“Buy the dip” analysts say as SEC-inspired downturn disrupts crypto market

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(Kitco News) – It was a day of stabilization across the cryptocurrency market as the fallout from yesterday’s US Securities and Exchange Commission (SEC) enforcement action against Kraken and the betting program began to settle as crypto advocates debated whether the development was positive or negative for the ecosystem at large .

The ruling will limit the amount of engagement crypto holders in the US have with centralized platforms, hindering the ecosystem’s growth, but it could be a good thing for decentralized finance (DeFi) as hodlers are now more likely to use options available in DeFi that are out of reach for US regulators.

Data provided by TradingView shows that Bitcoin (BTC) bulls were able to fend off an onslaught of bears trying to force another leg into the top crypto, halting the smackdown at $21,530 and bidding BTC back above the $21,600 support on Friday afternoon .

BTC/USD 4-hour chart. Source: TradingView

As a result of the move by the SEC and the subsequent fallout witnessed across the market, “the uptrend on the daily bar chart has been negated and the bulls have lost their short-term technical advantage,” according to Kitco senior technical analyst Jim Wyckoff, who said that “Bjørner now has momentum on his side.”

Buy the staking dip?

Insights into how to play the SEC-inspired dip were offered by Markus Thielen, head of research at Matrixport, who said in the latest issue of Matrix on target newsletter that “at this time we would propose to sell $19,000 Bitcoin strikes, end of March expiration.”

“The last time Bitcoin materially breached $20,000 was during the FTX implosion, and it would potentially take a similar risk of event for the downside to be breached, and so $19,000 appears relatively unlikely to be breached,” Thielen wrote .

Regarding the sideways price action seen in Bitcoin over the past couple of weeks, Thielen noted that “Bitcoin tends to move very quickly in 4,000-point increments,” and suggested that “When Bitcoin retests resistance at $24,000 and crosses it , the price could potentially accelerate to $28,000.”

In 2022, rising inflation and decisions by central bankers had a negative impact on the crypto market, but so far in 2023, “the opposite has happened,” the researcher said. “That’s why most people have missed this strong rally this year.”

Shortly after the mid-December FOMC meeting minutes were published on January 4, Bitcoin underwent a rally. A similar move was seen on January 12, when Bitcoin rallied after US inflation came in lower than expected, the newsletter highlighted.

“When we map all the central bank events (meetings and minutes) and also CPI data release dates, we see that there will be many catalysts for the Bitcoin rally to continue in the first half of 2023. Based on the “January effect “Bitcoin could reach $45 000 by the end of the year,” Thielen concluded.

Altcoin stands out in a sea of ​​red

The altcoin market was hit hard by the SEC-inspired decline as traders who jumped into the market during the recent rally in prices left the scene in the last 24 hours to await calmer market conditions.

Daily performance in the cryptocurrency market. Source: Coin360

As usual, several tokens managed to buck the downtrend with double-digit gains, including a 55.6% increase for SKALE (SKL), a 20.75% gain for MobileCoin (MOB), and a 12.62% increase for Syscoin (SYS).

The total cryptocurrency market cap is now $1.014 trillion, and Bitcoin’s dominance rate is 41.1%.