Bitcoin Price Analysis: BTC/USD bulls in tactical retreat, critical support at $9,600

• BTC/USD collapsed on an unhappy combination of technical setup and fundamental factors.
• The trend remains bullish as long as the price stays above $9,600.

Bitcoin (BTC) has reversed the gains of the previous day amid massive sell-off. The first cryptocurrency lost nearly $500 in a matter of hours and hit the intraday low at $10,095. At the time of writing, BTC/USD is changing hands at $10,170, down nearly 1.5% since the beginning of the day.

Bitcoin's market dominance settled at 62.3%, while an average daily trading volume increased to $45 billion amid growing market volatility.  In terms of on-chain data, over 84% of all Bitcoin addresses are in the money, which is a long-term bullish signal.

Fundamental background and technical setup

The US Treasury Secretary Steven Mnuchin said that Financial Crimes Enforcement Network planned to roll out a regulation for cryptocurrency and digital payment systems to enforce transparency of all operations and prevent digital currencies from being used as a "secret bank" for illegal activities. Obviously, the US wants to adopt tough approach towards anonymity and privacy features of cryptocurrencies to "see where the money is going and that this isn’t used for money laundering."

These comments might have spoiled investors' sentiments and clamped down on the bullish momentum as the coin approached a critical resistance level of $10,500.

Thus a combination of technical and fundamental factors triggered a sharp correction on the market and brought BTC to the lowest level in recent two days.

BTC/USD: Technical picture 

On a daily chart, BTC/USD tries to settle above 50% Fibo retracement for the downside move from July 2019 high to December 2020 low. This area served as resistance during the previous upside wave, and now it provides initial support to BTC. Once it is out of the way, the sell-off is likely to gain traction with the next focus on $10,000 and $9,925 (SMA50 4-hour). The critical support comes at $9,600, which is an upper boundary of the broken consolidation channel. reinforced by SMA100 4-hour.

On the upside, a sustainable move above $10,300 will mitigate the initial bearish pressure and bring $10,500 back into focus. The next resistance is created by psychological $11,000 that coincides with 68.2% Fibo retracement.

Downward-looking RSI on the intraday charts implies that BTC may extend the correction in the nearest future; however, the weekly RSI points upwards with no sighs of the reversal, which means that the long-term bullish trend is intact.

BTC/USD daily chart

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