Crypto Market Forecast: The week ahead, 12th November

Following strong green trading last week, crypto markets corrected sharply following news on Friday that EtherDelta founder, Zachary Coburn, had been charged by the SEC for operating the DEX as a unregistered securities exchange. Top 2 digital assets, BTC and ETH, ended the week trading slightly down, both falling ~1%.

The larger implication of the SEC move, is that it may well be the beginning of further sanctions and fines directed at DEXs, ICOs and other subsections of the blockchain ecosystem, that the Commission deems to be dealing with digital assets that have clear ‘security like’ characteristics.

Popular ERC20s appeared to bear the brunt of this negative sentiment with BAT, ZRX and REP observing price falls of ~9%, ~4% and ~7% over the last 7 days, predominantly driven by strong selling pressure towards the end of the week.

Speaking at the recent DC Fintech week, SEC corporate finance director William Hinman, said the Commission will soon launch ‘plain English’ documentation on the legal position of ICOs.

While the SEC’s exact position has not yet been confirmed, what appears to be clear is that the existing ICO fundraising model will no longer be operable in the United States and most projects will have to register their tokens as securities, meaning additional costs and legal restrictions.

With full legal clarity, however, should come greater market certainty — and a larger price move is likely to occur.

This bearish leaning SEC news thus slowed the bullish momentum built earlier in the week as multiple pro-crypto politicians won key seats in the recently concluded US midterms.

Upcoming Events in Crypto

**November 14th **- CBOE Bitcoin (XBT) last trading date

The current round of CBOE Bitcoin Futures trading, has its last trading day on Wednesday. This will be the last chance for futures contracts to be traded or closed out, and post this date outstanding contracts need to settled by cash as per original specifications. Monthly trading volumes on the CBOE lag behind those on Bitmex and CME markets. Nonetheless, the days surrounding futures expiration are always prone to unusual price activity with scenarios like short squeezing, tending to exaggerate movements.

November 14th- [Golem (GNT) Reddit AMA

Popular ERC20 and ICO project Golem, has a community AMA (‘ask me anything’) this week.. Questions may cover dates surrounding upcoming network updates and the jurisdictional approach of Golem given the attitude of the SEC towards ICOs. Useful sentiment may be gleaned from the AMA, potentially affecting short-term buy/sell action of GNT.

November 15th- Bitcoin Cash Hardfork

The controversial Bitcoin cash blockchain, will split into Bitcoin Cash ABC (BCHABC) and Bitcoin Cash SV (BCHSV) this Thursday. As speculation surrounding the implications of the fork has run rampant in BCH markets, prices have fluctuated wildly with the digital asset facing losses of 6% last week, culling gains of 29% the week before. Prefork trading futures offered by Poloniex indicate BCHABC to be the market’s preferred option, trading at ~$470, while the Craig Wright backed BCHSV trades at ~$69.

Top 10 Crypto Summary

With the vast majority of crypto markets trading green last week, the strong gains of Stellar Lumen (XLM) and XRP (Ripple) stand out. The driving factor for Stellar’s strong performance is a $125 million give away to token holders, set up to expand adoption, creating buying pressure and ‘get it while it’s hot’ appeal. As highlighted by Cryptocurrency Newsfeed, XRP was buoyed by news of Ripple’s continued expansion and the opening of a new office in cash-rich Dubai.

Midweek excitement as the price of BTC crossed the $6500 level quickly faded as markets consolidated following the SEC action — and the Bitcoin price returned to its new favourite range between $6300-$6400 — ending the week down ~1%

At a fundamental level the Bitcoin network continues to perform strongly with transaction fees trending downwards along with hashrate and block size. Segwit usage continues to hover around the 50% level sending positive signals about the scalability of the network and potential adoption.