14.01.202616:47 Forex Analysis & Reviews: Crypto market currently awash with optimism

The crypto market is currently awash with optimism, but there were no particular fundamental reasons for this, so the present rise without a clear underlying driver at the start of the year should be treated very cautiously.

Meanwhile, the CLARITY bill on crypto-market structure could sharply expand financial oversight in the US. According to Alex Thorn of Galaxy Digital, the scale of the proposed changes could be the largest expansion of financial oversight in 25 years. In his research, Thorn emphasized that the bill may represent the most significant expansion of Treasury power. Of particular concern is a provision that would allow the Treasury to block digital-asset transactions without a prior court order. This could create situations in which users' assets are frozen without adequate legal protections, based only on the agency's assumptions or suspicions.

The expansion of special controls over digital assets also raises questions about privacy and the freedom of financial transactions. It is unclear what actions would be permitted under these measures and how compatible they would be with the principles of decentralization and anonymity that underlie many cryptocurrencies.

Separate attention should be given to attempts to regulate DeFi. Recognizing DeFi as part of the financial infrastructure opens wide room for interpretation and could lead to stringent requirements for developers and operators of these platforms — similar to the long-running dispute over Ripple and XRP, which the SEC considered securities for roughly four years before the matter ended up in protracted litigation. In that case, such regulation could potentially choke innovation in the decentralized-finance sector, limiting access to new financial instruments and opportunities.

Critics of the bill fear that, under the pretext of fighting money laundering and terrorism financing, authorities could seek to establish total control over the crypto market while disregarding the rights and interests of law?abiding users. How the situation develops will depend on the debate over the bill, any amendments introduced, and the positions taken by regulators and the crypto community.

Trading recommendations

Bitcoin technicals: Buyers are currently targeting a return to $95,600, which opens a direct path to $97,300 and then to $99,400. The farthest target is the high near $102,100; breaking that would signal attempts to return to a bull market. In case of a decline, buyers are expected at $93,600. A move back below that area could quickly push BTC toward $92,100. The farthest downside target is $90,500.

Ethereum technicals: A clear hold above $3,372 opens a direct path to $3,505. The farthest target is the high near $3,664; surpassing that would indicate strengthening bullish sentiment and renewed buyer interest. In case of a decline, buyers are expected at $3,297. A move back below that area could quickly push ETH toward $3,229. The farthest downside target is $3,154.

Chart indicators

• Red indicators represent support and resistance levels, where a slowdown or active price increase is expected.
• Green represents the 50-day moving average.
• Blue indicates the 100-day moving average.
• Light green signifies the 200-day moving average.

Crossovers or tests of the moving averages usually halt or set the market's momentum.