Cryptocurrency Analysis

[IFX_Selena]

People's Bank of China: Bitcoin is a threat to the financial system



Over the past trading day, bitcoin has lost $2,000, but at the same time it remains inside the side channel, which was repeatedly talked about in the previous articles, $31,100 - $40,700. However, if in the first half of the last two-month period the quotes jumped from one border to another, then in the last few weeks they are firmly located near the lower border of the channel and refuse to move far away from it. This behavior of bitcoin only confirms our hypothesis that sooner or later the implementation of the correction scenario will continue. Simply put, the upward trend is completed, and in the previous two cases, after the trend ended, a long period of consolidation and correction began, during which bitcoin lost up to 90% of its value. We believe that everything will now go according to this scenario. In principle, bitcoin only has to overcome the level of $31,100 and the accompanying $29,700. And given the fundamental background of recent months, this will not be too difficult. The problem with the fundamental background now is that it simply does not improve. Earlier, there was negative news and the markets worked it out, after which they restored purchases of cryptocurrency, since there was more positive in general. But now, the markets are immersed in negative, which increases its pressure every day.

Yesterday, the People's Bank of China made an official statement, which refers to the threats from bitcoin and stablecoins to the country's financial system and its social stability. Fan Yifei, deputy chairman of the People's Bank of China, noted that China did not just begin to tighten control over the circulation of cryptocurrencies and issued an order banning mining. It was the threats emanating from cryptocurrencies that served as the reason for this decision. After this statement, the BTC quotes collapsed by $2,000.

On the other hand, the founder of the investment company SkyBridge Capital, Anthony Scaramucci, believes that the ban on mining in China can be a positive factor for "digital gold" in the long term. After mining and financial transactions with bitcoin were banned in China at the level of companies and firms, the volatility of bitcoin has greatly decreased, which is a plus, according to Scaramucci. Also, after this decision of the Chinese authorities, the share of coins extracted with the help of "green" energy increased, according to some studies. Thus, according to Scaramucci, certain advantages for the future of bitcoin can be found here.

In the long term (5-10 years), bitcoin may still show more than one upward trend. But at the moment, it is aimed at updating its local minima. And the final news from the United States has not yet come, where the authorities also want to seriously tighten the regulation of the cryptocurrency sphere, and, in particular, implement strict tax control over all large transactions. If such a decision is made, then bitcoin may experience a new shock.

Daily time frame


Technically, bitcoin has fallen to the support level of $31,100 five times already. Therefore, purely theoretically, at this time, bitcoin can continue a new round of movement to the upper limit of the side channel - the level of $40,700. However, we believe that bitcoin continues to aim to overcome the level of $31,100, and we fully support this scenario. The consolidation of quotes below the level of $31,100 will signal the continuation of the fall of BTC. Many crypto experts, including large banks, believe that bitcoin will continue to fall in the coming months.


4-hour time frame


On the 4-hour chart, the quotes of bitcoin were fixed below the ascending trend line, which at least supported the upward trend. The price also overcame the Ichimoku cloud, from the lower border of which it has repeatedly bounced recently. From our point of view, these signals are strong enough to now expect a fall to at least $31,100 and $29,700. Then, everything will depend on overcoming or not overcoming these two most important levels.





Paolo Greco
Analytical expert
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