For the past few months, China has been cracking down on Bitcoin hard. The Asian juggernaut has introduced the digital yuan to the public, and right after that, it has aimed to defeat any opposition. With Bitcoin being the biggest threat to the digital yuan, China’s crackdown focused on miners and farms. The negative reports have been killing the price for weeks now.
Weeks later, it further reiterated its anti-crypto stance by warning institutions against providing services to crypto companies. Traders were left in panic as the volume started declining, with Bitcoin stuck between $30,000 and $40,000. The seven-day trading average is the lowest since December 20, showing that the crackdown had a massive effect on the price.
However, the largest cryptocurrency by volume has managed to consolidate its price which could lead to a relief rally.
Oversold Market Conditions
The current market conditions are oversold according to experts. While that’s not always a positive aspect, it could open up the way to a relief rally. Buyers are soon expected to step into the 50-day moving average which could boost Bitcoin’s price over $36,000. A breakout above the average will set on the right track to $40,000-$45,000 resistance level.
At the moment, both buyers and sellers are indecisive and hesitant over big moves. The slowing volume is a result of the major resistance from the downward trend that’s been going on since April. It’s a bit difficult to navigate the current market, with most traders sticking to the sidelines. Until a breakdown or a breakthrough is confirmed, buyers and sellers are likely to sit idle.
The trading activity has dropped significantly in the past week. This is why the price can’t move past the $40,000 mark. While 4th of July celebrations may be a reason for the slow weekend, there are other things at work that have been slowing Bitcoin down. The China crypto crackdown is surely a massive part of it, and things may get even trickier as the Chinese continue with the crackdown.
Active Bitcoin miners have been hit the hardest since the crackdown, with a 28% downward difficulty reported on July 3. Over 50% of China miners went offline in the past month, with the hashrate suffering as a result. Bitcoin’s code was automatically adjusted in order to offset this, so at the moment, it’s much easier and more profitable to mine Bitcoin.
Positive News on the Way
While the market has been stuck right now, many experts believe there’s a positive trend coming soon. Bitcoin should be able to make a move over $40,000 in the coming months, which would set a precedent for the next bull run. With Bitcoin mining easier at the moment, miners could be coming back in, especially outside of China.
Slowly, but patiently, Bitcoin has been regaining lost ground in the past month. Experts believe that a bull run is coming soon, and that could bring the price back where it belongs. It remains to be seen what happens in the coming months, but the positive signs are encouraging.