- BITCOIN (Bitcoin underlying) takes a major hit as price deeps below $10000 mark
- South Korea and China mainly to blame
- Technical analysis sees a possible end to the correction
This week has been very tough for Bitcoin and other cryptocurrencies as their valuations plummeted. We identify three major reasons behind this collapse, take a look at some bright spots and analyse the Bitcoin CFD chart.
South Korea considers a ban on exchange operators
A major reason behind this sharp correction in Bitcoin prices is South Korea where a government reconsiders a full ban on exchanges. Let us recall that such ban was already considered in December but the government eventually stopped short of it, introducing milder regulations. However, a minister of justice said that a full ban might be necessary to stop speculative frenzy in the country and his views were echoed by other authorities, including vice-chairman of the central bank and minister of finance. South Korea is a crucial market for Bitcoin, representing some 25% of global trading volume so a bad here would be a massive blow to the cryptocurrency.
So far only Korean soldiers have been banned from cryptocurrency trading but a broad ban is being discussed. Source: ccn.com
Having said that, it remains unclear if or when the ban becomes a reality. A vice-chairman of the central bank poured some hope into the hearts of crypto traders saying that a full ban is one option while another option is a ban on exchanges violating the law. On top of that more than 200 thousand Koreans signed a petition to government against a ban which warrants a response and may delay action. So far, the authorities banned access to exchanges for soldiers in a fear of cyber-attacks from the North. For sure, any decision in Korea will have a huge impact on Bitcoin price.
China is set on stopping its citizens from trading Bitcoin
At the same time China is taking a tougher stance on cryptocurrencies as well. China banned domestic exchanges in September 2017 but major operators moved to Hong Kong and as a result the Chinese citizens were able to keep trading. Official want to change this now, blocking access to offshore platforms and banning major peer to peer platforms. Obviously, a sudden loss of demand for Bitcoin from South Korea and China would be a giant blow.
There’s more bad news, though. China is a global hub for Bitcoin mining, representing above 60% of so called “hash power”, necessary to maintain Bitcoin blockchain running. There have been rumours that China is no longer happy about for a while but now a vice-chairman of central bank made it clear that miners would be advised to leave the country.
BitConnect collapses after exchange closure
Finally, a closure a BitConnect exchange and lending platform due to fraud accusations added fuel to this fire. While BCC coin is not directly linked to Bitcoin, a 90%+ tumble along with fraud accusations did not improve publicity for the whole cryptoworld.
Some good news too…
Mark Cuban seems to believe in Bitcoin despite a regulatory backlash. Source: Twitter
So is all the news bad these days? Not necessarily. Mark Cuban, a famous entrepreneur and owner of Dallas Mavericks NBA club promised to a fan o Twitter that the franchise will start accepting Bitcoin payments next season. While next season in the NBA means late 2018, Cuban confirmed later that Mavericks will accept both Bitcoin and Ethereum as means of payments for tickets. That could be a consolation for the crypto community that despite regulatory headwinds at present, digital coins still have a business future.
On the chart – bulls have their chances
Could a recovery be in sight? The key support level is at $8400. Source: xStation5
As dramatic as the BITCOIN price decline was, there are some promising signs on the chart. First of all, it is possible that we are close to a major ABC correction initiated from the all-time highs in December. Although A to C relationship could point at $8400 (and there is a previous resistance at this level, making it strong) on such a volatile market A to C equality does not need to be met precisely. A long lower shade on the yesterday’s candle is a positive sign but it needs confirmation.