- Bitcoin tanks below $30,000
- Litecoin is struggling to power through $74
- ECB cryptocurrency warning
Consolidation and accumulation is the central theme in the cryptocurrency market as coins struggle for direction after the recent crash. Bitcoin is one of the coins struggling to power through the $30,000 level as Litecoin remains on edge after a stalled bounce back from seven-month lows.
The coins have struggled to rally after the recent sell-off in line with the sell-off in the equity markets. Investors are increasingly on the fence concerned about the long-term outlook in view of the current interest rate hikes; inflationary pressures have also left most investors cautious about taking in risky investments, opting to settle on safe havens such as bonds and treasuries.
Bitcoin technical analysis
Bitcoin is one of the coins that have felt the full brunt amid the risk-off mood in the market. The flagship cryptocurrency has found the going tough above the $30,000 level. The $30,700 level has emerged as a critical resistance level whereby short sellers have come back into the fold and pushed the coin lower.
A drop to the $29,700 area leaves BTCUSD close to a pivotal support level. A daily close below the 28,500 level could trigger renewed sell-off that could see the coin dropping to one and a half year lows of $25,300. Bitcoin remains highly bearish, with the Relative Strength Index pointing lower with the coin also trading below its 200-day moving average.
Litecoin under pressure
Litecoin also remains under pressure below the $70 a coin level. After struggling to power through the $74 handle, LTCUSD remains susceptible to further losses going to the bearish momentum in the overall sector.
After a recent bounce back from a seven-month low of $52 a coin, LTCUSD could come under pressure on failing to find support above the $60 level. A drop back to the $50 area could be in the cards. In the meantime, the coin continues to trade sideways.
So, why do Bitcoin and Litecoin remain under pressure?
The ECB crypto warning
Bitcoin and Litecoin remain under pressure after the European Central Bank issued its biannual financial stability report and warning of the “Systemic” risk posed by virtual currencies. According to the central bank, significant risks could appear should the interconnection between cryptocurrencies and the traditional financial sector continue.
The warning by the ECB comes in the wake of stablecoin TerraUSD imploding early in the month and sending the entire market lower. The collapse of what was seen as a much more stable asset has sent shockwaves in the market, triggering fear among the investment community.
The crypto sector has been under immense pressure after hitting a peak of $2.9 trillion last November. The market has since imploded, with Bitcoin leading the slide after a 50% pullback from all-time highs. The value of the entire market has since dropped to lows of about $1.2 trillion.
The ECB remains wary of the ongoing crash, insisting that exposure to crypto banks and other financial institutions could put capital at risk. It is also expected to damage confidence and trigger a crisis in the financial markets.
Amid the warnings, investors are increasingly eyeing opportunities on battered assets such as Bitcoin and Litecoin. The number of investors in Fidelity Investments Bitcoin Index Fund increased from 83 to 689 in May, affirming investors are increasingly looking to buy the dip.
Bitcoin and Litecoin are bearish due to the sell-off wave that has gripped the sector. The ECB warning is only fuelling fears in the sector likely to pile pressure. However, investors are also increasingly looking to take advantage of the deep pullback.