Bitcoin and Ether are supported on dips but look vulnerable

Market Picture

Bitcoin rallied at the start of Wednesday’s US session but unexpectedly plunged $1400 or 5% to $26.7K mid-session. This short-term dip shows continued demand for Bitcoin on dips below $27.5K.

The sharp price drop has sparked rumours that US government officials were behind it, selling previously confiscated Bitcoins. However, we also note that the fall was preceded by a rally, during which speculators may have built up liquidity for a following dump.

Either way, the price dynamics are becoming increasingly bearish: the formation of a series of descending highs, a consolidation below the 50-day moving average and a break of the April lows suggest that sellers are dominating.

Ethereum is also forming horizontal support at $1830, which has existed since early April. The fact that the price is increasingly testing this level, and one needs to develop a sustainable rally, makes one cautious about its short-term prospects.

New Background

Glassnode has seen an increase in transaction fees on the BTC blockchain and miners switching to hoarding tactics. Their sales could resume at levels above $30K.

The head of mining company Marathon Digital said that last year’s downturn in the crypto market helped weed out “dubious operators” and spurred regulators worldwide into action. He pointed to the efforts of the EU, UK, Hong Kong, Singapore, and the UAE, as opposed to the US, which has been “partly behind” on the issue.

SEC Commissioner Hester Pearce said that the crypto asset market regulation bill (MiCA) passed in Europe and the UK’s approach to digital asset regulation could be a starting point for a regulatory framework in the US.

German crypto start-up Unstoppable Finance announced its intention to create Europe’s first fully regulated bank offering crypto-assets and DeFi services to customers.

The FxPro Analyst Team