- Chinese government declares further crackdown on crypto
- Exchange activity of Bitcoin and Ethereum on the rise
- Bitcoin bulls struggle to break above $50,000
The past week was a rather negative one for the cryptocurrency market. BTC uptrend appears to be losing some steam as buyers struggle to break above psychological $50,000 level despite FED Chair Powell dovish comments and weakening of the US dollar. Other major coins also remain below key resistance levels waiting for a potential trigger that would move the markets. Bitcoin's market dominance increased to 43.9%. The capitalization of all digital assets in circulation rose to 2.055 trillion, while an average daily trading volume is registered at $90.0 billion.
Crypto crackdown intensifies in China
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Create account Try a demo Download mobile app Download mobile appThe Chinese officials have continued to warn against investing in cryptocurrencies. An official from People’s Bank of China (PBoC) restated that Bitcoin and other digital assets are not legal tender and have “no value.” Citizens should protect their capital by staying away from cryptocurrencies and increasing their awareness of the risks involved with the new asset class. The PBoC will also join forces with other regulators to crack down on overseas exchanges, trading websites, applications and corporate channels in the country.
Due to the actions of the Chinese authorities, many miners were forced to move to other places, which caused North American mining companies to see an increase in demand for facility hosting space as they began to take over most of the Bitcoin network hashrate.
Bitcoin's hash rate returned to the levels seen in April 2021 despite Chinese crackdown. Source: Blockchain
Overall exchange activity of Bitcoin has increased
Meanwhile overall exchange activity of Bitcoin and Ethereum continues to rise which may herald increased volatility in the coming days. Last week 1.68 million Bitcoins flow into exchanges, which is the biggest increase since June 2019 and may indicate that traders have transferred Bitcoin to exchange wallets for profit-taking.
Last week Bitcoin recorded its largest day of exchange inflow since June 19, 2019 which may increase volatility in the coming days. Source: Santiment
Bitcoin price failed to stay above the psychological $50,000 level and pulled back below long-term upward trendline. If current sentiment prevails, downward correction could deepen towards a strong area of resistance around $44,000 which is marked by lower limit of the 1:1 structure and previous price reactions. Only breaking above $50,000 would negate the bearish scenario and pave the way for a test of the $55,000 swing area. Source: xStation5
Ethereum price rallied 36% from the beginning of August however buyers failed to break above the $3,345 resistance level which coincides with 61.8 Fibonacci retracement of the last downward wave. Currently the price is testing EMA 100. Should break lower occur, then downward move may accelerate towards major support at $3000 which is marked with lower limit of the 1:1 structure, 50% Fibonacci retracement of the last downward wave and lower limit of the wedge formation. Source: xStation5
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