Cryptocurrencies have sold off this week with the market capitalisation dropping to $334bn. There was no clear catalyst for the massive price declines but could be related to uncertainty in South Korea where a new tax policy at Bitfinex caused negative investor sentiment. However, cryptocurrencies continue to see increased regulation with news that the US Justice Department has opened a private criminal investigation into traders who may be manipulating the price of Bitcoin. Moreover, there have been reports suggesting that Goldman Sachs is going to launch a Bitcoin operation to trade futures on behalf of institutional clients. Also, the US exchange Coinbase has announced a suite of tools specifically designed for institutions as well as a custodian service. Coinbase has also discussed with regulators the possibility to apply for a banking license.
On the daily chart, BTCUSD failed to break the 200MA and 61.8% retracement of the decline from 11500 and subsequently turned lower. Trend line and horizontal support can be found at 6750 and if this is broken, a bearish continuation to support at 4900 is possible. Only a break of the falling resistance trend line and May highs at 8600 would change the outlook with upside resistance at 10050.
On the daily chart, ETHUSD has formed a head and shoulder pattern with a measured target of 450. Ethereum has found some immediate support on the 61.8% retracement from the lows in April at 535 and a break would open the way for continuation to 450 followed by the lows at 360. On the flip-side a reversal and break of 660 is needed to put the bulls back in control with resistance at 730.