BTCCNY made a sharp drop from its recent rally upon hitting the 5000.00 handle as predicted in a previous article . Not only did profit-taking come into play but reports that the Chinese government is planning on restricting bitcoin trading also weighed on the cryptocurrency’s price. As it turns out, authorities are finding the rise in bitcoin against the Chinese yuan worrisome, as investors in the mainland have been buying BTC to hedge against yuan devaluation. Now the government wants to impose limits on the amount of bitcoin moving in and out of the domestic economy, causing some investors to panic and book their profits off their recent positions in anticipation of declines. Keep in mind that Chinese investor activity has been mostly responsible for bitcoin price gains over the past few months so the news that restrictions could be put in place has weighed heavily on demand. Then again, the government might have its hands tied with this one as the nature of bitcoin transactions makes it difficult for authorities to interfere in the market. Of course there’s still the chance that China could impose a bitcoin ban altogether if their efforts don’t prove to be enough to limit BTC gains against the yuan. This could spur massive declines for the cryptocurrency since China is its largest market. From a technical standpoint, BTCCNY is holding safely above its correction levels for the time being so there’s still strong support. The 61.8% Fib lines up with the 100 SMA dynamic support, which makes it a strong floor. Further losses beyond this point could bounce off the rising trend line support on the daily time frame, which lines up with the longer-term 200 SMA. Speaking of moving averages the 100 SMA is above the 200 SMA so the path of […]
