Bitcoin Bulls Try To Break The Downtrend
FxPro Financial Services Ltd | Jun 04, 2021 01:21AM ET
Bitcoin is making another attempt to test an important $40K resistance level. Over the past 24 hours, the benchmark cryptocurrency is up 4%, approaching $39K. It is too early to draw final conclusions, but the renewal of the highs of the outgoing week can be considered a local victory for the bulls.
During the last two weeks, there was a sequence of declining peaks on the Bitcoin chart, and the attempt to break this trend should be seen as a bullish signal. If it remains in force, we may see a clear revival of institutional buyers by the end of the week, followed by retail investors who may enter the market over the weekend.
Altcoins are supporting the first cryptocurrency to break the $40K resistance level. The leading altcoin Ethereum (ETH) shows a 5% increase over the day and is trying to get back to $3K. Binance Coin (BNB) jumped 10% and is trading around $413. Most altcoins are in the green zone now. Thus, market participants may demonstrate their willingness to return to purchases amid the belief that the recent market decline was still a deep correction rather than a broad trend reversal.
Environmental claims and regulation have been the main brakes for the current cryptocurrency rally. The contemporary corporate culture implies the need to follow various global trends, including environmental issues. After all, if Elon Musk was forced to withdraw his support for Bitcoin because of corporate pressure, then other major investors will also be forced to consider in their decisions the views of "greens," who consider Bitcoin "not environmentally friendly".
The regulation also opens an interesting field for analysis. Everyone knows China's position on cryptocurrencies. Now Beijing has once again unequivocally pointed the cryptocurrency market to the exit. Nevertheless, there are signs that Chinese investors are still working, which tells us all about the complexity and ambiguity of the current situation. The market has become significantly more global, and Bitcoin was created precisely to circumvent any firewalls.
Everyone in the market is coming to realize that, in the end, Chinese investors can trade formally outside of China, miners can move to any other jurisdiction where it is cold, and there is cheap energy. The only real vulnerability of cryptocurrencies is the need to peg to national currencies. Therefore, the Fed and the ECB are not making loud statements and do not ban or threaten market participants, giving them the opportunity to build infrastructure.
Authorities of developed countries understand that they need more statistics to make decisions. Besides, China acts as a testing ground for its aggressive policy against cryptocurrencies. We can assume that in the current format, the market can survive another cycle of decline and growth, which opens great opportunities for investors.
Get The News You Want
The FxPro Analyst Team
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.