Within minutes, the bitcoin price crashed from $10,500 to below $9,900 in an abrupt drop, causing the rest of the crypto market to plunge by large margins.
As the bitcoin price slipped 4.5 percent on the day, other major crypto assets in the likes of ethereum, bitcoin cash, ripple (XRP), and litecoin dropped by 4 to 10 percent against the U.S. dollar.
Throughout this week, technical analysts and traders have said that while they remain generally optimistic on the short-to-medium-term trend of bitcoin and the rest of the market, bitcoin breaking below a key support level at $11,000 could leave the asset vulnerable to another correction.
Nick Cote, a cryptocurrency trader, said:
“Bearish throwback respected at $11,000 Bullish support respected at $9,700 Bearish bias remains until we re-claim the $11,000 level.”
Even worse, $10,000 represents a crucial psychological – if not technical – support.
Texas West Capital trader Scott Melker similarly stated that the bitcoin price could potentially find an interim bottom at $7,246 if it fails to recover swiftly in the near term.
Although the criticism of bitcoin and the crypto market by U.S. President Donald Trump and Treasury Secretary Steve Mnuchin were seen as positive factors for the awareness of the market by some industry executives, it is possible that the negative remarks had an overnight impact on the market.
Through a White House briefing, Mnuchin emphasized that financial authorities including FinCEN, the SEC, and the CFTC would tighten their oversight on the crypto sector.
“The United States has been at the forefront of regulating entities that provide cryptocurrency. We will not allow digital asset service providers to operate in the shadows and will not tolerate the use of the cryptocurrencies in support of illicit activities,” he said.
The overall stance towards the crypto sector by the Trump administration and the U.S. government’s unwillingness to approve Libra, a crypto asset created by a Facebook-led consortium, could have darkened the sentiment around the market.
Still, analysts perceive several fundamental factors such as the emergence of new trading venues, the launch of Bakkt’s testing platform, and the upcoming block reward halving of the Bitcoin network as potential variables that could help the market regain its footing and press toward new highs.
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Last modified: March 4, 2021 2:38 PM