Bitcoin drops to $46K, altcoins sell-off as report claims Binance is under investigation

Bitcoin drops to $46K, altcoins sell-off as report claims Binance is under investigation

Within the last hour Bitcoin (BTC) price dropped by more than 3%, extending the decline which started on May 12 and saw the digital asset drop as low as $46,000 on some exchanges. 

Initially, on May 12 it was Tesla’s announcement that it would stop accepting Bitcoin as payment over environmental concerns, along with technical weakness and a nearly complete head and shoulders technical pattern that pushed BTC price down to $46,000.

Daily cryptocurrency market performance. Source: Coin360

Today’s bearish catalyst appears to be a Bloomberg Tax report claiming that the Justice Department and the Internal Revenue Service are investigating Binance Holdings Ltd. for alleged “illicit activity”.

While the investigation is unconfirmed at this moment, as the news broke Bitcoin price quickly dropped by more than $3,000 and currently trades at $47,300.

BTC/USDT 4-hour chart. Source: TradingView

From the viewpoint of technical analysis, the bearish head and shoulders pattern is now confirmed, and barring a bounce off the 61.8% Fibonacci retracement level at $42,600, traders may look for BTC price to restest the $40,000 level as support. Below this, there is the 200-day moving average at $39,000 and in a worst-case scenario, $35,000 is the target of the H&S pattern.

Bitcoin price may be revisiting multi-month lows but a quick glance through crypto Twitter shows most traders view the current pullback as a ‘buy the dip’ opportunity, included Micheal Saylor who on May 14 tweeted that MicroStrategy bought another 271 BTC at an average price of $55,387.

This is not the first time Binance has been accused of unlawful activity by U.S. authorities and regulators. On March 12 Cointelegraph reported that Binance was under investigation for its loose KYC and AML procedures, an accusation which Binance CEO Changpeng Zhao said had “no teeth”.

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