Amid regulatory chaos in China, cryptocurrency markets have slipped. Now the bears are firmly in control of the bitcoin price, pushing it below $4,000 for the first time in over a month.
The true extent of China’s latest crackdown is still unknown. However there are fears too much attention is on digital currencies and alternative investments in the run-up to the ruling party’s five-yearly congress in October 2017. If that’s true, then don’t expect the pressure on Chinese crypto companies to ease any time soon.
Bitcoin Price in Steady Decline
The bitcoin price has been on a downward trend since the Chinese ICO prohibitions and subsequent announcements regarding future cryptocurrency regulation. Until now, though, the price seemed to have shown reliable support at the $4,000 level.
Early Wednesday morning though, it dipped below $4,000 and hit $3,780. At press time, bitcoin has returned to $4,000, but appears to be struggling to stay there.
But with the dive below the $4,000 technical support, it’s anybody’s guess how far it might go.
While the immediate, fundamental, effects of the Chinese news may only be temporary, the panic caused by the subsequent drop could cause a chain reaction, leading the price to drop dramatically. From there, current technical projections would be interrupted, and new ones would emerge — which may or may not be bearish.
Were Fears of an Exchange Ban Confirmed?
Charlie Lee, Litecoin creator and brother of BTCC CEO Bobby Lee, may have spooked twitch traders with a series of tweets earlier.
Since deleted, the tweets made statements like “Looks like this time China finally banned Bitcoin. (Anonymous source I trust fully) There’s only one response: JUST HODL”. He later replaced it with “… banned Bitcoin exchanges” and followed up with “To be clear, crypto exchanges will be banned. Bitcoin and crypto not banned”.
That may still have been enough to trigger a multi-asset selloff. Bitcoin took a dive, but it was followed by double figure percentage declines in Bitcoin Cash, IOTA, OmiseGO and NEO. Litecoin dropped 9 percent to $62.70 and Ethereum ETH 6.6 percent to $283.
Sell everything in panic, or buy the dip? This is not investment advice, but let’s hear your thoughts.
Images via Pixabay, Twitter