Bitcoin – The Bears are Coming to Town
Bitcoin tumbled by 5.35% on Tuesday, following a 0.63% fall on Monday, to end the day at $7,741.1.
Playing catch up, following two days of minor losses relative to the broader market, Bitcoin slid from a start of the day intraday high $8,178.9 through the first major support level at $7,919.37 to an early afternoon intraday low $7,664.9, calling on support at the day’s second major support level at $7,670.03 before recovering to $7,700 levels by the day’s end.
While the near-term bullish trend remained intact, with Bitcoin managing to steer clear of the 38.2% FIB Retracement Level of $7,456, the pullback through the 23.6% FIB Retracement Level of $7,857 and failure to break back through to $8,000 levels has raised the prospects of a resumption to the bearish trend formed back at 5th May’s swing hi $9,999.
An anticipated roll out of rules and regulations across key jurisdictions continue to drive volatility across Bitcoin and the broader market, with the latest news being of the South Korean government clear intent to pass law as quickly as possible to beef up anti-money laundering policies and to introduce minimum standards on the security side that exchanges would need to meet in order to minimise the risk of theft.
A delay to the G20 unified rules and regs to October will likely have led to the South Korean government’s sense of urgency, which raises the question on whether other jurisdictions will follow.
While it may be considered a positive for crypto exchanges to be forced to improve security levels and to also improve on KYC and anti-money laundering processes, the ability of the exchanges to meet the demands of governments and regulators continues to be a key issue, with increased scrutiny at the verification process another issue that the broader market continues to balk at.
At the time of writing, Bitcoin was down 2.2% to $7,561.0, with Tuesday’s sell-off continuing into the early hours of this morning, Bitcoin pulling back from a start of a day $7,756.1 morning high to a morning low $7,515, calling on support at the day’s first major support level at $7,544.37.
The slide saw Bitcoin pull further back from the 23.6% FIB Retracement Level of $7,857, to inch closer to the 38.2% FIB Retracement Level of $7,456 and a resumption of the extended bearish trend formed back in early May.
For the day ahead, a break back through the 23.6% FIB Retracement Level of $7,857 would support a run at $8,000 levels to bring the first major support level at $8,058.37 into play, though we would expect Bitcoin to face plenty of resistance on any approach to $8,000 levels through the afternoon, a break back through the 23.6% FIB Retracement Level likely to be considered a positive outcome to any recovery.
Failure to move back through the morning high to $7,800 levels in the early afternoon will likely see Bitcoin pullback through the first major support level at $7,544.37 to bring 38.2% FIB Retracement Level of $7,456 into play before any recovery, the day’s second major support level at $7,347.63 likely to be left untested on the day.