Markets witnessed Bitcoin’s dramatic plunge over the last 12 hours, fueled by a succession of negative headlines: the escalating Ripple-SEC legal drama, reports of SpaceX’s substantial Bitcoin write-down, and the bankruptcy filing of China’s Evergrande. But a more important question is whether the cryptocurrency’s slide mirrors is part of a larger shift in risk sentiment, underscored by this week’s drop in US stocks.
The tremors in the crypto market seemed to intensify post US Federal Judge Analisa Torres’ nod to the SEC’s interlocutory appeal, which came shortly after a preliminary ruling favoring Ripple. The narrative was further dented the Wall Street Journal’s disclosure about SpaceX’s USD 373m Bitcoin value markdown in recent years, combined with the “unexpected” news of Evergrande’s Chapter 15 bankruptcy protection in New York.
Bitcoin fell to as low as 25588 in Asian session, and recovered just ahead of 38.2% retracement of 15452 to 31815 at 25564. Risk will stay heavily on the downside as long as 28555 support turned resistance holds. Attention will be on the reaction to support zone between 24739 and 25564.
Strong rebound from this level will keep price actions from 31815 as a medium term correction only, i.e. the up trend from 15452 is not over yet. However, decisive break of this support zone will significantly raise the chance of trend reversal, and could trigger deeper acceleration to 61.8% retracement at 21702 at least.
At the same time, NASDAQ also closed sharply lower by -1.17%. Deeper fall is expected as long as 13789.15 resistance holds, to 38.2% retracement of 10088.82 to 14446.55 at 12781.89. Reaction from there will unveil whether the decline is just a correction to the rise from 10088.82, or reversing the whole trend.
