Today’s small gain in the dollar or the fall in the pound following the publication of UK inflation data was nothing compared to the sell-off in cryptocurrencies.
Bitcoin was down some 15% while Ripple had shed 30% at one stage. Cryptos have been held back in recent days amid increasing levels of scrutiny from regulators, most notably in South Korea, where the government is planning to clamp down on trading in virtual currencies. The justice ministry is apparently working on a bill to ban cryptocurrency trading through exchanges. If the bill is eventually passed by the National Assembly, it would be very bad news given that South Korea is the world’s third-largest market for cryptocurrencies.
The uncertainty is weighing on investor sentiment. However suggestions that this is the start of the demise of cryptos is very premature.
This uncertainty is reflected in price action, with Bitcoin trading near the lower end of its wide range. The key support that needs to hold on a closing basis is at 11,400, a level which previously support and resistance. If BTC/USD breaks below this level then it could very easily drop to the next psychologically-important level of $10K next. Below that, the next support comes in at 8,350, which was previously a resistance level. Meanwhile resistance comes in at 12,800, last week’s low, followed by 13,430, the low of the doji candle from Monday.
If these levels break then Bitcoin will likely go above this week’s opening price level of 13,648, which, if realised, would be a bullish outcome, particularly if the most recent swing high at 13,495 is also taken out.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.