Tuesday's Market Minute: Bitcoin Bruised After Binance Sued by SEC

Bitcoin futures suffered a -6% drop yesterday after the Securities and Exchange Commission sued the crypto exchange Binance and its billionaire founder Changpeng Zhao. The SEC filed 13 charges, alleging Zhao and Binance comingled billions of dollars of user funds and then transferred them to another company that also was controlled by Zhao in order to allow high-net-worth U.S. customers to trade on Binance’s unregulated international exchange.

The reaction in the cryptocurrency was swift and sharp, taking the /BTC contract to new 30-day lows and sending it below three commonly followed technical indicators: the 21-, 63-, and 252-day Exponential Moving Averages. This would typically be regarded as a bearish development, especially considering the two shorter-term moving averages are sloping downward. But bitcoin has been waning since mid-April when it failed to take out its previous yearly highs near 31,800, and has been trending downward in a channel since that point. It also once again crossed below another notable point, which was the opening of the June 13 downward gap near 27,355.

But perhaps the move isn’t as bad as it may seem at first glance. The contract now finds itself near the yearly Linear Regression line near 25,578, a line of “best fit” based on closing prices and a notion of fair value according to the product’s own price history. This could be a supportive point for the crypto futures to regain some footing. If /BTC continues to falter, look for further support near 24,600 based on old highs from the past year. To the upside, watch the 252-EMA near 26,000 and the 63-EMA near 26,700.

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