The cryptocurrency market has witnessed a significant correction lately due to the news of the US Commodity Futures Trading Commission (CFTC) suing Binance, a global cryptocurrency exchange, and its CEO Changpeng Zhao (CZ) for unlawfully offering trade options to US-based customers. However, the technical charts indicate a silver lining amidst the chaos.
The lawsuit by the CFTC alleges that Binance violated the rules governing the trade of derivative contracts, including futures and options, by allowing US investors to utilize their platform. Binance was additionally accused of failing to properly register with the CFTC, a required step for any futures exchange in the United States. The regulator has demanded Binance to pay a hefty fine for violating US law.
As a result of this news, the cryptocurrency market experienced a correction that has led to substantial losses for investors, especially those who have invested in altcoins. Bitcoin, the world’s leading cryptocurrency, endured a significant reduction in its overall market cap as it dropped to nearly $30,000 from its all-time high of $63,000 earlier this year, taking other cryptocurrencies along with it.
However, despite the correction, technical charts reveal a promising trend. The Relative Strength Index (RSI), a popular technical analysis tool, indicates that Bitcoin’s oversold state may soon reverse. The RSI for Bitcoin has reached a level below 30, suggesting that it is oversold and could undergo an upward correction.
Another positive development is the Moving Average Convergence Divergence (MACD) indicator. This indicator determines the momentum of the market by examining the difference between a cryptocurrency’s 26-day exponential moving average (EMA) and its 12-day EMA. The difference helps in identifying an upward or downward trend. A histogram is also created to display the difference between the two EMAs. The bullish crossover of the 12-day EMA over the 26-day EMA line indicates a potential upward trend that could be beneficial for Bitcoin.
Ethereum, the second-largest cryptocurrency, has also experienced a significant decline in its market value due to the correction. However, technical charts suggest that Ethereum could recover from this. The RSI for Ethereum is currently at a level of 21, indicating that it is oversold and could bounce back soon.
Moreover, the MACD for Ethereum displays a bullish crossover trend that could lead to a potential upward trend. If Ethereum recovers from its oversold state, it could potentially see an increase in its market value, which could be beneficial for investors.
In conclusion, the recent correction of the cryptocurrency market has had a negative impact on the market value of various cryptocurrencies. However, technical charts indicate that there could be a silver lining to this development. The oversold state of cryptocurrencies like Bitcoin and Ethereum, as shown by the RSI, suggests a potential upward correction. The bullish crossover trend exhibited by the MACD for both Bitcoin and Ethereum could lead to a possible upward trend. As a result, investors might want to hold on to their investments and wait to see if these technical indicators ultimately play out. Despite the temporary setback caused by the lawsuit against Binance, the future of the cryptocurrency market could still be promising, and investors should remain hopeful.
