Bitcoin Holding $30k During Weekend Sell-Off & Rallying After U.K Regulatory Actions is an Encouraging Change in Market Reaction to Bad News

In our Friday note, we reiterated our long and medium term bullish view on crypto from our Mid-Year 2021 Crypto Outlook call last Wednesday, but discussed how markets could see some weekend volatility and a little protection to manage risk might not hurt.

Crypto markets sold-off a bit further into the weekend on early Saturday morning following news from the U.K Financial Conduct Authority (FCA) that banned certain crypto entities operating illegally, including an affiliate of the prominent crypto exchange Binance (who has since issued their own statement in reaction to the news).

Bitcoin Holding $30k During Weekend Sell-Off & Rallying After U.K Regulatory Actions is an Encouraging Change in Market Reaction to Bad News

Source: FCA

Bitcoin again fell again into the $30k rage but managed to hold support and was able to bounce towards the end of the weekend, jumping into the $34k range Sunday evening, which is roughly where we sit now.

Bitcoin Holding $30k During Weekend Sell-Off & Rallying After U.K Regulatory Actions is an Encouraging Change in Market Reaction to Bad News

Source: Bloomberg

We think there are two important takeaways from the way Bitcoin reacted this weekend:

  1. This is the fourth time the price has come within the ~$30k range and found support
  2. This weekend’s price action represents a change in the market reactions vs. prior months where negative news had been taking us lower

Prices holding the $30k level again may be a sign that we have in fact found the bottom of this crypto correction around those levels. And prices rising in the face of bad news may be a sign of the seller exhaustion we need to go higher.

We do think this could continue to be a choppy market for a bit as prices reestablish their trend and we could even retest the $31k levels, but overall, we remain in the bullish camp over the balance of the year.

But, as we highlighted in our note on Friday, we are still looking at some of the counterparty risks that exist with the crypto lending space. We think these managed to fade into the background over the weekend. And we don’t yet know if they may reemerge. We’re going to keep talking to industry contacts and doing our research on the area. In general, we encourage retail clients to do their diligence and be confident in the financial stability of the platforms they deposit their assets on to. We will discuss this further in our crypto weekly on Wednesday.

Disclosures (show)

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 2/2

🎁 Unlock 1 extra article by joining our Community!

You are reading the last free article for this month.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)