Bitcoin recently made a sharp dip lower but quickly found its way back inside the short-term rising channel on the 1-hour time frame. This suggests that price could still regain ground from here and that bulls are keen on defending the longer-term floors.

However, the 100 SMA is crossing below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. These moving averages are also holding as dynamic resistance levels as well.

RSI has room to head higher before indicating overbought conditions, but the oscillator seems to be topping out already and looking to move south. Similarly, Stochastic has yet to reach overbought levels but seems ready to move lower, indicating a return in selling pressure. In that case, the price could revisit the channel bottom around $6,300 or perhaps attempt to break lower.

BTC/USD Chart - TradingView

The buildup in short positions leading up to the SEC ruling on Bitcoin ETF applications is being blamed for the sharp drop earlier on. There are arguments for an approval or rejection of the VanEck and SolidX proposals, and recent actions of the regulator barely provide clues.

Keep in mind that the SEC earlier on rejected a handful of other proposals but almost immediately signaled a review of this decision. Later on, the regulator temporarily suspended trading of Bitcoin Tracker One and Ethereum Tracker One, citing confusion among market participants on the nature of underlying securities and emphasizing their mandate to protect consumers.

With that, some worry that they could cite similar reasons for rejecting the pending rule changes for Bitcoin ETFs. If so, it would set the industry back in terms of achieving more institutional interest and inflow of funds. On the other hand, an approval could bring the much-anticipated rebound for the year.

Images courtesy of TradingView

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