The cryptocurrency market, after being in the $30,000/$36,675 side channel for a long time, is again testing its lower border for strength, frightening traders who were already scared during this time.
What could have provoked market participants to sell off?
The trigger in the face of the Chinese regulator, which has taken on not only mining farms, but also the crypto industry as a whole, scares everyone, as it is a strong lever to change the market trend.
As market fears have subsided, news emerges that US Treasury Secretary Janet Yellen has announced the convening of the US President's Working Group on Financial Markets to discuss the issue of stablecoins.
The news took place during Friday and weekends, which accumulated a lot of fear, as there is something to fear for.
Note that a stablecoin is a cryptocurrency coin, which value is tied to a specific physical asset, for example, the US dollar. The most famous stablecoin, which is also the first and largest in terms of capitalization, is Tether (USDT) from Tether Limited, which guarantees that the value of USDT is backed by 20 percent of the US dollar reserves held in their bank accounts.
Back in June, some experts, including the chairman of the Federal Reserve, expressed concern about such a developing class of assets, which could not only undermine the financial stability of traditional assets but can also force the collapse of the entire crypto market if USDT could not provide for itself in vain.
The point is that USDT, as a leading stablecoin, has concentrated almost 100% of currency pairs on crypto exchanges, and if something happens to Tether Limited, this will lead to a large-scale collapse in all crypto assets.
Now you understand that the news that the working group on financial markets has taken up stablecoins may initially scare traders, which may have led to a decline in the crypto market.
The first session of the working group under the auspices of Janet Yellen has already come to an end, following from recent data, a regulatory framework for stablecoins will be created within a few months.
The details of the recommendations have not yet been disclosed, nonetheless, there is a positive signal, and Janet Yellen's speech does not contain phrases about the ban, which is already good for the entire industry as a whole.
What happens on Bitcoin and Ethereum trading charts?
For the first time since June 22, the Bitcoin quotes dropped below $30,000, which is considered a critical moment for many traders. Pay attention to the daily chart of BTC, the psychological level of $30,000 has already been broken twice by the quotes, but the price has not been properly kept below. This suggests that there are a lot of buy orders in this area, which absorbs almost all volumes, making it impossible to change the clock component.
This absorption process cannot take place forever, therefore traders always approach this parity with caution and a share of panic.
There is no need to rush to conclusions, wait for the results of the day, since at the moment it is impossible to say with complete certainty that the side cycle of $30,000/$41,500 has completed its formation with the breakdown of the lower border and we are in for a long decline.
There is still a chance for a rebound, and if it does arise, then the strengthening of bitcoin is quite possible by 15%-20%.
Ethereum, following its older brother, is following a downward trajectory, but the local lows of May 23, June 22, and June 26 have not yet been broken by market participants, which may well lead to a reduction in the volume of short positions.
The strongest sell signal will come if the price is kept below $1,700 in the day. Otherwise, a regular rebound from the base is possible, by about 20%-25%.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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