The cryptocurrency market has stated the second half of the year with a rally and market capitalisation standing at $273bn. Last week Bitcoin dropped below $6000 as market sentiment remained negative but after the expiration of CME futures contracts the cryptocurrency rallied 12%. Sentiment was improved recently as the US Securities and Exchange Commission (SEC) clarified that Bitcoin and Ethereum are not considered securities and so would not be regulated in the same way as stocks.
Coinbase has also gone live with its institutional product (Coinbase Custody) aimed at hedge funds and other clients who can deposit a minimum of $10m and have accepted their first deposits last week. Also, Facebook has reversed its ban on cryptocurrency adverts, fuelling speculation that the tech giant may be planning to enter the space.
On the daily chart, BTCUSD broken out of a descending wedge and there is now a possibility of a bear market rally. If Bitcoin can break the 23.6% retracement and the horizontal resistance at 6760, there may be a more meaningful recovery towards 8400 with resistance near 7720. A reversal below 6450 will negate the immediate outlook and open the way for another test of the lows at 5780.
In the daily time frame, ETHUSD has also broken out of a descending wedge but faces immediate resistance at the 20MA near 480. If Ethereum can clear the 23.6% retracement at 508, a continuation to 570 and then 620 is possible. On the flip-side, a reversal below 445 would result in another visit to the lows at 405.