryptocurrency.”

He added that conversely, individuals at the start of their careers have “more capacity to take on risk and will likely allocate more of their capital towards risk-on assets.”

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The potential downsides to adding crypto to retirement investment plans, Perfumo said, involve fiduciaries failing to “act in their clients’ best interests by rushing into a risky product or misallocating their clients’ capital relative to their risk profiles.”

On the other hand, someone who wishes to manage a self-directed retirement portfolio “should have all available options at their disposal, so long as they are informed of the risks.”

Adding cryptocurrencies to 401(k) plans means adding tax-efficient investment opportunities for investors looking to hold onto their assets for an extended period of time. As with any other financial decision, the choice should be adapted to investors’ risk profiles and should only be made after thorough research and help from advisers if necessary.

Cryptocurrency investments do not match everyone’s risk profile, nor should they. They are voluntary, but they may be highly beneficial to investors who thoroughly understand the risks involved.

OpenSea ‘insider trading’ could see NFTs labeled securities: Former SEC lawyer

Former SEC lawyer says OpenSea insider trading case could end with NFTs labeled as securities.

Former United States Securities and Exchange Commission lawyer Alma Angotti says this week’s news about an OpenSea employee being charged with insider trading could open the doors to nonfungible tokens (NFTs) being labeled as securities.

On Wednesday, in a first for the industry, prosecutors in Manhattan charged former OpenSea product manager Nathaniel Chastain with insider trading .

The U.S. Attorney’s Office for the Southern District of New York said the exact charges were “wire fraud and money laundering in connection with a scheme to commit insider trading.” Until now, the phrase “insider trading” has not been used in regard to cryptocurrency and typically refers to the insider trading of securities.

Angotti was once an enforcement official at the SEC, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network and the Financial Industry Regulatory Authority. She is now a partner at a consulting firm called Guidehouse. She told TechCrunch:

“It could very well be a security under the Howey Test — if you’re buying a piece of an NFT and hoping the price will go up so you make money from it, that’s not very different [from securities].”

The Howey Test is used to determine if a transaction qualifies as an investment contract, or security, which is subject to disclosures and registrations. An investment contract exists if an investment results in the expectation of profit from the efforts of others.

The OpenSea case of insider trading against Nathaniel Chastain claims that he used anonymous hot wallets and accounts on OpenSea itself to purchase 45 NFTs over the course of a few months that he knew in advance would be featured on the home page. He would then sell them for a profit after they became featured and rose in value.

According to Angotti, the charges are not surprising:

“Misappropriating your employer’s confidential information is fraud, and once you move the proceeds of that fraud through the monetary system, it’s money laundering.”

In similar news today, the Commodity Futures Trading Commission, which regulates commodities rather than securities, is suing Gemini, claiming the crypto exchange lied in their futures contract evaluation. The CFTC claimed that Gemini misled them in 2017.

Mental health and crypto: How does volatility effect well-being?

Crypto addiction has become a new disease for investors: Who is affected, how to understand that you have problems and who can help.

The crypto world is well known for its volatility. Especially in the early days, digital assets experienced wild price swings, gaining or losing double-digits in the course of a day. It appears that the current bear market is no exception to this trend.

While wild price swings provide opportunities to make gains — if you’re lucky enough — the volatile behavior of digital assets can pose a threat to the mental and emotional health of investors.

Mental health is an extremely important aspect of human life, which, until recently, wasn’t given much importance in mainstream media and discourse. Finances and investments can play an important role in emotional well-being, while constant despair due to the volatility of the crypto markets can hurt.

This was well displayed after the Terra debacle, when the ecosystem’s stablecoin depegged, sending the crypto market as a whole into a spiral and eroding confidence in the crypto ecosystem.

Indeed, after the price crash, suicide hotlines for numerous countries appeared in the LUNA subreddit, as the savings and investments of many investors were wiped out in a matter of hours.

Fears and failures

Even when equipped with investment knowledge, beginners can make bad decisions under emotional pressure. In addition to technical and fundamental analysis, the right mental attitude plays an important role in trading. Under the pressure of emotions, rash acts can be committed, which usually cause mistakes and serious losses. These mistakes can be divided into several groups:

Gambler syndrome: New investors begin to open a large number of transactions without thinking them through.
Premature exit from a deal: At the first successful transaction, beginners tend to quickly take profits and close the position prematurely. In this case, they lose part of the profits that they could gain.
Dependence on other market participants: Many traders are guided by the signals and opinions of established market participants. To obtain the maximum benefit, however, it is necessary to become independent of these factors.
Coming to terms with losses: the cryptocurrency market is very susceptible to emotional trends. Prices immediately react to a variety of statements and rumors, so it won’t be possible to completely get rid of the influence of emotions.
Euphoria from the first deal: The first profit gives the trader a positive emotion, which can only push them to become undisciplined.

Many crypto enthusiasts refer to FOMO, or the fear of missing out, on a potential deal. Another major fear in the crypto world is related to hackers. The digital, decentralized and often anonymous nature of crypto makes these assets more vulnerable to hacking and scams.

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These are just some of the many factors that can affect the mental health of cryptocurrency investors. To limit the psychological impact of financial stress, it is important for investors to decide how much they can afford to risk.

New disease

Over the past couple of years, cryptocurrencies have risen and fallen many times, which couldn’t help but affect the mental health of crypto investors.

According to experts, crypto trading can turn into a real addiction. The first signs of this psychological disorder occur when traders constantly follow the price fluctuations in digital currency. Experts refer to this process as “day trading” and consider it to be another form of gambling, and people who are addicted to trading cryptocurrencies are referred to as “crypto addicts.”

The main symptoms of crypto addiction are muscle tension, anxiety, round-the-clock monitoring of digital asset prices and constant thoughts about trading digital currency even while doing other things not related to the crypto industry. All this leads to depression and insomnia.

In some countries, specialized programs have already appeared that help address mental health problems related to digital asset trading.

Who is at risk?

Luckily, not every crypto investor is subject to mental health issues.

Scientists from the Queensland University of Technology in Australia recently conducted a study in April regarding who is most susceptible to crypto addiction and which personalities should pay special attention to their mental health while trading.

Those who are prone to crypto addiction are people who love gambling and don’t really trust authorities. A strong desire to have nothing to do with the state makes such people turn to cryptocurrency.

People who like to deceive and manipulate others for the sake of their own interests, such as cynical and prudent people, are also prone to a crypto addiction.

Narcissists are also susceptible to crypto addiction. Such individuals are usually incredibly confident and, therefore, prone to risky investments. At the same time, they prefer to focus on the positive side of life, believe in their bright future and think that nothing bad can happen to them. This unshakable self-confidence is what drives narcissists to take risks and buy cryptocurrencies.

People with a high level of psychopathy are characterized by heartlessness, low emotional intelligence and a lack of empathy. Such people usually have reduced emotional reactions, which makes them resistant to stress and anxiety, so they probably like risk. In addition, psychopaths are impulsive. This quality, combined with a propensity for risky behavior, makes them prone to risky trading behavior. They are afraid of afraid missing out on the benefits that others might receive.

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Sadists also like to invest in Bitcoin (BTC) because, like psychopaths, they don’t want to miss out on potential reward. For them, the pleasure of someone else’s pain is associated with a sense of superiority over others. At the same time, both psychopaths and sadists, unlike narcissists, have no illusions about their prospects, which is reflected in their passion for cryptocurrency.

Of course, not every crypto investor is mentally disturbed. However, most people don’t develop an addiction to trading digital assets. It is worth remembering that when starting to trade cryptocurrencies, one must take into account all the facts that can affect one’s health and well-being. To limit the psychological impact of cryptocurrency stress, it is important for investors to decide how much they can afford to risk.

According to Sergey Miheev, product manager from investment platform United Traders, investors shouldn’t focus only on the cryptocurrencies themselves:

“First of all, stop perceiving crypto only as a trading instrument, unless you’re a professional daytrader with many years of experience. If you are an investor, it is better to understand how price is created and why it changes, the value of a certain coin and market behavior patterns. Then, you get a bigger picture. One way or another, you realize that a crypto is a developing industry, which means that the best strategy is simply buy and hold. Remember that time is on your side.”

Cardano price fake-out? ADA’s 45% rebound in two days could trap bulls

ADA price has seen sharp recoveries during bear markets in the past with many turning out to be bull traps.

Cardano (ADA) price climbed from $0.48 on May 30 to as high as $0.68 on May 31—a 45% rally in less than 48 hours. But ADA/USD failed to extend its rally further upward and dropped by almost 13.75% from its weekly high.

ADA price: Ear market vibes

Cardano’s price retreated sharply on June 1, giving up a portion of the gains secured in the previous two days. The question now arises whether the ADA/USD pair can extend its recovery trend, especially as it trades almost 80% below its September 2021 peak of $3.16.

Interestingly, the downside retracement began after ADA tested its 50-day exponential moving average (50-day EMA; the red wave in the chart below) as resistance. Also, the pair moved lower in tandem with a broader correction sentiment across riskier assets, including Bitcoin (BTC) and the S&P 500 (SPX).

*ADA/USD daily price chart. Source: TradingView*

Now, the Cardano token risks a further price correction, according to the Digital Trend, a financial analysis contributor at SeekingAlpha, noting that ADA has seen sharp price rebounds in the past that turned into bull traps, adding:

“In March, we saw ADA go from south of $0.80 to over $1.24 in a couple of weeks. This, to me, looks like another fake-out.”

Several fundamental factors also support a bearish outlook. On June 1, the Federal Reserve will begin unwinding its $9 trillion asset portfolio, likely creating more headwinds for risk-on assets, Cardano included.

1/16

Today it begins.

Quantitative Tightening.

So what does it mean? Is it a straight down market? Do we know its all good if nothing bad happens the first day?

How do you navigate this?

— Adam Cochran (adamscochran.eth) (@adamscochran) June 1, 2022

“I don’t think we know the impacts of QT [quantitative tightening] just yet, especially since we haven’t done this slimming down of the balance sheet much in history,” Dan Eye, the chief investment officer of Fort Pitt Capital Group, told Market Watch, adding that removing liquidity from the market would “affect multiples in valuations to some degree.”

Cardano price paints bull pennant

From a technical perspective, Cardano could continue its recovery trend in June due to a bullish continuation pattern.

ADA has been consolidating inside what appears to be a “bull pennant,” confirmed by the price fluctuating inside a triangle structure following a massive move upside, called “flagpole.”

As a rule, a bull pennant resolves after the price breaks above its upper trendline and rises by as much as the flagpole’s height.

*ADA/USD hourly price chart featuring ‘bull pennant’ setup. Source: TradingView*

In other words, a $0.77 bullish target in June, up more than 25% from June 1’s price.

ADA/BTC sees a similar upside setup

ADA has been painting a similar bull pennant setup against Bitcoin, raising the chances of an uptrend for the ADA/BTC pair in June.

*ADA/BTC hourly price chart featuring ‘bull pennant’ setup. Source: TradingView.com*

As a result, ADA/BTC’s decisive breakout above the pennant’s upper trendline could have it rise toward 0.00002355, up 23% from June 1’s price.

Goldman Sachs reportedly eyes crypto derivatives markets with FTX integration

FTX has sought to integrate brokerage services internally to fulfill trades automatically, however, CFTC has called for greater scrutiny of the demand as it would lead to a monopoly of big players.

Goldman Sachs, one of the leading investment banks in the United States is reportedly trying to onboard some of its derivatives products into FTX.US crypto derivatives offerings.

Goldman Sachs has been in talks with FTX over regulatory and public listing help, and aims to expand into offering crypto derivatives by leveraging some of its own derivatives tools and services, reported Barron’s.

FTX.US, the U.S. subsidiary of global cryptocurrency exchange FTX is currently seeking to offer brokerage services for its derivatives offerings. This would allow the crypto exchange to handle the collateral and margin requirements internally rather than depending on “futures commission merchants” (FCMs). FTX.US president Brett Harrison said:

“We have multiple FCMs already committed to integrating technologically with the exchange. There are several large ones you can probably name.”

The U.S. Commodity Futures Trading Commission (CFTC) has sought public comments on the requested amendment from the crypto exchange. The chief regulatory body also believes that FTX’s proposal warrants scrutiny as it would lead to a monopoly by large investment banks such as Goldman.

According to people familiar with the matter, the integration of Goldman Sachs derivatives services would offer “trading futures directly, introducing clients and acting as an on-ramp to the exchange, or providing capital top-ups for clients.”

FTX has argued that an integrated brokerage model would help in making the market more stable and free. In a recent roundtable discussion with the CFTC, CEO Sam Bankman-Fried fielded several questions about crypto derivatives and FTX’s proposal to integrate its own FCM.

Crypto derivatives trading has been a topic of debate for quite some time, with many European countries and even the United States prohibiting most of the crypto exchanges from offering leveraged trading. Binance had to shut its derivatives offerings in several European countries post regulatory interventions.

On one hand, CFTC has called for greater scrutiny of FTX’s amendment demand. On the other, FTX argues that an integrated brokerage model would help them to calculate margin requirements every 30 seconds rather than waiting until the next day to liquidate positions.