• Major cryptocurrencies suffered heavy losses on Saturday, Bitcoin dropped below $10,000.
  • IRS has reportedly started sending out letters to more than 10,000 crypto investors.
  • Both Ethereum and Bitcoin are trading near key levels according to Confluence Detector.  

Following the news of the US Internal Revenue Services (IRS) having started to send out letters to more than 10,000 cryptocurrency investors to potentially penalise them over failure to properly report income forced the crypto market sentiment to turn sour this weekend. 

Top-20 cryptocurrencies with regard to total market capitalization suffered heavy losses on Saturday and stayed relatively quiet on Monday as investors have taken a back seat while waiting for the next catalyst. In the meantime, this weekend saw more than $15 billion erased from the total market capitalization, which now stands at $264 billion according to the latest available data on CoinMarketCap.

Earlier this week, during an interview with CNBC, the United States Treasury Secretary, Steven Mnuchin, said that they were looking at all of the crypto assets and added that they will make sure to have a unified approach among regulators when introducing new rules and guidelines with an aim to mitigate the potential negative impact on the financial system. Commenting on Bitcoin as an investment tool, "I won’t be talking about Bitcoin in ten years, I can assure you that,” Mnuchin said. “I can assure will not be personally loaded up on Bitcoin.”

Now let's take a look at the technical picture and identify the key technical levels revealed by the Confluence Detector for the top 3 cryptocurrencies.

BTC/USD seems to have found support near $9,500

After breaking below the key $9,900 area, Bitcoin extended its slide but seems to have found support at the $9,500 area, where the previous weekly low, middle-line of the 15-minute Bollinger Band and the previous 1-h low is located. 

Below that level, the BTC/USD pair doesn't seem to have any interim support levels until the strong $9,300 region that is reinforced by the 1-week Pivot Point (S1) and the previous daily low. 

On the upside, the Fibonacci 61.8% retracement of the monthly price action seems to have formed a key resistance at $9,900. Ahead of that, the Fibonacci 23.6% retracement of the weekly price action at $9,820 could be seen as a hurdle.

 ETH/USD trades near critical $208 support

Ethereum trades a tad above the critical $208 support, which is formed by the Fibonacci 23.6% retracement level of both the weekly and daily price action, previous lows on both the H4 and H1 charts as well as the middle line of the hourly Bollinger Band, and could come under a renewed bearish pressure if it makes a daily close below that level. The next target on the south is located at $187 - 200-day moving average. 

On the flip side, monthly pivot point (S1) at $223 is a key resistance ahead of $227, where the 100 period SMA on the H4 chart and the previous monthly low is located. 

XRP/USD sits in between strong support and resistance levels

Ripple has pierced through a couple of key resistances and could test $0.3054 - the 1-week Pivot Point (S1), next. Below that level, next strong support aligns at $0.3026 - previous weekly low.

The XRP/USD pair's upside seems more crowded, suggesting that a recovery attempt is likely to encounter strong obstacles. The Fibonacci 23.6% retracement of the weekly price action is located at $0.3110, guarding the Fibonacci 38.2% retracement of the same move at $0.3150.  The 100 period SMA on the H4 chart at $0.3190 could be the next hurdle. 

See all the cryptocurrency technical levels.

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