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December 27, 2021
The Chinese are eliminating their positions after the country has banned cryptocurrency trading and crypto exchanges are soon to close.
Written by Steven Anthonis - @stevenanthonis
China has often banned cryptocurrency in recent years, but each time it turned out to be a measure for nothing. This year, however, it was serious. In the summer, miners left China, because bitcoin mining is now banned. In September, China said it would consider all cryptocurrency transactions illegal. In addition to the miners, the crypto exchanges must also cease their activities in the country. For example, the major exchange Huobi Global will close the accounts of Chinese citizens by December 31. We see a similar story at Binance.
So, the Chinese citizens will no longer be able to go to an exchange with the bitcoin they own. Ofcourse, China can never prevent two Chinese citizens from exchanging bitcoin with each other, but the on and off ramps via exchanges are closed. The question is thus how many Chinese will still want to work with crypto coins, now that China considers every crypto transaction a crime and is committed to prosecuting people who don't comply with the law.
Chinese citizens who want to avoid being stuck with a large bag of crypto coins, have no other choice than to quickly sell everything before their accounts at exchanges are closed. Given that China has always been one of the largest bitcoin markets, this has created a lot of selling pressure on crypto markets in recent weeks. It was noticeable that in the last few weeks, especially during the Asian session, there was a lot of selling pressure.
In the previous analysis, I wondered if the worst for bitcoin was already behind us. I pointed to the rising trend channel and wrote that an extended test of this line was likely. That is exactly what we have seen: the price weakened for a while, but we have not seen a real breakthrough in the decline.
The RSI made a positive divergence: the indicator already made higher bottoms while the price made even lower bottoms. This is often the harbinger of a trend reversal. The bitcoin price has meanwhile again moved above the 8 EMA and 21 EMA and these moving averages are almost making a golden cross. However, to brighten the technical picture even more, we want to see more strength. Above USD 51,000 we are more positive and above USD 54,000 we can gradually start to look forward to a new high above USD 75,000.
If you are bullish and believe in bitcoin, you can read more about buying bitcoin here.