Ukraine Legalizes Crypto, Bitcoin Steps Back Into Red Territory
Bulls Fail to Break Resistance, Double Top Warns of More Losses
by Bogdan Giulvezan
After a beautiful rally that saw Bitcoin climb from roughly $33,000 to $45,000 in just over two weeks, the bulls ran out of steam and crumbled at $45K key resistance. BTC/USD created a double top at said resistance and then followed the rules of this pattern by the book, dropping lower.
The pair is currently testing $40,000, which is a technical support as well as a psychological one (big round number), and a break will likely cause more of the bearish movement started at $45,000. However, Bitcoin may get some sort of push from Ukraine and the newly adopted Law of Ukraine on Virtual Assets.
Thursday, February 17, Ukraine’s parliament passed the law with more than 270 votes and as a result, cryptocurrencies are now legal in the country. However, it must be well understood that Bitcoin is not legal tender, hence not an official currency in Ukraine.
According to Mykhailo Fedorov, Ukraine’s Deputy Prime Minister and Minister of Digital Transformation, “The new law is an additional opportunity for business development in our country. Foreign and Ukrainian crypto companies will be able to operate legally, and Ukrainians will have convenient and secure access to the global market for virtual assets”.
The law specifies rules that should be followed by crypto-exchanges and by other providers of cryptocurrency services, and outlines fines for not following said rules but also establishes that Ukraine’s National Securities Commission will be the regulatory body for cryptocurrency.
A similar bill was introduced in September 2021 but Ukraine’s President vetoed it because it was supposed to create a totally new regulatory authority that would supervise cryptocurrencies. He suggested that the new sector should be regulated by existing entities, such as the National Securities Commission. The bill was changed accordingly and Ukraine opened its cryptocurrency doors for businesses but also for everyday people who are looking for easier and safer access to the market.
Technical Outlook – BTC/USD
After creating a double top at $45,000, Bitcoin is once again testing the long-term bearish trend line seen on the Daily chart below, trading at $40,800. It’s a very important zone because we have 4 key elements here: the said trend line, the 50 days MA, the lower barrier of the ascending diagonal channel, and the major level at $40,000.
The double top created around $45,000 is a strong bearish signal that usually results in strong moves, so it’s not farfetched to think that the pair will extend below $40,000. If this scenario comes true, the next probable destination is $37,500.
On the other hand, if we see a bounce from current levels followed by a break of the double top at $45,000, this would show clear signs of bullish pressure, making $50,000 a viable target in a matter of weeks.
