02.12.202516:33 Forex Analysis & Reviews: Bitcoin licking its wounds

After yesterday's major sell-off, Bitcoin has dropped to around $84,000, and the market is currently undergoing a correction that could evolve into something more interesting, provided there is at least some solid fundamental reasoning behind it, which has been difficult to find lately.

Meanwhile, the chief banking inspector of the Federal Reserve, Michelle Bowman, stated in an interview that she plans to establish new rules for banks and stablecoins to ensure healthy competition among Wall Street, fintech, and cryptocurrency companies.

Bowman emphasized the need for a balanced approach that would not stifle innovation in the rapidly evolving fintech sector while ensuring adequate consumer protection and financial stability, as required by the Genius Act. According to her, the existing regulatory framework supports new business models arising from the convergence of finance, technology, and cryptocurrencies.

The new rules are expected to focus on ensuring transparency of reserves, maintaining liquidity, and managing operational risks for stablecoin issuers. Additionally, requirements for capital and auditing are likely to be established to ensure the financial resilience of companies dealing with stablecoins.

In any case, the statements from Federal Reserve officials regarding the cryptocurrency market, albeit in an indirect manner, reflect a growing recognition that regulation must adapt to changes in the financial market brought about by technological progress. The goal is to create a level playing field for all market participants while ensuring consumer protection and the stability of the financial system as a whole. Bowman assured that the rule-making process will be conducted transparently and with input from stakeholders in the banking sector, fintech, and the crypto industry.

Trading recommendations

Bitcoin

Regarding the technical picture for Bitcoin, buyers are currently targeting a return to the level of $87,200, which opens a direct path to $89,600, and from there, it's just a short distance to $92,000. The furthest target will be the peak around $95,500; breaching this level would indicate attempts to return to a bull market. In the event of a Bitcoin decline, I expect buyers at the level of $85,300. A return of the trading instrument below this area could quickly drop BTC to around $83,200. The furthest target will be the area of $81,200.

Ethereum

As for the technical picture for Ethereum, a clear consolidation above the level of $2,858 opens a direct path to $2,924. The furthest target will be the peak around $2,994; breaching this level would indicate strengthening bullish market sentiment and renewed interest from buyers. In the event of a decline in Ethereum, I expect buyers at the level of $2,763. A return of the trading instrument below this area could quickly drop ETH to around $2,684. The furthest target will be the area of $2,585.

What's on the chart

• Red lines represent support and resistance levels, where price is expected to either pause or react sharply.
• The green line shows the 50-day moving average.
• The blue line is the 100-day moving average.
• The lime line is the 200-day moving average.

Price testing or crossing any of these moving averages often either halts movement or injects fresh momentum into the market.