Bitcoin goes back towards $7.5K after having one of its most trying weekends in a while, once again proving skeptics that it’s here to stay. The world’s biggest cryptocurrency suffered a major drop during the weekend, causing a correlated drop in other altcoins and halving the market capitalization of the global cryptocurrency market. The sell-off that brought the price down is attributed to a number of factors, most importantly new updates on cryptocurrency restrictions, bans, and criticism from influential players in the market.
As Forbes reports, a number of banks like Capital One, Bank of America, Bank of Scotland, and MBNA decided to ban their account holders from using their cards to buy cryptocurrencies while Chinese regulators announced a ban on all cryptocurrency exchanges and not just in mainland China. India’s income tax department likewise toughened its stance on cryptocurrencies, issuing notices to a reported 100,000 investors who haven’t filed their cryptocurrency profits on their tax forms.
Around the same time, the Wall Street stock market went through one of its most trying Mondays that ended with a plunge in US stocks, particularly the Dow Jones which crashed over 1,000 points. This, together with the combined reports of cryptocurrency bans, can be said to have played a role in Bitcoin’s recent drop.
Buyers Return; Market Cap Hit Hard
During the past week, Bitcoin’s price went on a long downward trip that took its value from the $10K range we saw last Wednesday to almost below $6K. The highest price point of $10,170.70 was hit in the early Thursday hours while the lowest the price dropped was on Tuesday morning, when Bitcoin’s value hit $6,048.26 before starting to move upwards after the US Senate hearing.
Coinciding with the price push was an increase in trading volume, which moved from being just below $10 billion to even reaching $14.1 billion. On the other hand, the market cap has dropped down to $126 billion – only last week it was sitting at $172.2 billion.
Judging from our technical analysis, buyers are returning on the scene as market signals have been turning upwards during the past hours. Our short-term indicators show a strong buying sentiment, with 9 out of 12 oscillators and 8 out of 12 moving averages sending a buying signal. However, with the SMA 100 dropping down below SMA 200 with a wider gap, we can see that there’s less resistance to the downward path, which means the previous selling trend can easily come back. But if buyers keep pressing, we might see a push over $8,000.
Senate Hearing on Cryptocurrencies Goes Better Than Expected
In times where Bitcoin is facing opposition from major traditional players in the markets, a U.S. Senate hearing on the dangers of cryptocurrencies as investment vehicles brings new faith in cryptocurrency trading. As reported by Fortune, the Senate Banking Committee had a hearing attended by the chairs of the CFTC and the SEC who, surprisingly, were not as critical towards cryptocurrencies as was feared by investors.
At times where blockchain technology is being widely accepted while the main cryptocurrency that launched it is not, CFTC chair Christopher Giancarlo showed support for both Blockchain and Bitcoin, without which, he says, “there would be no distributed ledger technology”. He also added that they “owe it” to newer generations to “respect their enthusiasm for virtual currency, with a thoughtful and balance response”.
SEC Chair Jay Clayton also shared support during the hearing, saying that “I hope people pursue it [blockchain] vigorously”. Not long after the Tuesday hearing, Bitcoin’s price started to recover.