Market update 12/19/2020: Why is Bitcoin rising after US FINCEN rule controversy?

Dec 19, 2020

Here are some brief thoughts about the current market conditions and what I’m seeing in the market.

-Joseph Young

Bitcoin is recovering after the controversial U.S. FINCEN rule proposed revealed by United States Secretary of the Treasury Steven Mnuchin.

The reason is quite simple: the rule isn’t as bad as many thought.

The controversial rule essentially requires crypto exchanges to keep track of non-custodial wallets (name and address of the owner) for withdrawals and deposits above $3,000.

Jake Chervinsky, a lawyer and general counsel at Compound Finance, says it could have been much worse.

“Let's look on the bright side for a minute. This doesn't require KYC for every transaction with a non-custodial wallet. It isn't an outright ban on self-custody. It doesn't prohibit the act of using a permissionless network. It really -- REALLY -- could have been much worse,” Chervinsky says.

Now let’s take a look at what exchange heatmaps show.

Source: Tensor Charts

Exchange heatmaps show the following levels:

Resistance at $23,600, $23,800, and $24,200.

There are large sell orders at the three resistance levels, particularly on Bitfinex.

Support at $22,500 and $22,800.

Bitcoin continues to reject $23,600, and it clearly is a big area of interest for sellers in the near term.

Now if Bitcoin goes above $23.6k and also breaks $23.8k, then it’s price discovery again and obviously bullish.

Now let’s take a look at what whale clusters show.

Source: Whalemap

Whale clusters form when whales buy Bitcoin at a certain price level and do not move their holdings.

Clusters often identify support levels because whales are likely to bid the cluster areas.

Short-term 1-hour whale clusters show the following levels:

Support levels at $23,150, $22,620, $21,740.

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