Bitcoin Bulls Get Sent Packing As Regulators Wreak Havoc
Bitcoin slid by 9.95% on Friday, following Thursday’s 0.68% fall, to end the day at $6,046.9, the moves through the day leaving Bitcoin down 6.15% for the week.
A start of the day $6,731 high came up short of the day’s first major resistance level at $6,775.63 and, more importantly, the 23.6% FIB Retracement Level of $6,876 before the news wires did the damage through the morning session.
Bitcoin went into reverse through much of the day, with investor reaction to news of Japan’s regulators hitting a number of crypto exchanges with orders to make business improvements and the recent hack in South Korea, which is likely to lead to similar orders in the market’s largest jurisdictions, causing chaos.
The fact that the Japanese exchanges in question will now have to make necessary improvements to prevent anti-money laundering and terrorist financing means that many will likely need to close their doors to new business until the appropriate controls have been put in place. When considering the fact that Japan’s largest exchange bitFlyer is amongst the exchanges in question suggests that the lion’s share may well face similar orders.
The mass market sell-off saw Bitcoin slide through the day’s major support levels to an intraday low and new swing lo $5,910.8 before recovering to $6,000 levels, the pullback to sub-$6,000 having been anticipated as the bears tightened their grip through the week.
Bitcoin’s late recovery to $6,000 levels will have been of little comfort, the latest pullback coming ahead of governments and regulators introducing crypto regs in the summer, suggesting that there may well be more pain to come before any recovery.
At the time of writing, Bitcoin was up 1.01% to $6,103.9, with the moves through the early part of the day coming off the back of a late Friday recovery, Bitcoin moving from a start of the day $6,040 low to a morning high $6,171.6 before easing back, the day’s first major support and resistance levels left untested early on.
For the day ahead, Bitcoin will need to move back through to $6,200 levels to support a run at the day’s first major resistance level at $6,548.33, though with the negative sentiment across the cryptomarket and the possibility of similar regulatory action by the South Korean government, the path of least resistance may continue to be downwards, with Bitcoin likely to face plenty of resistance at $6,100 on any run at $6,200 levels.
Failure to break through to $6,200 levels will likely see Bitcoin take another hit later in the day, with Bitcoin unlikely to be free from sub-$6,000 levels just yet, though we would expect the day’s first major support level at $5,728.13 to be left untested through the day.
Following the Friday’s reversal and new swing lo, the extended bearish trend formed at 5th May’s swing hi $9,999 remains intact and, when considering the market response to Friday’s news, there may be little incentive for investors to be jumping back in until there really is some clarity on the anticipated shift in the regulatory landscape.
Elsewhere in the cryptomarket, Litecoin coughed up early gains to resume the slide, joining EOS in the red, while DASH led the way through the morning, up 4.58%, NEM’s XEM a distant second with a 2.06% rise early on.