Bitcoin Price Key Highlights
- Bitcoin price is showing no signs of pulling up from its dive, as it went on another wave lower and could be in for more declines.
- A descending trend line can be drawn to connect the highs of price action, with the resistance level lining up with a former support area.
- Price could pull up to this area of interest before resuming its slide.
Bitcoin price continues to tread lower as Chinese regulators make moves to investigate cryptocurrency exchanges and clients in the country.
Technical Indicators Signals
The 100 SMA is below the longer-term 200 SMA on the 1-hour chart, signaling that the path of least resistance is to the downside. In addition, the short-term moving average coincides with the descending trend line, adding to its strength as a ceiling.
Bitcoin price could pull up to the $900 level before resuming its drop, as this area previously served as support. Stochastic is on the move up to suggest that sellers are taking a break for the time being and allowing profit-taking to happen. RSI is heading up so bitcoin price could follow suit. Once these oscillators hit the overbought areas and turn lower, price could slump back to the lows near $700.
Market Events
The lack of follow-through from earlier bullish moves suggests that bitcoin price is under tremendous selling pressure right now. This follows reports that Chinese authorities are cracking down on bitcoin activity in the mainland as part of their efforts to curb offshore investments and devalue the yuan.
Reports indicated that the Chinese central bank is conducting “spot checks focused on how the exchanges implement policies including forex management and anti-money laundering” so bitcoin investors are getting wary and starting to liquidate their holdings.
Keep in mind that China is the largest market for bitcoin so any moves to limit activity in this country could have a drastic effect on bitcoin price. The government has an annual maximum on the amount that people can change into foreign currency but has also noted that bitcoin is not currency and shouldn’t be treated as such.
Charts from SimpleFX