Expect More Regulation In 2022

Big changes are expected to happen in the crypto world. Starting with legislation, cryptocurrency will put their foot in the door to try to regulate transactions and trading in the same way they do in the stock market. Read about our other crypto investment ideas here in the A1 Trading analysis tab on our website.

What's New

Cryptocurrencies are now expected to see a lot more regulation from lawmakers in the coming year as the crypto market becomes widely recognized. The US government understands the potential growth and immersion into this market, and whether they agree with it or not, it will become more mainstream, and they are trying to decide how to step in and deal with it.

The IRS And New Legislature

According to the IRS website on cryptocurrencies, holding crypto and using it to pay for transactions can now be considered a tax liability. And it is up to the individual to keep track of their investments and report them when they pay taxes.

The current bill, "Build Back Better", states that you will not be able to buy a cryptocurrency after selling it for a loss immediately after you close. And reporting these trades are not limited to just the digital coins but are also for NFTs. Lawmakers haven't decided a set date to start the implementation, but investors may start pricing in what the market may look like with this news that is to take place.

Our outlook

It's hard to say what I think the market will look like in 2022 and the years ahead, especially since we are still not sure if all these new regulations will be passed. But I do know that these kinds of talks will be more prevalent in the New Year. This may lead to volatility as a result should the majority of these laws are implemented. Bitcoin is down today after this news. Whenever there are discussions of regulation, the market doesn't do well. So, I think it's important to watch what could come out of these new bills because we still have no clear path of what tighter policy surrounding this market has in store.

Trade Setups

BTCUSD

Bitcoin fell 2.55% on the latest 4H candle as it hit support and a rising trend line. A close under this trend line would signify another bearish move, but it could be a decent long setup if price holds above. The 14-Day RSI reads 40 which still is considered undervalued to the average price behavior. Above price are the 200 and 50 SMAs that could serve as resistance.

This is some analysis on the next 4H period. The previous candle closed on the trend line which isn't telling us much as regards to direction or future price action. If you draw a fib level on the current trend from the lows, price could end up touching and bouncing off the 50% level, but it seems that a double bottom found support at the 61.8% level.

ADAUSD

Cardano hit its 50 DMA on the 1D chart before turning back to the downside. Support lies below at the bottom of this long term wedge, and the next level of support lies around the $0.98000s range.

ETHUSD

Ethereum couldn't hold above the rising trend line on the 1D chart, and price tumbled nearly 6% on the day. It looks like the ETH may not find clean support until the 200 DMA. Unless price action suggests a bullish reversal pattern, the pair may continue to tumble to this support level.