The heavy sell-off in the cryptocurrency space, after Bitcoin made a fresh all-time high, looks like it has run out of steam and the chart patterns suggest that BTC/USD, and to a lesser extent ETH/USD, will try and re-test prior highs in the weeks ahead. The latest sell-off coincided with news that India was planning to pass a law banning any cryptocurrency activity, including possession, trading and mining. The proposed law, if passed, would allegedly allow investors up to six months to liquidate their holdings. While any proposed ban would take months to come into effect, if it is passed, the recent price action shows that some traders are starting to get nervous at these higher levels.

We highlighted recently a reoccurring pattern on the Bitcoin daily chart and this continues to play out. This two steps forward, one step back pattern is now being played out after Bitcoin hit just under $62,000, and if the recent low around $53,000 holds, then further highs may be made in the weeks ahead. The short-term support line remains in place and needs to broken convincingly to change market sentiment negative.

Bitcoin (BTC/USD) Daily Price Chart (September 2020 - March 16, 2021) 

(Click on image to enlarge)

The daily Ethereum chart is not quite as bullish as the Bitcoin chart with ETH failing to make a fresh ATM in the latest rally. The short-term supportive trendline from the end of February looks broken and ETH/USD will need to move back above this to boost sentiment. The 20- and 50-day simple moving averages sit together at $1,666 and provide a reasonable area of support if Ethereum breaks below a cluster of old lows between $1,700 and $1,740.

Ethereum (ETH/USD) Daily Price Chart (September 2020 - March 16, 2021)

(Click on image to enlarge)