Bitcoin continues to decline, support level $7900 is in the market’s focus

Despite the positive start of the week and attempts to gain on Monday, the market of cryptocurrencies continued to decline on Tuesday. Over the past 24 hours, the capitalization of the cryptocurrency market has fallen from 390 billion to 373 billion USD, the entire digital currency market has lost more than 17 billion US dollars per day. Bitcoin price fell below $8200 and at Wall-Street start is traded at $8177, and the price of the second most important digital currency – Ethereum dropped below $670. The current correction of the cryptocurrency market and the decline in prices for Bitcoin, Ethereum and other major digital currencies may be related to three main factors: the tax policy at the Bitfinex exchange, the scandal over South Korea's two largest cryptocurrency exchanges UPbit and Bithumb, and the large sale-off by the investment fund MT.Gox.

Last week, the Bitfinex team said that the financial regulator of British Columbia (offshore exchange jurisdiction) is able to exchange information with the tax authorities of the country where the Exchange customer resides. In addition, the exchange intends to provide all the necessary information at the request of the regulatory authorities in accordance with the law of the British Virgin Islands. Immediately after that news, large corporate clients of the exchange publicly stated that they stop using Bitfinex for their trading operations and are going to withdraw funds from trading accounts.

Cryptocurrency sales at Bitfinex and crypto transfers to fiats was one of the main factors that contributed to the market decline last week.

The South Korean cryptocurrency market is only beginning to recover after the scandal around UPbit, which became known on May 11.

The cryptocurrency market is likely to recover from the situation at Bitfinex quickly. Large investors will be able to use other crypto exchanges to reopen longs and buy a digital currency. As for the South Korean exchanges, this is the question of time that is necessary for the return of clients' trust to the exchanges, even if there have been no proofs of client funds disappearance from exchange client accounts.

As for a technical point of view, the situation has not changed - the Bitcoin market continues a downward impulse towards the nearest support. The nearest significant support is located at $7700-$7900. Friday's minimum on May 18 is at $7890. This might serve as a zone of demand.

FortFS