Bitcoin drops below $12K

Today’s small gain in the dollar or the fall in the pound following the publication of UK inflation data was nothing compared to the sell-off in crypto currencies.

Today’s small gain in the dollar or the fall in the pound following the publication of UK inflation data was nothing compared to the sell-off in crypto currencies. Bitcoin was down some 15% while Ripple had shed 30% at one stage. Cyptos have been held back in recent days amid increasing levels of scrutiny from regulators, most notably in South Korea, where the government is planning to clamp down on trading in virtual currencies. The justice ministry is apparently working on a bill to ban cryptocurrency trading through exchanges. If the bill is eventually passed by the National Assembly it would be very bad news given that South Korea is the world’s third-largest market for cryptocurrencies. The uncertainty is weighing on investor sentiment. However suggestions that this is the start of the demise of cryptos is very premature.

This uncertainty is reflected in price action, with Bitcoin trading near the lower end of its wide range. The key support that needs to hold on a closing basis is at 11400, a level which previously support and resistance. If BTC/USD breaks below this level then it could very easily drop to the next psychologically-important level of $10K next. Below that, the next support comes in at 8350, which was previously a resistance level. Meanwhile resistance comes in at 12800, last week’s low, followed by 13430, the low of the doji candle from Monday. If these levels break then Bitcoin will likely go above this week’s opening price level of 13648, which, if realised, would be a bullish outcome, particularly if the most recent swing high at 13495 is also taken out. 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.