The IMF vs. Crypto. The Claws Are Out…. But Why?
Bitcoin’s Pullback Is Underway. $25K Still a Target.
In a statement released on February 23, the International Monetary Fund (IMF) made harsh remarks about cryptocurrency and called for a “coordinated response” from member countries.
The IMF presented a rough attitude towards cryptocurrency, saying that “the widespread adoption of crypto assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks”
Does this mean that the IMF considers crypto a threat to fiat instruments? And if the answer is yes, then what happened to the CBDC (Central Bank Digital Currency) projects? In other words, centralized cryptocurrency (CBDC) is good but decentralized cryptocurrency is not? Of course, that’s a crude way of putting it, but still, it seems like the IMF is flexing its muscles at crypto.
The statement also mentioned that “Directors generally observed that while the supposed potential benefits from crypto assets have yet to materialize, significant risks have emerged” and “Widespread adoption could also have significant implications for the international monetary system in the longer term”
It’s worth noting that some Directors “agreed that strict bans are not the first-best option, but that targeted restrictions could apply”, while other Directors “thought that outright bans should not be ruled out.” (Source: IMF Press Release No. 23/51)
Chart Analysis – BTC/USD
Most of the Top 10 cryptocurrencies are trading at levels last seen 7 days ago, due to retracements. Bitcoin pushed above $25,000 and then came back to just below $24,000, while Ethereum pushed above $1,700 and then pulled back to $1,650.
These retracements are nothing out of the ordinary and are actually healthy for an uptrend. When the price drops, the asset becomes more appealing for traders that missed the initial push and even for those who profited from it. The “buy the dip” mentality kicks in and the asset’s price increases again due to buying pressure.
For Bitcoin, the most important short-term level is $25,000, but it could also have long-term implications. A break of this psychological and technical resistance could be the catalyst for an extended bull run but the current bearish move may not be over.
The pair is still showing bearish divergence (the price is making higher highs and the RSI is making lower highs) and a solid support level is not in place. The middle line of the Bollinger Bands is a good place for price action to create support, and it could turn out to be a good place for BTC/USD to reverse direction in line with the prevailing trend.
A move below the middle line of the Bollinger Bands would indicate that the pair might be headed for the lower band. Keep in mind that important U.S. inflation data (Core PCE Price Index) is still due for release today and it will probably have an impact on the pair’s direction.
