What was to be another great week for Bitcoin is turning sour as the cryptocurrency’s value started dropping last evening, even before the weekend. After staying strong in the face of an official rejection from the US Security and Exchange Commission and continuing to move upwards short after, hopes of Bitcoin finally going past its usual price swings were growing larger, yet things have rarely worked this way for the cryptocurrency.
And this is all coming in a time when the dream of seeing Bitcoin turned into a reliable payment method has never been closer to the truth. Namely, recent data show that Bitcoin’s use for purchasing is increasing rapidly, according to a Quartz report that used traffic information from BitPay to see where the cryptocurrency is being used.
The data shows that Bitcoin is being used more and more for various transactions, like topping up e-wallets or pre-paid cards, gaming platform accounts, domain registrations, or even car rentals, plane tickets and hotel reservations, where, surprisingly, Bitcoins are used more for first class and business class tickets, rather than coach or economy.
Trading Volume through the Roof
The trading market is showing unusually high interest, similar to past panic attacks that sent the price spiraling down. Whereas a trading volume of around 300 million is the usual sign of high traffic, today’s numbers show more than double that amount, or $696,049,000, while the market cap has dropped back to $18.4 billion. With this volume, the price can suffer a faster correction that normal, so stay on your toes throughout the day and weekend.
Our technical analysis shows a path downward, as can be seen from the long-term charts that show all 12 moving averages and 9 out of 12 oscillators are in the sell zone. However, the SMA 100 is still above the SMA 200 with a wide gap, so an upward path is where the least resistance is. There is also bullish pressure appearing on short-term charts that should keep the price from unrolling fast.
From the current stance, swings are expected over the next hours as the price struggles to stay afloat and find support at the $1,150 mark, with the $1,100 range standing as the bottom floor, which if breached, could unroll the price further.
China’s PBOC Sets New Rules
The most probable reason for the price plunge, according to new reports, is that the People’s Bank of China has released new guidelines, which if they are put in effect, would obligate Chinese exchanges to identify their users or face consequences by the government. This comes only a week after the PBOC announced to be adopting a “forgiving attitude” towards exchanges and start a period of observation, which briefly put concerns about Bitcoin’s future back to normal.
However, as new findings suggest, the PBOC’s draft guidelines reportedly state that to adhere to the anti money laundering and banking laws Chinese exchanges would have to start gathering information and identify their users. For this purpose, China’s Bitcoin exchanges would likely have to install new systems that would be gathering information and reporting anything suspicious to the relevant authority, the PBOC.
For now, the guidelines remain in draft form and might be revised in the upcoming days, while there are no official comments from the PBOC. And while Bitcoin survived the initial wave of losing most of its trading volume when the three largest exchanges in China announced they will be changing rules to according to PBOC’s policies, this might signal a risky time as the bank’s stance on Bitcoin is taking its final shape.