Bitcoin dropped for the fourth day in a row yesterday, with the price derailed at an important intermediate support around $7,400. The coin refreshed April 12 lows at $7,260 and trimmed intraday losses by the end of the trading day. During the morning hours Friday, BTCUSD licked its wounds in the $7,600 area but remains vulnerable to further losses.
This time, the reason behind the latest sell-off was not a technical one. The US Justice Department has launched a criminal investigation into price manipulation of large cryptocurrencies like bitcoin, and the market took this news rather painfully, despite the industry has become more immune to regulatory crackdown lately. The ongoing downtrend and quite high volatility exacerbated the negative market reaction to the news. Besides, as long as the regulatory uncertainty persists, long-term and institutional investors will likely remain out of the game, and this fact hurts the industry.
In the short term, the coin needs to confirm its recovery above $7,400 in order to resume the upside bias and return to $8,000 and higher. Once the dust settles, we may see further corrective rebound as the pair looks oversold and therefore attractive for opening longs. Should the current recovery attempts fail, the downtrend will gain traction, and the $7,000 figure will be at risk.