Summary:

• Bitcoin (BITCOIN on xStation5) falls below a $6k mark and bounces up out of the blue
• Bank for International Settlements calls on central banks to clap down on cryptocurrencies
• Deutsche Bank advises against buying digital currencies as risks are too high

Monday was the ugly day not only for equity investors but also for them being immersed in cryptocurrencies as Bitcoin was dropping during the past hours making a bottom a notch below $5900. Having said that, one may suspect that the sell-off seen there had little to do with global equity carnage as the virtual currency had been in a downtrend prior to the yesterday’s session. In this respect, it’s worth noticing that while stock markets witnessed a tremendous slide yesterday, other assets (JPY, CHF, precious metals), being inversely correlated to risk appetite, did not experience huge demand except the fear index VIX which soared more than 100% on Monday. Over the past hours we got two important reports being not supportive of Bitcoin and other digital currencies as well. Before we mention them let’s take a closer look at the chart of BTC.

From a technical point of view Bitcoin could have already bottomed as the price reversed suddenly after making the lowest point slightly below $5900. Notice that the RSI oscillator suggests oversold, and it was unable to make lower levels despite fresh declines seen in the price. Do notice that so low levels of the RSI led to a rebound in the past, hence one may assume the story may repeat this time round. Source: xStation5

BIS urges central banks to crack down on Bitcoin and other cryptocurrencies

While many central banks around the world have already expressed their doubts with regard to Bitcoin underlining the need to closely monitor this topic, the Bank for International Settlements, also known as the bank for central banks because it is the place where they hold accounts, has not yet. It changed yesterday when the head of the BIS said that central banks must clamp down on Bitcoin and other virtual currencies to stop them “piggybacking” on mainstream institutions and becoming a “threat to financial stability”. General manager of the BIS Agustin Carstens added “if authorities do not act pre-emptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability”. Furthermore, he also referred to distributed ledger technology (DTL) saying that “DTL-based systems are very expensive to run and slower and much less efficient to operate than conventional payment and settlement systems”.

Deutsche Bank advises against investing in cryptocurrencies

According to Deutsche Bank Wealth Management investing in cryptocurrencies  incurs risks that are just too high, including high volatility, possible price manipulation and data loss or theft. Therefore, the group recommends its customers to steer away from any form of digital currencies. Markus Mueller, global head of the chief investment office in the German bank, added that if virtual coins were to replace money, then they would have to fulfil money’s three core functions: as medium of exchange, a measure of value and a store of value. Finally he stressed it seems to be unlikely given the risks outlined earlier.