Bitcoin, Ethereum Bull Signal Could Come From Regulators
Crypto giant Binance signed an agreement with Cambodia’s Securities and Exchange Regulator to develop a legal framework for regulating cryptocurrencies. While crypto regulation remains patchy in Southeast Asia, Binance believes developing close ties with regulators could fuel a crypto recovery.
Regulatory clarity in crypto has been cited as a hurdle for institutional adoption. Therefore, close ties with regulators could increase capital inflow to Bitcoin and Ethereum, triggering a recovery in these assets.
Cryptocurrencies witnessed an outflow worth $423 million in the last week of June 2022. The largest outflow was observed in Bitcoin and Ethereum when compared to altcoins like Solana, Litecoin, Polkadot, and Cardano.
As institutions and investment firms liquidated their Bitcoin and Ethereum holdings to beat market volatility, crypto market outflow inched closer to February 2018 levels. According to Binance, closer ties with regulators and clarity on cryptocurrency regulation could avert such a crisis.
Institutional investors have reduced their cryptocurrency holdings for fear of volatility, increased risk, and a negative outlook on Bitcoin and Ethereum prices. However, through the bear market, Binance has worked consistently on strengthening its ties with regulators.
Binance recently cleared the air with French regulators, and the exchange’s subsidiary received approval to provide digital asset services to users. Binance now seeks to work towards improving its relationships with the UK and Japan.
Leon Foong, head of the Asia Pacific market for Binance, said:
While there’s some market correction now, this will be a time of greater resilience. The projects that survive are the ones that will be here for the long run. We want regulators to see that resilience so they can have comfort and clarity on regulating this new asset class.
The overall crypto market capitalization has plummeted by 10% and hit $0.89 trillion for the first time since the 2021 bull run.
Given that there is a large scope for regulatory clarity, it might be bullish for Bitcoin and Ethereum prices.