The cryptocurrency market steadied this week, with the major coins hovering in a familiar range after a volatile month of February. Bitcoin tested weekly highs on multiple occasions, but was unable to make a convincing break above $11,000.
In equities, Wall Street resumed its downward spiral as a combination of volatile energy prices and a brewing trade war dampened investor appetite for riskier assets.
Bitcoin Tests $11,000
The past seven days have been a net positive for bitcoin, although prices have been confined to a narrow trading range with an upper limit of around $11,000. The digital currency crossed that mark on at least two occasions this week, including a high of $11,187 on Thursday.
At the time of writing, bitcoin was valued at $11,040 for a market cap of $187 billion.
February was a turbulent month for cryptocurrencies. Trade volumes plunged during the month, although the total market cap for all coins rose. At the time of writing, the crypto market’s total value was $457 billion, according to CoinMarketCap.
Bitcoin’s share of the total market has risen steadily over the past four weeks, with the coin’s dominance index hitting 41%. At its lowest point, bitcoin accounted for roughly 32% of the total market cap.
SEC Launches Investigation of Crypto Market
The Wall Street Journal reported this week that the U.S. Securities and Exchange Commission (SEC) has launched a formal probe into the cryptocurrency market, with a special focus on initial coin offerings (ICOs). The report, which cited unnamed sources, said the regulator has issued dozens of subpoenas and requests for information from companies and individuals involved in the cryptocurrency market.
One day later, Overstock’s tZERO filing with the SEC surfaced, where details about the investigation were investigation was corroborated.
“While the SEC is trying to determine whether there have been any violations of the federal securities laws, the investigation does not mean that the SEC has concluded that anyone has violated the law,” the Mar. 1 filing said. “Also, the investigation does not mean that the SEC has a negative opinion of any person, entity, or security.”
The SEC has warned token issuers it will come down hard on projects that violate federal securities laws. This means cryptocurrencies labeled “utility tokens” will not be free of federal scrutiny.
Trump Trade War Roils Stocks
U.S. stocks on Friday wrapped up their fourth consecutive down session, as President Donald Trump talked up trade war after imposing new levies on steel and aluminum imports.
The Dow Jones Industrial Average fell 70.29 points, or 0.3%, to 24,538.06 on Friday. For the week, the blue-chip index lost more than 3%.
The broader S&P 500 Index finished up 0.5% on Friday, but lost 2% the week to settle at 2,691.25.
A measure of 30-day volatility known as the CBOE VIX fell sharply on Friday following three consecutive daily advances. The so-called “fear index” closed at 19.67 on a scale of 1-100 where 20 reflects the historic mean.
On Thursday, President Trump announced tariffs of 25% and 10% on steel and aluminum imports as part of a larger effort to level the playing field in international trade. The president defended his decision in a series of tweets.
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” Trump said.
The Week Ahead
The fallout from President Trump’s new trade policy will be scrutinized closely next week, as investors look to gain further clarity on the nations and products involved. An eye on economic data will also reveal important clues about the health of the world’s largest economy. Next Friday, the Labor Department will issue its monthly nonfarm payrolls report. Investors may recall that it was nonfarm payrolls that triggered the latest correction in stocks after the report showed an unexpected pick up in wage inflation.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in these coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.
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