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Bank of England Chimes in on FTX, Plus Cardano Price Projection

Steve Miley trader
Updated 23 Nov 2022

A senior Bank of England official has highlighted the need for tougher regulations for the cryptocurrency industry. This comes in the wake of the FTX collapse and contagion impacts across the world of decentralised finance in November. In addition, the Cardano bottoming pattern has been eroded, leaving risk for a more negative price forecast for the cryptocurrency.

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YOUR CAPITAL IS AT RISK


Bank of England Warns on Crypto in Wake of FTX Collapse

Sir Jon Cunliffe, a senior official at the Bank of England, has warned that although digital currencies do not pose an immediate threat to the stability of wider financial markets, he stated that “We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilising impact. The experience in other areas of digitalisation has demonstrated the difficulty of retrofitting regulation on new technologies and new business models after they have reached systemic scale.”

The Financial Services and Markets Bill is currently in the UK Parliament and set to be approved. The bill will introduce regulation regarding the marketing of crypto assets and stablecoins.

Cardano Base Crumbles

In the wake of the FTX collapse, the cryptocurrency market has seen a broad sell-off, and Cardano (ADA) has been a casualty of this contagion as well. The ADA/USD price plummeted below the October low at 0.3301 in early November to 0.3102 but has suffered another wave of selling pressures since the weekend amid fears of a deeper contagion impact on the cryptocurrency market, pushing as low as 0.2954 this week.

Source: IG.com

Moreover, the August-October sell off had already decimated the basing pattern that had been developing since the May bear market low, having rejected the robust rally up to the August peak at 0.5947.

With the intermediate- to longer-term bottoming effort rejected and now a succession of lower lows and lower highs since August, a new bear market down leg is fully developed and looks set to extend lower.

Cardano Downside Risks

The downside risks for ADA/USD are back through the recent low at 0.2954. A surrender here would open risk down to projection targets located at 0.2525 and even as low as the 0.2000/0.1875 area.

Only back above 0.37882 starts to modestly ease bearish forces, with a recovery up through 0.4377/0.4399 swing peaks required to signal a possible new base.

Steve has 29 years of financial market experience including 3 years at Credit Suisse and 15 years at Merril Lynch. Steve is the Academic Dean for The London School of Wealth Management and has won many awards from Technical Analyst Magazine.