Bitcoin prices have somewhat stabilized around the $580 handle. Market participants are still waiting for more info from the hacked exchange Bitfinex before making up their minds. The technical bias, however, remains the same with both Bitcoin and Litecoin in a downtrend.
Bitcoin Traders Wait for Bitfinex
Bitcoin traders are still in a ‘wait and see’ mode after Bitfinex, the largest USD exchange by trading volume, got hacked last week. The exchange allowed read-only access on Sunday and is asking everyone to change their passwords and 2fa tokens. What everyone will notice right after they log in is that 36% of their assets have been replaced by a ‘BFX token’. This is a ‘haircut’ applied by Bitfinex to each account to compensate for the loss of over 100,000 Bitcoins.
If in fact, Bitfinex does decide to go through with this plan, they will have to purchase the lost BTC with USD (mostly). This may create a short-time price spike. But many legal challenges remain before this plan can be applied. Many argue that this is illegal for Bitfinex to dip into customers` USD to compensate for the loss of Bitcoins.
Let’s turn to the technical picture. As we`ve mentioned above, BTC/USD is still in a downtrend. The bulls will need to push prices above the $650 mark to end it. Below the current support near $578, a stronger level can be found at the $540-$550 area on FXOpen. Further down the round figure at $500 is another notable support. The breakout point for the latest major rally at $462 per coin is a major level to watch. We retested this level with prices bottoming out at $469 during the crash last week. This confirms the validity of this level as strong support. A break below it would intensify the losses.
Litecoin Still in a Downtrend
The long LTC downtrend that started almost 2 months ago continues. We are currently quoted at $3.74 per coin. Similarly to BTC, we’ve somewhat stabilized after the Bitfinex hack. Here are some of the levels to watch.
A breakout above the $4.04 high is needed to end the current downtrend. Below the current prices, support can be found in the area from $3.50 to $3.61. Further down we find another support area from $3.22 (last week crash low) to $3.30 per coin. A breakdown below here could extend the losses to the round $3 figure.