Caroline Ellison's Release Marks New Chapter for Crypto Markets as Bitcoin Tests Critical Levels

The release of Caroline Ellison from federal supervision after completing her 440-day prison sentence signals a significant moment for the cryptocurrency industry, particularly given the ongoing policy discussions around digital assets. Bitcoin’s subsequent price action reflects broader market tensions between regulatory optimism and technical weakness. With BTC currently trading at $67.62K—down 2.10% in the last 24 hours—the market faces critical support levels and mounting uncertainty about the sector’s future trajectory under evolving political circumstances.

SBF’s Crypto Advocacy Reignites Amid Caroline Ellison’s Transition

Sam Bankman-Fried has intensified his public backing of President Trump’s approach to cryptocurrency regulation, despite his own 25-year prison sentence following the 2022 FTX collapse. The former exchange founder took to social media to endorse Trump’s policies as “correct,” while simultaneously criticizing former President Joe Biden’s regulatory stance. Notably, Caroline Ellison’s completion of her prison term occurs as this political and regulatory dialogue intensifies within industry circles.

Bankman-Fried specifically targeted Biden’s appointment of SEC Chair Gary Gensler, whom he blamed for the “regulation by enforcement” approach that has defined crypto policy over recent years. Gensler’s January 2025 resignation opened the door for Paul Atkins, appointed by Trump in April 2025, who is perceived as considerably more favorable to the sector. The timing of Ellison’s release coincides with these significant regulatory personnel changes, creating a window of perceived opportunity for crypto advocates.

Interestingly, predictive markets on Polymarket currently price the probability of Trump pardoning Bankman-Fried by 2027 at just 17%, suggesting market participants remain skeptical despite SBF’s recent optimism and his continued proximity to policy discussions through public commentary.

Bitcoin’s Technical Weakness Contradicts Sentiment Narratives

Despite bullish sentiment from SBF and crypto advocates, Bitcoin’s price action tells a more cautious story. BTC has retreated to $67.62K, failing to maintain positions above the $70,000 level that many treated as a psychological floor. This pullback tests support levels previously identified around $65,000-$66,000, with the asset showing clear signs of momentum weakness.

Technical indicators reveal the severity of current selling pressure: the Relative Strength Index (RSI) stands at approximately 30, indicating an oversold condition that typically precedes either capitulation or a bounce. The Supertrend remains in bearish mode, and the 20-period EMA at $85,695 sits considerably above current price, suggesting traders remain positioned for further downside until price can recapture critical moving averages.

Key support zones remain vulnerable between $65,000-$64,000, while resistance forms in the $72,000-$75,000 range. A decisive break below the $64,000 level would establish new downtrend momentum and potentially open targets toward $60,000.

Market Narrative Mismatch: Policy Optimism vs. Technical Reality

The divergence between regulatory narratives and technical price action creates an unusual market environment. While Caroline Ellison’s release and the transition from Gensler to Atkins represent tangible shifts in the regulatory landscape, Bitcoin’s price has moved in the opposite direction—suggesting that either sentiment has already priced in these changes, or technical factors are temporarily overwhelming fundamental optimism.

This mismatch warrants caution for traders. Oversold conditions on the hourly and daily timeframes can produce quick bounces, but without a clear reversal signal from higher timeframes, any rally should be approached as potentially temporary relief rather than a trend shift.

Analysis provided by market observers. Not investment advice—conduct your own research before trading.