- SEC created significant volatility in the crypto market by filing lawsuits against Binance and Coinbase earlier this week.
- Bitcoin reacted strongly to these events, dropping from $27,300 to $25,300 on June 5th.
- The ability of Bitcoin to maintain its value above $25,300 can be attributed to the critical resistance level it has maintained within its trading range for the past 30 days.
How did Bitcoin manage to remain strong despite the lawsuits filed by the SEC this week, which triggered a wave of market downturns in the crypto market?
SEC Pressures Create Volatility in the Market
The US Securities and Exchange Commission (SEC) created significant volatility in the crypto market by filing lawsuits against Binance and Coinbase earlier this week.
Bitcoin reacted strongly to these events, dropping from $27,300 to $25,300 on June 5th, a 7.3% decrease. This sharp drop raised concerns among investors about the possibility of further declines in Bitcoin’s value due to legal uncertainty.
Bitcoin stopped its decline at $25,300. By June 7th, the cryptocurrency had recovered its losses and experienced a 7.9% rebound. The ability of Bitcoin to maintain its value above $25,300 can be attributed to the critical resistance level it has maintained within its trading range for the past 30 days.
This trading range includes three important price points: upper, middle, and lower. The upper level reflects the average price at which short-term investors hold Bitcoin, the middle level corresponds to the 200-day exponential moving average (EMA), and the lower level corresponds to the adjusted realized price value. These measurements are important factors in assessing Bitcoin’s market sensitivity.
Short-term investors reflect the average price at which short-term holders bought Bitcoin. This measurement provides valuable information about potential selling thresholds for these investors and can inform overall market sensitivity.
The 200-day EMA is a widely used tool in market analysis. It calculates the average closing price of the asset’s last 200 days, but like a simple moving average, the EMA gives more weight to recent prices. This feature makes the EMA more sensitive to new price changes and helps to detect potential trend reversals earlier. Therefore, it provides information about long-term market sensitivity and allows for a comprehensive evaluation of price trends.
What Are the Current Metrics for Bitcoin?
The realized price represents the average price at which all coins in the market have moved, and adjustments are made for lost and stagnant coins. This provides a reference point for most investors to assess whether they are in a profit or loss situation.
On June 5th, Bitcoin’s realized price was determined to be $25,300. Short-term investors had a realized price of $26,300, while the 200-day EMA was $25,300.
Evaluating Bitcoin’s realized price is important for determining support and resistance levels. Examining realized price metrics and adjusting them based on assets such as long-term and short-term holders allows us to more accurately understand Bitcoin’s potential trading range.
This understanding becomes important for determining price floors and the beginning of market cycles. Therefore, despite the market volatility triggered by SEC lawsuits, Bitcoin maintained its value above $25,300 and demonstrated the strength of the market.
