Crypto newsletter: Bitcoin rebounds on Elon Musk tweet

• Musk suggests Tesla could accept the cryptocurrency again
• El Salvador become the first country to adopt bitcoin as legal tender
• Ethereum approached major resistance 

Cryptocurrencies came under pressure early last week, however prices stabilized after booking solid gains over the weekend following Elon Musk comments. Tesla's CEO hinted that his company may start accepting crypto payments again. Also further news from El Salvador lifted market sentiment. Bitcoin's dominance increased to 43.6%. The capitalization of all digital assets in circulation rose to 1.68 trillion, while an average daily trading volume is registered at $94.7 billion.

Bitcoin market dominance starts to recover slowly. Source: Coinmarketcap.com

Elon Musk suggested that Tesla may resume accepting cryptocurrency payments

Bitcoin surged above $39,000 after Elon Musk tweeted that Tesla will allow bitcoin transactions again "when there's confirmation of reasonable (50%) clean energy usage by miners with a positive future trend." Tesla first announced bitcoin as a payment option in February, only to suspend it early May on environmental concerns. Musk also replied to allegations from Sygnia CEO Magda Wierzycka who called for the SEC to investigate him over alleged Bitcoin price manipulation. Musk confirmed that Tesla sold about 10% of its bitcoin holdings to prove that BTC could be liquidated easily without moving the market. Meanwhile El Salvador becomes the first country to make bitcoin legal tender. The new law contains several proposals on how the country should adopt cryptocurrency. “The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” the law reads. This includes the requirement that every business - be it to acquire a good or a service - accept payments in bitcoins and allow people to pay taxes in a coin. In addition, it excludes bitcoin from capital gains taxes. Adding to the bullish tone, on-chain analysis from Decentrader shows that an ‘oversold’ signal was recently triggered, “suggesting that BTC may soon be ready to turn around and move to the upside.”

Bullish signal provided by the active addresses sentiment indicator. Source: Decentrader

While the market sentiment has improved over the weekend, caution ahead of the Federal Reserve rate decision, due Wednesday, may limit further upward move.

Bitcoin price surged towards $40,000 resistance after Elon Musk comments. Should break higher occur then next major resistance lies at 42000 and is strengthened by 200 SMA ( redline). Only breaking above this area will invalidate the bearish scenario and upward move may accelerate. On the other hand, if sellers manage to regain control, then nearest support lies at $33,210. Source: xStation5

Ethereum tests key resistance

Ethereum price is currently testing major resistance at $2500. A decisive close above this level should create a higher high and signal the start of an uptrend. However, if buyers will fail to push the price higher, then this may lead to another downward impulse towards support at $1839.00.

Ethereum, D1 interval. Source: xStation5

Meanwhile the number of active addresses for Ethereum declined to 505,000 from 764,000 within the last 30 days which support a bearish scenario. This sharp decline indicates that investors are not interested in ETH at current price levels.

Number of ETH daily active addresses declined recently. Source: Santiment