Crypto Talking Points:
- It hasn’t even been a week since the FOMC rate decision and crypto markets continue to go through heavy re-pricing in the aftermath.
- Michael Burry warned of crypto leverage and we seem to be seeing some of that in action as price slides have continued to pick up steam as pressure has built on the offer.
It hasn’t even been a week since the Federal Reserve’s rate decision and the crypto space continues to see a heavy hand behind the offer. This morning saw a big level taken-out when Bitcoin pushed below the 30k level as the US was coming online for the day. This is the first time that BTC has traded below $30,000 since January, and much has happened since then.
Bitcoin (BTC/USD) Daily Price Chart
The crypto pain hasn’t been confined to just Bitcoin, however, as the rest of the crypto space was in a firm sell-off ahead of this morning’s BTC breakdown. Probably one of the more visible unwinding events has been taking place in Dogecoin, which pushed below the 20 cent marker last night.
Making matters more interesting, it was just a couple of weeks ago that Dogecoin was added to the Coinbase platform. This was a move that opened up the cryptocurrency to far more investors and traders but, alas, Dogecoin is off by more than 40% since being added to that platform.
Ether Holding Above the May Low
It’s difficult to find silver linings in the crypto space at the moment but one possible item for Ethereum bulls is the fact that Ether is holding around the May swing-low. As looked at a couple of weeks ago, Ethereum is one of the cryptocurrencies that holds some long-term promise if blockchain acceptance is to continue. And during the May sell-off, when crypto was in free-fall, Ethereum caught a bit of support around the 76.4% Fibonacci retracement of the late-Jan to mid-May major move.
This level is now back into play after a series of lower-lows have developed: If buyers can hold the line here through the end of today, there could be reversal strategies that can be investigated for those looking to react to the sell-off. But, even in that case, traders should exude the upmost of caution as the crypto space is taking on the appearance of a falling knife at the moment.
Ethereum (ETH/USD) Daily Price Chart
— Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX