China is afraid of Bitcoin, and this is good for the crypto market in the long run
The crypto market experienced a very dangerous moment yesterday. The negative news background forced investors to close positions, which resulted in a broad sell-off of bitcoin and a fall below the most important technical and psychological level by $30K. The reference cryptocurrency fell down to $29K, from where buyers came to its aid, who were waiting for the moment to buy an asset with a significant discount. By Thursday morning, the coin had bounced up 4% and was trading around $34,000.
Bitcoin is again proving its exceptional role in the crypto market, since all other coins would most likely just go into a state of free fall.
Negative news background forced investors to close positions, which resulted in a broad sale of Bitcoin and a fall below the most important technical and psychological level by $30K Negative news background forced investors to close positions, which resulted in a broad sale of Bitcoin and a fall below the most important technical and psychological level by $30K
Despite the rebound attempt, it is very likely that bulls and bears will continue to play tug of war around $30K, and yesterday’s drop below the round value may not be the last attempt by sellers to push the benchmark cryptocurrency below an important psychological level. In case of a successful breakdown of $29K, we could well see a drop down to $25K. At this stage, this has not happened, but this probability remains. And the problem in this case is that investors who were ready to come to the rescue of the coin after falling below $30K ended yesterday. Other “smart money” will wait for even lower levels to open positions.
Although cryptocurrencies show recovery attempts on the daily chart, everything is much worse on the weekly segment. Bitcoin has been losing 15% in the last 7 days. Ethereum and other top altcoins show a drop of up to 33% over the week. As before, in the case of the fall of the first cryptocurrency, altcoins show significantly more fierce price dynamics and less obvious attempts to rebound.
As always, there were a number of factors behind yesterday’s negative price dynamics. The most important contribution to the fall of the market was made by the Chinese factor and the fall of the hashrate in the bitcoin network. The Central Bank of China continues to put pressure on bitcoin, while this time the country’s authorities finally showed the remaining miners to exit. As a result, we see a sharp decrease in hashrate. This indicator is usually correlated with the fall in the price of an asset. In addition, futures positions of almost $900 million were liquidated yesterday.
However, in the broad perspective, the news is not nearly as bad as it initially seems
Miners will not disappear, but will most likely move to Texas, where they will work on environmentally friendly energy, which removes the question of environmental friendliness from bitcoin. In addition, the state authorities have a positive attitude towards cryptocurrencies. Moreover, given the crucial role of the United States in the development of cryptocurrencies, as well as their tendency to favor projects that are based on the territory of the country, bitcoin can get a significant boost for development.
The fact that China is so fierce about bitcoin is also positively perceived in the community. This means that BTC really works and causes serious concerns among the authorities of such a large country regarding the competition of the national currency. In the long run, this means that bitcoin will continue its global ascent to the monetary olympus.