"$40,000 looks more vulnerable than $30,000" for undecided Bitcoin
The cryptocurrency market gives up its gains of the last 24 hours on Friday, despite the fact that it recovered on Thursday from the bump caused by the monetary policy decision of the Federal Reserve (Fed), which ended the accommodative era of the pandemic. The digital currency par excellence remained all day in a range between $35,500 and $37,500, with a very short-term floor at the first of these two levels. It gives ground on Friday to almost $36,000, after trading above $37,000, but it remains in this price range and seems to be eager to extend the rebound from the six-month low of January 24th at $33,000.
"Bitcoin is certainly enjoying the relief that this week has brought. The cryptocurrency was getting into dangerous territory but has recovered well as sentiment has improved and now looks in a much more comfortable position," stated Craig Erlam, an analyst at Oanda. The expert noted, however, that "volatility is still here and there's plenty of underlying anxiety in the market that could see bitcoin tumble again."
"But suddenly $40,000 is looking more vulnerable than $30,000," commented Erlam, pointing out that "a move above here could be the catalyst that the crypto crowd has been craving."
However, dark clouds continue to hang over these assets. As with all other risky stocks, the recent falls, which have drained more than $300 billion from the cryptocurrency market - although at the worst times capital flight reached almost half a trillion - and triggered a 50% correction in the price of Bitcoin, are due to several factors. The Fed's balance sheet reduction and rate hikes, the health situation, the conflict on the Russia-Ukraine border are just some of them.
Cryptoassets in particular have a regulatory sword of Damocles that weighs above them, that has led to the prohibition or threat of closure of mining activities in several global centers of this sector of the 'crypto' industry. And, more recently, the US is moving to regulate digital currencies and their entire ecosystem, which is anticipated to take a heavy toll on prices and have a long-term effect.
Specifically, as reported by 'Barron's', The White House will issue an executive order that will focus on assessing risks in the cryptocurrency market, and related government agencies will have three to six months to submit proposals. The aforementioned order could lead to other measures too if US President Joe Biden deems it necessary.
"Bitcoin’s rollercoaster ride is not over yet," commented Edward Moya, analyst at Oanda. "The next couple of months will remain very choppy for crypto markets but the fundamentals still support a broadening formation for the top performing cryptos," he noted.
ETHEREUM, TERRA AND OTHER TOKENS
As for other tokens, Ethereum continues to struggle to break above the $2,500 barrier and, more importantly, the 100-hour simple moving average. Technical analysis points to a trend line on the hourly chart with resistance at $2,450 and, that if clearly broken, would indicate further upside for the second largest token by market cap to $2,500.
Bulls have been defending the $2,300 area, although recent market bleeding left lows below $2,200. If the token fails to break through the $2,500 resistance we could see declines to $2,350.
As for other 'altcoins', they have turned around after Solana pocketed some gains, as well as Cardano, Binance coin, Ripple or Dogecoin. However, Terra maintains its bearish look and has bled an additional 5% in the last 24 hours, adding to the 30% declines of the last week. The terra network token, LUNA, has touched lows since early December in the vicinity of $50, a 50% drop from the highs above $100 on December 24th. Total market capitalization is $1.68 trillion.