What started off as a smooth week has changed drastically during the past 24 hours when the price dropped sharply by more than $50. The most critical point was late last night, when the price reached its week’s low only to recover in the early morning hours. Currently it is consolidating around the $700 mark, with the trading market showing signs of fewer surprises.
New Chinese Regulations Inspire Panic in Bitcoin Market
Many believe that the key reason for this high volatility were the rumors surrounding China’s alleged upcoming restrictions on Bitcoin purchases. As we reported on Wednesday, the steady price increase that’s been taking over the market was seen as a direct effect of the increased interest in Bitcoins by Chinese traders who’ve turned to the cryptocurrency following the two-year decline in Yen value.
While so far investors were able to move founds outside of China via Bitcoin exchanges, several media outlets reported in the past day that this might come to an end soon, as Chinese regulators were investigating actions to limit Bitcoin transactions. The reports came from a number of media, including Zero Hedge, who’ve cited Bloomberg as the original source.
However, what’s interesting to note is that the original source isn’t available online, which lead traders to speculate as to the true purpose of the reports. Coincidently, as soon as the news started spreading the price began a rapid decline, prompting suspicions of traders using the reports to capitalize on the incoming panic. After all, this isn’t the first time unsubstantiated rumors about Chinese regulations have pushed the price down.
Bitcoin Recovering; Will It Keep Going Up?
Rumors or not, the past day has been a turbulent period for Bitcoin traders, with the price changing wildly in the span of several hours. Only yesterday afternoon the Bitcoin value reached $737.27 so that it can start snowballing from there and end the day at $678.43. But luckily, with the panic clearing and buyers regrouping, the price has begun to stabilize around the $700 mark, with the highest volatility being no more than $3 since the fall.
The report-induced panic that struck the market was also clearly observed in the trading volume, which skyrocketed as the price started falling. Traders afraid over their Bitcoins funds flocked the market and almost doubled the volume to $175,375,000 by the day’s end. Currently, it sits at $169,196,000, which combined with the market trends is a good sign for those who hope to see the price recover.
Moving on to our technical analysis, we can conclude that bulls are slowly returning on the scene. The overall signal we’re getting is pro-buy, with 5 out of 12 technical oscillators sending a buying signal and only 3 showing the Bitcoin is being sold. Our moving averages show an even stronger inclination towards buying, with 8 out 12 averages being pro-buy, while 4 remain pro-sell.
But, even though this is a positive sign, traders might not want to get their hopes up just yet. The Stochastic and Williams %R have been in the “overbought” zone for some time now, which indicates sellers are still holding their ground. However, to break yet another support, the market will need a stronger push. As always, a close watch on the market trends is advised to any Bitcoin user since things can change fast, as we had the change to witness during yesterday.