Daily Market Recap – BTCUSD Staging a comeback, pivot at 43k will be key

The cryptocurrency market has experienced its first major blow since the start of the pandemic. After Elon Musk's tweets criticizing the energy consumption of Bitcoin mining, it's the Chinese government that has bent the cryptocurrency price.

Bitcoins market capitalization collapsed roughly 25% last week after Beijing declared war on cryptocurrencies. The Chinese government decided to ban the use of Bitcoin and other virtual currencies as a means of payment, and Inner Mongolia, China, the world's leading “mining” region, decided that telecom and internet companies that engage in cryptocurrency mining will have their operating licenses revoked by regulators.

The cryptocurrency market will likely need some time to recover from these decisions, especially since Chinese miners are by far the largest contributors to Bitcoin and other major cryptocurrency networks.

However, since the beginning of the week, Bitcoin has already started a rebound towards the $40,000 mark. That said, many analysts are writing off this recent surge as a technical reaction. It is still difficult to say whether the recapture of the 40,000-dollar level will mark the end of the correction or simply a pause.

While bitcoin remains down 40% from its April highs at around $60,000, BTCUSD has put a strong comeback up 30% from last week's low of $30,000 which shows that buyers are still far from being dissuaded.

From a technical perspective, BTCUSD has correctly reached the theoretical $30,000 target of the bearish “head and shoulders” reversal pattern formed last week.

We can now see two important price areas at around $43,000 and $30,000. The outlook is neutral as long as BTCUSD fluctuates between these two boundaries. Traders will look for signals in the price action in the run-up to these two levels.

(Chart Source: Tradingview 27.05.2021)

In order to buy again, it would be best to look to buy towards the $30,000 support or wait until the $43,000 resistance area is breached. A pullback below $30,000 would pave the way for a larger bear market, in the spirit of 2018, i.e., a less volatile, but much longer downtrend.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.