Bitcoin Crashes Again on Chinese Fears
- China a major player in Bitcoin
- Fear of government crackdown
- Has completely reversed major bullish surge
Bitcoin’s price has plunged over the last several sessions after the surge higher it saw over the weekend. This was based on speculation that the Chinese “investing in blockchain research” would lead to higher Bitcoin pricing over the longer term, as well as greater demand.
At one point, the Bitcoin market did break above the $10,000 level. However, it should be noted that the surge higher was during the weekend, which means there is a lack of institutional volume. Retail traders tend to be a bit more impulsive and don’t have the ability to move the markets for the longer-term like they once did.
China still a major player in Bitcoin
The Chinese are still a major player when it comes to Bitcoin, with China being one of the largest places where Bitcoin has been adopted. The cryptocurrency is a vehicle that a lot of the wealthy in China use to protect capital, as sometimes the government will crack down on monetary flows.
They are starting to do that again in the wake of the political situation in Hong Kong, where Bitcoin will be thought of as one way to get finances out of the country. However, there are unsettling comments that the Chinese may choose to crack down on the crypto market.
Keep in mind that a lot of the bullish momentum to the upside was due to comments from President Xi suggesting that the Chinese would speed up blockchain research. It should be noted, though, that the People’s Bank of China has since warned investors not to confuse the technology with the idea of owning cryptocurrencies – something that a lot of retail traders tend to miss.
Selling off below initial rise shows Bitcoin’s weakness
Bitcoin seems to be suffering from all sides. Selling off above the impulsive move from President Xi’s comments and then falling below them shows just how weak the demand for the crypto is at the moment.
This moment presents a double-edged sword. Bitcoin can be attractive for those looking to speculate and make quick profits, but it’s absolutely impossible for retailers or corporations to use it with any type of certainty.
One day, Bitcoin could be trading at $9000, only to turn around and drop to $7000. As long as that’s the case, Bitcoin will not be money. This is becoming more apparent to the overall markets.
Furthermore, the US dollar continues to strengthen, which of course is working against the value of Bitcoin as well.