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The cryptocurrency market is experiencing a massive collapse after a long period of upward movement. The main reason for such a powerful collapse was the negative reaction of investors to the adoption of a law tightening government regulation of the digital asset market in the United States.
Against the background of this event, BTC and ETH quotes sank by 9%, and coins risk aggravating the fall to deeper areas. Taking into account such a reaction of the market to the control of the cryptocurrency, there is a possibility of aggravating the current correction.
One of the reasons for the continued downward trend will be bills on government regulation of the cryptocurrency market in India. The local government has come to the conclusion that digital coins can be traded and stored, similar to stocks, gold, and other precious metals.
At the same time, the country's authorities are convinced that it is impossible to use cryptocurrencies as a means of payment, and therefore the regulatory act will have provisions prohibiting the use of cryptocurrencies as payment for services and goods.
Despite the obvious positive, the bill rather toughens the regulation of the cryptocurrency market, as it involves introducing mechanisms for taxing crypto platforms, by analogy with the United States. The market reaction to such news was negative and significantly exacerbated the correction.
With this in mind, a similar reaction can be expected, as India is an important hub for the crypto industry in Asia. In addition, the wording of the law implies a ban on direct advertising of cryptocurrency platforms and financial offers. The decision on the approval of the legal act will be made within three weeks.
A similar policy is being implemented in Israel, where, as part of the fight against money laundering, an obligation has been introduced to provide detailed reporting and identification of transnational transactions in cryptocurrency.
Despite the absence of direct prohibitive norms, Israel's position should also be seen as tightening control over the activities of cryptocurrency platforms. And despite the negative reaction of the market, government regulation of the industry has a positive effect on the security of transactions, as well as contributes to the growth and development of individual coins and projects.
It is very important that such a decision was made in the United States, where the regulatory authority is confident that legislation cannot provide reliable protection for users within the framework of cryptocurrency investments.
Thanks to the gradual implementation of legislative acts, the SEC may change its position regarding important crypto projects, such as spot ETFs, which will subsequently have a great impact on the development of the entire crypto market.
Meanwhile, market leaders are trying to gain a foothold in local support zones so as not to aggravate the downward movement to monthly lows. Bitcoin managed to work out the fall below $60k and recovered above an important area. Moreover, the price made a second retest of $58.7k for two, and the subsequent move to this mark could end with its bearish break.
As of 13:00 UTC, there is every reason to believe that the market has found a bottom at $58.7k and the asset will resume its upward movement soon.
This is as indicated by the technical indicators of the cryptocurrency: the stochastic oscillator reached an important psychological mark of 40, after which it turned around and moves in a flat, which could be a direct display of today's rebound. The relative strength index shows a similar trend, which indicates an increase in the number of coin purchases. At the same time, MACD continues to decline, demonstrating the weakness of the long-term upward momentum.
It is also worth noting that, despite the recovery above the $60.2k support area, its breakdown is highly probable, since the buyers' positions are not able to ensure the redemption of the offered volumes. This can be seen in the daily candlestick, a body that is unable to absorb the body of the bearish candlestick that facilitated the $60k breakout.
With this in mind, it's worth assuming that BTC will continue to fall and rebound within the $53.7k-$57.8k range.
The situation around Ethereum is quite logical, and the coin would have gone into correction without the help of fundamental negative factors. The altcoin made a powerful upward spurt, which lasted from September 30. All this time, the coin has not been adjusted and has updated the historical maximum several times. With this in mind, it is likely that the coin will continue to adjust, although the prerequisites for the recovery and activation of buyers are already visible.
ETH found a local support zone at $4.2k, where it rebounded and began to recover. Technical indicators of cryptocurrencies have also started a sideways movement, which indicates the buying off of sellers' volumes and the start of a stabilization period.
Despite the local positive, ETH remains locked inside a narrow range and cannot break through the $4.3k mark. If this does not happen, then the coin will start moving to the lower limit of the range, at the breakdown of which a retest of $4k will occur.
Taking into account the long period of upward movement, quotes may fall to $3.7k, which will be an ideal entry point into the coin before a new rally to $5k. However, apparently, the coin will find the bottom at $4k and begin the recovery process, which will end with an impulse jump to the growth zone.
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