US regulation against Bitcoin could be the catalyst for the next upswing

In a recent briefing held by the U.S. Secretary of the Treasury Steven Mnuchin, the U.S. government revealed its stance on cryptocurrencies and the efforts it will carry upon to regulate Bitcoin because of its use in criminal activity and the threat it poses to the financial system.

Bloomberg Crypto July 15, 2019.Yet BTC surged 4.5 percent after the statements were made by the U.S. government official, which according to the head analyst at Fundstrat Global Thomas Lee, could be a sign of confidence about the underlying fundamentals behind BTC that allow it to function in a decentralized way without the need of regulatory oversight.

Bitcoin seems comfortable with statements made by #Mnuchin regarding Crypto and KYC/AML. - White House wants fair ground rules but does not seem intent on further action at this time.

As it was foreseen, the break below the 23.6 percent Fibonacci retracement zone on the 3-day chart led to a drop-down to the 38.2 percent Fibonacci retracement level and the support trendline, which are both acting as barriers containing the price of Bitcoin from continuing depreciating due to the high concentration of demand around this area.

Even though these two major support clusters could be able to hold and bounce off BTC's market valuation back to the 23.6 percent Fibonacci retracement point or higher, moving below them could take this cryptocurrency to the next level of support around $8,500 and $7,240.

A similar scenario is presented on the 1-day chart where an ascending parallel channel has been developing since mid-December 2018.Now that Bitcoin reached the bottom of the channel, a rebound to the middle or even the top of the channel could be expected.

Due to the longevity of this ascending parallel channel a break below it could accelerate the selling pressure behind BTC significantly dropping its price down to at least the 50 percent Fibonacci retracement level as it can be seen in the 3-day chart.

Despite the sharp downturn that Bitcoin experienced over the last week that took many analysts by surprise including Tone Vays who turned bearish less than 24 hours after becoming bullish, there are multiple signs that could be predicting a rebound to previous or even new highs.

As it can be seen on the 3-day chart as well as in the 1-day chart everything seems to point out that BTC could soon regain at least 20 percent of its value within the next few days.

It is worth noting that even with the few corrections that Bitcoin has gone through since it started surging in early February, in the long-term this cryptocurrency remains bullish.