Key takeaways
- The Bank of Mexico prohibited the country’s financial institutions from trading cryptocurrencies or offering crypto-based services.
- On June 27, billionaire Ricardo Salinas Pliego declared his bank plans to do business in Bitcoin.
- Bitcoin has gained 13.50% since Saturday.
New Delhi (CoinChapter.com) — On Monday, Banxico, the Mexican central bank, stated that it would impose sanctions on Mexico’s financial institutions that plan to offer cryptocurrency-based services. The joint statement, issued by the central bank, Finance Ministry, and the country’s banking regulator, comes a day after billionaire Ricardo Salinas Pliego announced that his bank is working towards accepting Bitcoin and other cryptocurrencies.
Banxico and Bitcoin
The Bank of Mexico’s cited the volatility of Bitcoin and other cryptos as a primary reason behind the warning.
Also, the central bank pointed out ‘inherent risks’ in using virtual assets as a store of value or form of investment. Banxico’s statement also highlighted that Bitcoin and other digital assets are not legal tender in Mexico or recognized as currency under the current legal framework.
Historically, the central bank has been against cryptocurrencies. Banxico first issued a warning against using Bitcoin in 2014. Later, the bank followed it up with two more warnings, in 2017 and 2019, respectively.
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However, the central bank has not banned crypto. As such, it wants to keep digital assets separate from the country’s financial system. The bank’s statement added that the policy is not likely to change soon either.
Interestingly, the warning came a day after billionaire Ricardo Salinas Pliego, the third richest man in Mexico, declared his plans of allowing his bank, Banco Azteca, to use Bitcoins. Mr. Pliego, chairman of Grupo Salinas, recently tweeted that he thinks Bitcoin is a good portfolio diversifier for investors.
The Mexican businessman’s comments were in response to a tweet by MicroStrategy CEO and bitcoin loyalist Michael Saylor, who commented positively on a video of Mr. Ricardo circulating on Twitter. In the video, Mr. Pliego explains why he thinks fiat currencies ‘are fraud.‘ Mr. Pliego said in the video, ‘I have invested a lot of time studying [bitcoin], and I believe it’s an asset that should be part of every investor’s portfolio.’
Last year, Mr. Pliego had said he had nearly 10% of his liquid portfolio invested in Bitcoin.
Bitcoin climbs after billionaire’s comments
After testing the $30,000 support level on June 26, Bitcoin gained 7.53% on Sunday, buoyed by Mr. Ricardo’s comments. Although BTC prices fell by 0.61% on Monday, the overall gain from Saturday’s $31,628.98 (open) to Tuesday is a healthy 13.50%.
However, BTC is still trending below the 50-Day (Red), 100-Day (Yellow), and 200-Day (Green) Moving Average lines, indicating a slower rising rate. Thus, the long-term trend for the token seems to be bearish.
Also Read: Why Bitcoin is headed for a $10 trillion market cap within the next 5 years?
On the flip side, it seems the short-term downtrend is reversing, which may lead to further upside momentum. Moreover, RSI, a trend oscillator, is at 50.57, which means the token is still not overbought.
The MACD oscillator, a momentum oscillator, forecasts a bullish rally as the MACD line has gone above the MACD signal line on the daily charts. The MACD histogram bars are rising as well. If BTC continues the current upwards rally, the next resistance level for the token is at $40,000.
At the time of writing, Bitcoin was trading at $36,148.
Although the comments from Mr. Pliego helped BTC gain, the Mexican central bank’s stand may hinder Bitcoin’s acceptance.
The announcement comes just weeks after El Salvador legalized Bitcoin as legal tender, with Paraguay planning to follow suit. Ironically, it was also a rare reprimand for Mr. Salinas Pliego, whose bank got a contract to handle cash-transfer cards for anti-poverty programs by the López Obrador government. His bank, the Banco Azteca, was going to
However, if BTC continues garnering support from individual and institutional investors, a digital currency-based global economy may become a reality.
