Global investment markets suddenly appear to be in a somber state. Traditional equity markets have nose-dived, there is nothing for short-term bond markets to cheer from, and crypto-markets too are following this very trend.
In fact, crypto markets have already been losing in a range of 8-11% everyday in the past week, and on Tuesday, a fresh report from the People's Bank of China denouncing all crypto-exchanges in the country has come out as a major death-knell. Until end of business hours on Monday, the logical resistance point on bitcoin was analysed at $5600, which has very well been maintained, but the momentum on Tuesday, makes one wonder, if this can be maintained.
By the way, here is a complete analysis of the scenario in China:
- People's Bank of China denounces all foreign cryptocurrency exchanges. Says it will continue to ban them. China had already shut bitcoin mining and trading exchanges in 2017.
- From February 2018 onwards, the state will adopt a safeguard to prevent all citizens from accessing domestic and offshore exchanges. Measures include ban and immediate shut down.
- Binance has already informed its Chinese users that it has shut services to China.
- IP access from mainland China have been shut by many service providers.
- Credit Card and Over the Counter transactions are being investigated.
- Seven ministries apparently have come out with a clear mandate to ban ICOs.
There is no clarity yet on how Chinese officials will proceed ahead with regulating offshore ICOs and trading exchanges, but netizens and crypto-traders seem to be in fear, which has resulted in a panic sell-off. Confirmation on China's crackdown has so far come from news website 8btc.com, which has further sourced the news from China's state-sponsored news agency- Xinhua.
There have been no reports updated on the website of the People's Bank of China, although there does seem to be a 2016 interview of the PboC Governor' Zhou Xiaochuan. In this story too, the governor can be seen talking of the reasons he thinks Bitcoin should be regulated.
"The Bitcoin does not involve a central bank. For a digital currency controlled by the central bank, a combination of technological measures, institutional design as well as laws and regulations will be applied to ensure the security of its operation system. This differs from the Bitcoin at the very start."
- Zhou Xiaochuan, Governor of the People's Bank of China
Will crypto-markets hold?
The lowest that bitcoins have raced off is $5947.40. They have bounced back to $6367.16. The $6000 barrier has already been breached. On Monday, there were hopes that valuations would at least hold on until US markets opened. But today, there seems to be no respite. And in case you are thinking of holding for a magical resurgence, we would certainly recommend you against it. Here are some reasons:
- According to data from bitstsamp, the average price quoted in the past hour is running at $6680. There is an extremely bearish trend.
- Traders and Miners from Mainland China, apparently have started offering 50% discounts on their assets. This also includes trading desks, and even mining rigs. This is driven from fear of the Great Fire-wall that Chinese authorities claim to be building.
- A reddit forum user states that BTC (bitcoin) has started in a selloff mode, and the RSI (relative Strength index) has built around a technical chart of 30 points. Although critics would argue that this has been 80% accurate, from recent trends and reports. There is also an argument that BTC enters a bull phase from such a low RSI.
If you are a trader holding or mining bitcoins, the macro-economic factors seem grim and you may be compelled to hold in the current market.
If you are a newbie, the current market volatility can scare you off, if not scar you away from investing. Better stay off.