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(Bloomberg) –
China’s escalating crackdown on cryptocurrencies has left Bitcoin flirting with $ 30,000, a price point seen as critical to the largest virtual currency’s near-term prospects.
Bitcoin fell 4.3% on Tuesday to $ 31,171, and for some, a breach of $ 30,000 would hurt sentiment and increase the risk of a sell-off. It was trading at $ 32,850 at 8 a.m. in London.
Most likely would continue to trade in the $ 30,000- $ 40,000 range and hopefully $ 30,000 will remain the lowest for the year, said Antoni Trenchev, co-founder of crypto lender Nexo at London. Otherwise, we would have to review $ 25,000 and even $ 20,000 before the next step.
China’s latest offensive came on Monday, when the country’s central bank said it had summoned officials from the biggest lenders as well as AliPay to reiterate the ban on cryptocurrency services. Concerns about the environmental impact of the power-hungry computers that underpin Bitcoin also continue to swirl. Chinese authorities are already trying to root out crypto mining operations.
Meanwhile, the prospect of reduced stimulus measures as the global economy recovers from the pandemic is also sapping the appetite for speculative investment.
The Bitcoin retreat has shaken the argument made by advocates like Michael Saylor of MicroStrategy Inc. that virtual currency is a reliable store of value. MicroStrategy said Monday it bought an additional 13,005 Bitcoins for around $ 489 million at an average price of around $ 37,617.
The news hasn’t done much to support prices as broader institutional adoption stalls after Elon Musk and Tesla Inc. cooled down on Bitcoin.
A definitive break below $ 30,000 would mean a blow to sentiment and possibly strong selling activity in the cryptocurrency market, wrote Pankaj Balani, managing director of the Delta digital asset derivatives exchange. Exchange, in an email. But he expects the coin to rebound and challenge $ 40,000 in the coming weeks.
The story continues
An explosion in the popularity of so-called alternative coins outside of Bitcoin and Ether, along with an increase in leveraged bets on the first two, were hallmarks of the crypto boom earlier this year. Both trends ebbed following a rout in the industry in May.
Ether, the second biggest token, slipped 4.2% at one point on Tuesday. Retail favorite Dogecoin has fallen 22% in the past 24 hours.
Most cryptocurrencies lost their bullish momentum against Bitcoin after outperforming, said Katie Stockton, founder of investment research provider Fairlead Strategies.
Bitcoin has halved from a record high of $ 65,000 in mid-April, although over the past year it has still risen by over 200%. The larger Bloomberg Galaxy Crypto Index has more than quadrupled in 12 months.
Negative trading conditions in the market stem from an excessively long position built up during the steep first quarter rally that has yet to end, said Adam Reynolds, Managing Director Asia Pacific at Saxo Capital Markets Pte.
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