Cryptocurrencies, including Terra Luna and Bitcoin, have been bullish since the beginning of October, after the crypto crackdown failed to kill this market, and they remain so, despite the retreat in the last two days. They pushed to new record highs early last week, with Bitcoin approaching $70,000, while Terra Luna approached $55, but started retreating lower, amid some profit-taking after the new highs, and this week the retrace lower picked up pace.

What’s Behind the Retreat?

Profit-taking is surely one of the reasons for this retreat in cryptocurrencies. We saw some strong bullish price action in October, and then again early last week, and we know that every trend goes up/down in waves. After such strong bullish momentum and placing of new record highs, it was time for traders to book some profit.

But, there’s more to it than that. China’s state planner, NDRC, commented at a press conference today, that they will continue to clean up virtual currency mining in China. This shows that China is not backing down on the war on cryptocurrencies, which is not a positive thing, but cryptos are finding other places to migrate to.

Besides that, the $1.2 trillion infrastructure bill, which will be signed by US president Joe Biden, intends to tax cryptos, in order to pay for other infrastructure plans, which is not a good thing, and cryptocurrency “brokers,” which are mainly exchanges, will be required to issue a 1099-like form, disclosing who their customers are. But there are tax provisions for cryptos and NFTs.

Terra Luna Daily Chart Analysis – The Trend Remains Bullish

Terra LUNA finding support at the 50 daily SMA

Terra Luna has been really bullish in recent months, increasing from around $5 in July to almost $55 earlier this month. The pullbacks in September haven’t disturbed the uptrend too much and this latest retreat seems like a good opportunity to go long.

The 50 daily SMA (yellow) provided support with LUNA/USD retreating around 20% so far this week. The decline stopped there and the stochastic indicator is sort of oversold, which means that the pullback might be complete. Besides that, the Terra LUNA community voted to burn 9% of the total coins, which accounts for around $4 billion in value at the current price, which brings deflation, which, in turn, provides a good incentive to buy LUNA coins. So, the trend will continue to be bullish, and this is a good opportunity to go long on this crypto.

Bitcoin Daily Chart Analysis – The 50 SMA Holds for Now

Bitcoin looks oversold now, which means that the retrace is complete

Bitcoin is making the biggest upgrade since 2017, with Taproot, which went into effect on Sunday at block number 709,632. This will introduce the Schnorr signatures, helping Bitcoin to make transactions less expensive, while becoming more private and efficient. The Taproot upgrade will generally enable Bitcoin to execute smart contracts on the blockchain faster and better.

But, that is not causiing Bitcoin to fall more than $10,000, below $60,000. The low a while ago stood at $58,587, but it has climbed back above $60,000 now, after the 50 SMA (yellow) held the decline. This moving average provided support and the price is increasing now. The stochastic indicator is also oversold, so this might be the end of the retreat. We are looking for a buying opportunity here, but would like to see a bullish reversing signal before buying.

Bitcoin Live Chart