Lingering Concerns of “Liquidity”, The Prime Factor Amid Cryptocurrency Bearish Streaks

The cryptocurrency prices, so far this week, has been edgy but continued selling pressures. BTCUSD (at Bitfinex), $3,597.90 levels to the recent lows of $3,422 levels. Whereas Ripple (XRP) has attempted to bounce back from 0.28524 to the current 0.32310 levels, while Ethereum (ETH) has also dragged bearish streaks with -2.95%, currently trading at $110.17 levels.

We have already reported that analysts at European Securities and Markets Authority (ESMA) reckon the types of risk areas amid bearish streaks of crypto-avenues, they are aggravated especially in the case of major cryptocurrency pairs, predominantly owing to their high price volatility and low liquidity.

While OKEx is intending to distag all Bitcoin Gold (BTG) futures contracts the same cause of concern (due to low liquidity of the financial instrument), as per OKEx’s announcement.

The ESMA, the E.U.’s in-house financial agency based in Paris, has released an in-depth report on “crypto-assets.” Wherein, the substance shines some light on how the regulators should address digital currencies and guide exchanges dealing with them. In this perspective, it outlines live apprehensions of the crypto-avenue and the potential threat areas, like the reliability of custodians and liquidity matters. 

Notably, the ESMA alarms this emerging asset class, with liquidity concerns in conjunction with other issues, like  scams, fraud, missing surveillance measures, speculations, and cyber-attacks, etc are the genuine hindering reasons for smooth flow of cryptocurrency operations that resembles the clarifications from the U.S. Securities and Exchange Commission (SEC)’s deferrals and denials for BTC ETF approval.

Now, the  Bank of International Settlements (BIS) report signifies that bitcoin's liquidity is set to fall dramatically owing to decreasing mining rewards and low retail use if it doesn't migrate to another consensus model such as proof-of-stake.

Elsewhere, realizing the apprehensions and the cyclical effects of liquidity matters, the CEO of Ripple Brad Garlinghouse mentioned in a recent interview, that: “consistency with Ripple’s vision of XRP as a fast and inexpensive source of liquidity for cross-border transactions. Instead of banks having to maintain foreign bank accounts, the idea is for them to buy XRP with dollars or euros and rely on local market makers to exchange XRP into local currencies would be conducive.”

Rootstock (RSK) is a Lightning-like sidechain that builds a bitcoin-pegged coin and smart contract utility on top of the bitcoin security layer to create a high-throughput currency that keeps bitcoin relevant as a medium of exchange and keeps network mining profitable. Courtesy: BNC

Currency Strength Index: FxWirePro's hourly BTC spot index is inching towards -46 levels (which is bearish), while hourly USD spot index was at 0 (absolutely neutral) while articulating (at 13:28 GMT). 

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