Second witness: We are taking the self-ceritification model from derivatives and future markets which have worked well. The SEC is looking to introduce legislation to amend the authority to regulate retail investors to invest into ICOs. They are not looking to overgulate this sector and want to take a 'do not harm' approach like the Republican Congress took with respect to regulating the internet in the dot com boom.

First witness: The SEC will continue investing ICOs issuing security-like tokens. They will also continue to monitor fraud and KYC/AML measures across the ICOs that are running. Overall, the SEC is supportive of the technology and want to support cryptocurrency investors in the USA.

The US Senate Commitee papers have been released here: Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission

Over the past few days, and particularly over the past 24 hours news on Wall Street has gone from hyper-optimistic to downright depressing.

Watching this play out has caused two questions to arise:

How strong is the correlation between traditional financial markets and the cryptocurrency markets? If the correlation exists what the implications of today could be for cryptocurrencies?

A resource that we have used is Sifr Data, a free cryptocurrency analytics, simulation, data and visualisation tool.

The numbers in this first chart are called z-scores which represent the strength of a relationship between two sets of data.

The S&P 500, because of it’s z-score, has a “weak positive relationship” to Bitcoin. Today, the Dow Jones dropped over 1,200 points constituting the single largest point drop in the measures 130+ year history, reversing all gains it has made in 2018. With this market trend in mind, the cryptocurrency market cap has dropped below $300bn with Bitcoin breaching the $7000 mark. Although the correlation is not statistically significant, it is interesting to see the relationship between the downturn of the stock and cryptocurrency markets.

What's causing all of this?

There are two main theories as to why the US stock market is correcting itself today.

Firstly, the Federal Reserve’s 10-year yield rate, which determines the interest rates the US government and Americans pay on their debt has increased recently. Higher interest rates can lead to decreased consumer spending and can increase inflation, both rather bearish signals.

Secondly, some prominent economists/former Fed Chairman declared that we’re entering a “massive multiyear bear market”, driving fear through the roof in the markets.

In the world of crypto, this FUD is combined with the recent price fall, crypto’s notoriously panicky retail investors, and general uncertainty to end up with potentially a long-term bear market. Market sentiment, more than anything else, drives the price of cryptocurrencies and is a worrying sign for the short-term markets.

Cryptovate Investments sees this as a healthy correction of the market that was overdue for the stock markets. In regards to the cryptocurrency world, BTC dominance remains at a low 36% and more exchanges are introducing ETH pairings to help reduce the correlation between altcoin prices and BTC. There will be a few interesting weeks ahead of us in the market.

We will leave you with this to consider about the state of the crypto/stock markets: