With a recent climb above $7,900, Bitcoin may be attempting a second go at breaking above $8,000, a level that is proving consistently tough this week.
Bitcoin made a concerted effort to break out above the significant $8,000 resistance level yesterday, reaching a high of $8,129 before dropping back to a low of $7,471. The drop was precipitated by a sudden increase in volume that entered the market soon after the rise, suggesting a wave of sellers taking profit at $8k.
The development doesn’t bode well for Bitcoin as previous climbs above the level didn’t result in sudden sell-offs. Market sentiment could be getting shaky as hopes for another 2017-style bull run begin to fade.
Regulation rears its ugly head
Following this year’s G20 summit, it appears stricter regulation in the cryptocurrency industry may finally become a reality. Members of the twenty major countries that partake in the summit are believed to be compiling a list of requirements needed to tackle money-laundering and terrorist financing linked to cryptocurrency.
It has been reported that major bank heads and finance ministers from the G20 countries plan to put pressure on the Financial Action Task Force (FATF) to develop stricter measures to control the use of cryptocurrency. The FATF is an international body consisting of members from 36 world economies brought together to combat global financial crime.
While the FATF’s regulations are not binding, countries that choose not to comply with them can be blacklisted by the major economic powers that do. While many in the crypto community welcome regulation and see it as a necessary evil, by its very nature it threatens to negate the traditional purpose of Bitcoin. As a supposedly ‘trustless’ system designed to operate outside of government control, ever-tightening regulation could drive away Bitcoin’s original adopters – many of whom are key to its success.
The BTC/USD pair is now trading just above $7,900 and looks likely to make another push above $8,000 within the hour. Whether or not this move will be sustainable depends largely on how many sellers are waiting in the wings. Above $8,000, resistance will be met at $8,250, the confluence of the 100-day simple moving average (SMA100) and SMA50 (4-hour).
On the downside, support remains strong at $7,800 where BTC has been trading sideways for most of this week. Below that, the previous consolidation channel at $7,300 will offer additional support.