Bitcoin has lost over $1000 during the course of the week, as investors continue to fret over additional regulatory action. The currency has broken some key levels to the downside, and the bears may be smelling blood. Other currencies have also been hit, and the roller-coaster of crypo volatility continues.
According to a recent article from Bloomberg.com, the Justice Department recently launched a criminal probe into Bitcoin price manipulation. According to the article, regulators are looking not only at Bitcoin but other currencies as well, and are taking a look to determine if traders are manipulating prices.
The article stated:
“The investigation is focused on illegal practices that can influence prices — such as spoofing, or flooding the market with fake orders to trick other traders into buying or selling, said the people, who asked not to be identified because the review is private. Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees derivatives tied to Bitcoin, the people said.”
The latest regulatory scrutiny is another step by regulators to gain control of these markets, which some have said are full of misconduct. Crypto trading has already been banned in some jurisdictions, and is also already more heavily regulated in others.
Following Bitcoin’s crazy rise in 2017 to the 20k level, it is not surprising at all that many investors, some far more sophisticated than others, have been drawn to the crypto markets. Many investors, however, may not fully understand the risks involved in trading cryptocurrencies, and could even be putting too much of their investment capital at risk. Not only that, but expectations of another fast climb like last year could cause many investors to sell out before the cryptos potentially make a more sustained rise higher.
Bitcoin: Bitcoin has moved lower by over $1000 this week, declining from over 8.5k to less than 7.5k. The market is quiet heading into the long weekend, however, down some 1.62% on Friday. The currency is in a clear trend lower over the last month or so, and the larger time frames do not look much better. Thus far, the currency has not been able to push through significant resistance around the 9.5-10k level.
Bitcoin Cash: This crypto saw a drop from around $1280 to about $960 this week before seeing a bit of a rebound. Prices are back over the 1k level to finish out the week, however, the market could remain vulnerable to further selling next week. The bigger time frames do not look constructive at this point, and without a significant rally being seen sometime soon, the market could continue lower.
Ethereum: This crypto declined this week from about $720 to a low around $560 before the selling stopped. The currency is actually up by about a half percent to end the week, and appears to be trying to put together a bit of a bounce. Over the last few months, however, the chart could indicate some topping action and further declines may be seen without a significant rally to neutralize recent chart damage.
Ethereum Classic: This crypto dropped from about $18 this week to a low of less than $15 before staging a rebound. The larger charts, however, show what could be a rounded top, and the currency could potentially have to approach the $12 level before finding more solid footing. Like other currencies, the market may need to see some good news in order to bring back the bulls.
Litecoin: This crypto is down 2.75% on Friday, and looks as though it will end the trading week on a sour note. The currency has lost significant ground this week, and after putting a bounce together now seems headed for a retest of the recent lows. Like many other currencies, the longer-term charts are not looking great, and significantly lower prices may be seen before the currency finds a long-term bottom.
Ripple: This crypto was also on the defensive this week, and is down over 3% for the day. Like some of the other currencies, it made a low, rebounded, and now appears headed back to the recent lows. This type of price action could be indicative of further selling pressure in the days ahead. The ongoing lack of any fresh bullish catalyst will also likely weigh on the sector.