Bitcoin sees red through the early part of the day, taking the rest of the cryptocurrencies with it, as investor sentiment turns negative in the wake of more regulatory chatter through the early part of the day.
Following a choppy weekend that left Bitcoin in the red, Bitcoin gained 10% on Monday to end the day at $8,922.12, with a relatively quiet day on the news wires providing support to the cryptomarket through the day.
While the cryptos and Bitcoin find support when the regulatory chatter is on the lighter, investors are quick to lock in profits, with the U.S government, the South Korean government and the PBoC likely to be working on frameworks in the background that could have a material impact on investor profiles and the initial coin offering market in the coming weeks or months.
Just when new regulations will be rolled out is an unknown and how restrictive the regulations will be is also an unknown and that’s never going to be a positive for the cryptomarket.
Smaller jurisdictions made regulatory announcements this morning, with Thailand and Russia looking to take greater control of the cryptomarket and, news will be a reminder to investors of what is around the corner.
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Following Monday’s gains, it’s been a bearish start to the day, with Bitcoin down 4.44% to $8,503.46 at the time of writing, Bitcoin having hit an intraday low $8,409.01 in the last hour.
With Bitcoin testing its first major support level of $8,442.66, we will expect some upside from current levels, though downward pressure remains on Bitcoin and the market in general, with the declines broad based at the time of writing.
A move through to $8,600 levels could see Bitcoin make another move towards $9,000 though sentiment will need to shift through the middle of the day and, following Monday’s gains, buyers are likely to hold off for a fall back towards sub-$8,000 levels before jumping back in.
The negative sentiment is reflected in Bitcoin’s dominance level, which has crept up to 34.8%, with any move above 35% likely to add further pressure on the cryptos.
With the Cboe Bitcoin Futures February contract down $395 to $8,440, we’re unlikely to see a shift in sentiment however, with the February contract sitting at Bitcoin’s first major support level.
Elsewhere, Bitcoin Cash is down 6.13% to $1,204.7, with Ripple giving up the all-important $1.00 handle, down 5.41% to $0.9853. Cardano and Stella Lumen have also seen heavy losses, with the pair down $6.55% and 4.78% respectively.
We’re seeing volatility across the asset classes and, while we will likely hear more talk of correlation between cryptocurrencies and other asset classes, this morning’s moves have gone against the grain, with Asian equities having mostly closed out the day in positive territory today.
We’re in for another choppy day and one does question how much more stomach the less sticky investors will have for the cryptocurrencies that have failed to rally since the middle of January. It will boil down to risk and reward. The rewards may not cut it when there is so much uncertainty in the market at present…