Bitcoin (BTC) Fails to Revisit $40,000 as Regulatory Activity Tests Support

After having seen a 3-day losing streak come to an end last Sunday, Bitcoin (BTC) rose for a 2^nd consecutive day on Tuesday. Following a 1.55% gain on Monday, Bitcoin ended the day up by 0.59% to $38,721.

For the Bitcoin bulls, while 8 days in the green from 10 sessions is positive, Bitcoin has failed to breakout from its current ranges. After recovering from a January low $32,991, a Tuesday high $39,281 has been its highest reach since the 21^st January sell-off.

Regulatory Activity a Hurdle for the Bitcoin Bulls

The NASDAQ continues to head northwards, in spite of market sentiment towards FED monetary policy. A 5-day winning streak has seen the index rise by 5.96% over the period. By contrast, Bitcoin was up by 4.12% to Tuesday’s close. Considering crypto volatility and market risk profiles, Bitcoin movement has been range-bound.

A marked pickup in regulatory activity has likely hindered Bitcoin’s return to $40,000 levels. On Tuesday, news hit the wires of the Indian government planning to roll out a 30% crypto tax. With news of a White House Executive Action on crypto regulations also hitting the wires, regulatory risk remains a key driver for the crypto market.

The Bitcoin Fear & Greed Index

A 2^nd day in the green for Bitcoin supported a modest rise in the Bitcoin Fear & Greed Index. Having recovered from a pullback to 20/100, the Index currently sits at 28/100, just short of January’s high 29/100.

While inching closer to the orange zone, the Index last sat outside of the red zone back on 28^th December (41/100). Uncertainty continues to peg the Index back, which is aligned with Bitcoin’s price movements at the turn of the year.

Back in November, the Index had risen to 84/100 on 9^th November before the broad-based crypto market sell-off.

Bitcoin Price Action

At the time of writing, Bitcoin was down by 0.53% to $38,516. A move back through the day’s $38,679 pivot would support a run at Tuesday’s high $39,281 and the first major resistance level at $39,323 into play.

An extended crypto rally, however, would bring $40,000 levels into play for the first time since 21^st January. The second major resistance level sits at $39,926.

Failure to move back through the day’s pivot would bring the first major support level at $38,076 into play. Barring an extended sell-off on the day, Bitcoin should avoid sub-$36,500. The second major support level at $37,432 should limit the downside.

Looking at the EMAs, the signal remains bearish. The 50-day EMA has pulled further back from the 100-day and 200-day EMAs. The 100-day EMA has also pulled back from the 200-day EMA, another bearish signal. Significantly, Bitcoin continues to sit well below the 50-day EMA that holds at $43,000 levels.

Failure to move back through to $40,000 could deliver another reversal. Much will depend, however, on regulatory activity in the coming days.

Looking across at the U.S futures market, the NASDAQ 100 mini was up by 135 points, at the time of writing, providing some support.