Forex Analysis & Reviews: 23.03.2022

23.03.2022 03:00 PM

Thailand bans cryptocurrency as means of payment

Bitcoin has paused in the area of another major resistance around $43,000, and ether cannot break above $3,000. However, before considering the crypto market from a technical point of view, I would like to inform you that Thailand has issued rules to ban digital assets from being used to pay for goods and services.

According to the authorities, an increased use of digital assets threatens the country's financial system and economy. Commercial operators, including cryptocurrency exchanges, are prohibited from providing such payment services and acting in a manner that promotes the use of digital assets to pay for goods or services. This is quite clearly stated in the statement of the Securities and Exchange Commission (SEC) published today.

Notably, the new regulation will not affect trading or investments in digital assets, so the majority of those who are involved in trading and investing are not threatened by the new rules.

The restrictions on the use of digital assets will come into force starting April 1. Digital asset business companies operating in this area must comply with the new rules by the end of April. Otherwise, sanctions will be applied. The regulator also said that the curbs on commercial transactions related to cryptocurrencies are in line with regulations in Europe, the UK, South Korea, and Malaysia.

Amid the country's economic downturn, more and more people are engaged in investing and trading cryptocurrencies, experts note. On Wednesday, the central bank proposed to cap investment by commercial banks in digital assets to 3% of their capital while advising them against making such investments directly. Now the value of digital assets held by Thais has soared to 114.5 billion baht ($3.4 billion) from 9.6 billion baht a couple of years ago. The average daily turnover has jumped to 4.8 billion baht from 240 million baht, with the number of active trading accounts swelling to 1.98 million from 170,000 before the pandemic.

SEC experts believe that the new restrictions will help shield the confidence of depositors in lenders and the financial system. According to the regulator, the development of any unit of pricing other than the Thai baht will increase the cost of economic activities and reduce the efficiency of monetary policy transmission. In the event of a liquidity crisis, the Bank of Thailand will not be able to provide assistance to various financial institutions in forms other than the baht.

Besides, it is worth noting that the Bank of Thailand is about to launch its pilot project for the central bank digital currency (CBDC). According to the bank, the digital currency of the central bank is more effective in achieving financial inclusion in Thailand without imperiling the financial system stability. The CBDC experiment has already helped lower cross-border transaction costs and increase efficiency, the regulator said in a statement.

Technical analysis of bitcoin

Bitcoin has hit the $43,150 mark, but it has not yet been able to get out of this range. A breakout and active buying above this level will push the asset to new monthly highs in the area of $45,780 and $48,500. Its current dynamics proves continuing demand for the first cryptocurrency, which means that bitcoin has strong upside potential in the long term. In case the price breaks through the level of $40,500 and settles below it, BTC will most likely head for the low of $37,500 and then probably reach the $34,300 mark.

Technical analysis of ether

The focus remains on the resistance level of $3,050. If the price consolidates above this mark, the trading instrument will continue its bullish run. A breakout of $3,050 will push the asset to the levels of $3,272 and $3,399. In case of renewed pressure on ETH, the volume of long positions may increase around major support of $2,830. A breakout of this range will drag the price down to the lows of $2,670 and $2,500, where major players are expected to enter the market again.

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*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.