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The BTC/USD pair has been in strong bearish trend in the past few weeks.
- Buy the BTC/USD pair and set a take-profit at 26,500.
- Add a stop-loss at 24,000.
- Timeline: 1 day.
- Set a sell-stop at 25,400 and a take-profit at 24,500.
- Add a stop-loss at 26,500.
The BTC/USD pair crashed hard as concerns about regulations continued. Bitcoin plunged to a low of $25,500, the lowest level since March. This decline means that one Bitcoin price has crashed by more than $6,000 from its highest point this year.
The main catalyst for the plunge of Bitcoin price was the decision by the Securities and Exchange Commission (SEC) to sue Binance and Changpeng Zhao, the company’s CEO. In a statement, the SEC accused the company of offering unregistered securities in its ecosystem.
The 13 charges also accused the company of offering unregistered exchanges, broker-dealers, and other agencies. Further, the SEC alleged that the company allowed client funds to be moved to a company registered in the British Virgin Islands associated with the CEO. Gary Gensler, the SEC Chair said:
“Through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”
Binance rejected these claims and vowed to defend itself in courts. The suit came a few months after the CFTC sued the company for offering futures and derivatives products to US customers without following the law.
The lawsuit by the SEC is notable because of the 13 allegations. It is also important because of the role that Binance plays in the crypto ecosystem. It is the biggest exchange in the world, handling billions of dollars worth of cryptocurrencies every day.
Therefore, the BTC/USD pair dropped as sentiment in the crypto industry worsened and as more investors dumped their Bitcoin coins.
With no major crypto-related and macro events scheduled on Tuesday, the focus among traders will be on the impact of the SEC lawsuit on Binance.
The BTC/USD pair has been in strong bearish trend in the past few weeks. This sell-off accelerated after the latest SEC lawsuit. As it dropped, the pair crashed below the key support level at 25,186, the lowest level on May 25 and May 18. The pair also crossed the 25-period moving average while the Stochastic RSI moved below the oversold level.
Therefore, judging by the price action of Ripple after the SEC lawsuit in 2020, there is a likelihood that the BT/USD pair will rebound on Tuesday as investors buy the dip. If this happens, the next key level to watch will be at 26,500. Also, this rebound could be a dead cat bounce, which is a temporary rebound.
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