Crypto Sell-Off Risk Rose With Bitcoin Price; 2 Alt-Coins To Buy On The Dip

This article was written exclusively for Investing.com

• Yellen and Lagarde’s statements were warning signs
• Bitcoin's over-30% correction
• Top ten-listed Litecoin could have plenty of upside potential
• TRON is highly speculative but might pay off big time
• Number 1 rule for investing in the cryptos

Gravity may have been pressuring Bitcoin since the price of the digital currency rose to a high of $42,730 per token on Jan. 8, but the price still remains far above the late 2017 high of $20,650. As with most markets, the risk of a correction increased with the price of the digital currency.

Currency markets tend to exhibit low price volatility. Governments manage traditional foreign exchange instruments to provide stability, which instills confidence. Cryptocurrencies, however, are far from conventional as they are a direct challenge to government control. In many ways, the digital currency asset class rejects individual governments and a move towards the globalization of money. With fixed supplies and prices established by supply and demand, the digital currencies move higher and lower without any government influence or control. Government events and policies impact the price levels, but control is only in the hands of buyers and sellers of the over 8,300 tokens currently in cyber-circulation.

Bitcoin is the leader of the asset class. It is the only token that trades on a futures exchange. However, Ether, the second-leading crypto by market cap, will have its futures listed on the CME in February. We are likely to see continued volatility in the asset class. Two digital currencies, Litecoin and TRON, could receive growing interest over the coming weeks and months as the asset classes’ profile continues to rise.

Central banks and governments worldwide have cautioned against the cryptocurrency asset class. Just after the Bitcoin price rose to an all-time peak of $42,370 per token and the overall crypto market cap eclipsed the $1 trillion level for the first time, the President of the European Central bank sounded some warnings on potential legal issues involving digital assets. Christine Lagarde told reporters :

“It’s a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity. It’s a matter that needs to be agreed at a global level, because of there is an escape, that escape will be used. So, I think…that global cooperation, multilateral action is absolutely needed, whether it’s initiated by the G7, moved into the G20 and then enlarged. But it’s something that needs to be addressed.

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During her Senate confirmation hearing last month, the new US Treasury Secretary, Janet Yellen, clarified her own stance on cryptocurrencies:

“Cryptocurrencies are a particular concern. I think many are used…mainly for illicit financing and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering (sic) doesn’t occur through those channels.”

The President of the ECB and the US Treasury Secretary sent a chill through the crypto asset class with their comments. They did not mention their primary concern, which is also the fear of other governments worldwide, that digital currencies threaten the control of the money supply. Both seemed to indicate that lots of regulations are on the horizon.

However, the underlying philosophy of Bitcoin and the over 8,350 other cryptos is that they are meant to be a libertarian challenge to the central bank and government power over money. As liquidity and stimulus have reached historic levels, fiat currencies have lost value.

In the aftermath of the US and European comments, Bitcoin’s price fell below $30,000 briefly but recovered and was sitting at over $38,000 on Feb. 4.