Crypto Market Dips: Impending Regulations and Temporary Bitcoin Plunge Below $26,000

Intricate cityscape at dusk, ominous clouds, diverse crowd anxiously watching screens displaying crypto charts, light from screens casting a blue hue, tension in the air, lines reminiscent of Kandinsky, chiaroscuro technique for contrast, impending storm symbolizing growing regulatory pressures, Bitcoin below $26,000 etched on screen.

Bitcoin (BTC) bulls might be in for a surprise as the negative regulatory environment could potentially result in a temporary price capitulation below $26,000. Much of this speculation is fueled by recent regulatory newsflow and the ongoing influence of governmental controls attempting to assert dominance over the sector.

Just recently, the US legislature circulated a memo amongst committee members, proposing to strengthen the SEC’s authority over cryptocurrencies. The memo published on May 10, claimed that almost all digital assets are securities, echoing the sentiments of SEC Chair nominee Gary Gensler.

Meanwhile, the United Kingdom’s Treasury Committee made a strong recommendation on May 17 to regulate retail crypto trading and investment under the same principles as gambling, invoking the notion of “same risk, same regulatory outcome.” According to the committee chair, Bitcoin and Ether account for two-thirds of the total cryptocurrency market capitalization but are considered “unbacked” digital assets.

Bitcoin enthusiasts are eagerly watching the $735 million weekly options expiry on May 19, as it could play a crucial role in determining whether BTC prices will retreat below $26,000. In light of the current regulatory atmosphere and potential risk from US Treasury funds dwindling due to the impending debt ceiling, some traders are opting to reduce exposure to Bitcoin in the short term.

On the other hand, Bitcoin bears can capitalize on the recent decline in Bitcoin prices and uncertainty caused by regulatory events. For instance, BTC experienced a 6.6% drop in value within a 36-hour period leading up to the options expiry on May 12. This downtrend ended with a short-lived 3-day rally culminating in a thwarted attempt to breach the $27,500 resistance.

With the May 19 options expiry looming, open interest for this particular event is sitting at $

Source: Cointelegraph

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