Flagship cryptocurrency, Bitcoin, just fell below the $30,000 critical support level for the first time since January 2021. According to CoinDesk 20 data, Bitcoin traded at $29,700 a short while ago, bringing the year-to-date gain down to just 3%. The drop in the price is a result of significant FUD (Fear Uncertainty and Doubt) surrounding China’s war against cryptocurrencies.
What is causing the decline?
As mentioned above, a major catalyst for the decline is the Chinese authority’s war against cryptocurrencies. In their latest attempt to stop all cryptocurrency-related transactions, miners in Ya’an, one of the major crypto mining hubs in China’s Sichuan province, received an inspection notice that required shut-downs.
Friday, Wu Blockchain reported that Alibaba Cloud, China’s largest cloud service provider, made calls to cryptocurrency and mining companies registered in China regarding potential domain name cancellations due to regulatory requirements. This caused the hashrate for Bitcoin to drop to an 8-month low which indicates that mining activities in China are at an all-time low.
That’s not all, another factor causing the decline is that the Agriculture Bank of China, the world’s third-largest bank by assets, is set to implement anti-cryptocurrency measures and rigorously vet its clients to ensure they are not engaged in any form of illegal activities including crypto transacting, trading or mining.
Another news causing panic sell-off in the market is the “Death Cross” scare. The death-cross is defined by a cross of the 50-day exponential moving average (EMA) below the 200-day EMA. The cross happened on Friday and caused the sell-off the market saw over the weekend. Although on the daily timeframe, another death cross is rumoured to happen which is a signal for an even bigger sell-off.
What to look out for
The next critical support zone traders should be focused on will be the $25,000 trading zone. Binance order book data showed buyers lined up at $25,000.
Investors are reminded that trading cryptocurrencies is highly volatile and adopting the dollar-cost averaging method of investing is always the best approach when it comes to investing in cryptocurrencies.