- China has made all cryptocurrency activities illegal in the country.
- The crypto market experienced signficant plunges yesterday following these news.
- The $40,000 zone is the level of immediate importance for all BTC traders. Everyone should be watching it.
On Friday, yesterday, the Central Bank of China announced that all cryptocurrency activities are illegal in the country. This is part of China’s Crypto crackdown that has been going on for the better part of this year. Following the news, Bitcoin lost an estimated 6% of its price value while Ethereum lost an estimated 8%. A day before the news, I had been watching for signs of a short-term bullish momentum. I even had an active buy position on Ethereum. I had to cut my losses soon after seeing the news.
As highlighted in the article that I published on Monday, the $43,300 level was expected to offer Bitcoin an immediate support in case of a plunge. The level was broken on Friday, exposing the $40k level as the next significant support zone. The $40k level has been offering support since yesterday. The chart below shows the 4hr price action for BTC at the time of this writing;
For Ethereum, price fell from the $3,149 level to the $2,732 area. This is an estimated 8% plunge. According to most financial advisors, the ongoing regulations and crackdowns on crypto are bound to have a short-term impact on the market. Arguably, this is all part of the long-term correction phase in the market. The chart below shows Ethereum’s 4hr chart at the time of this writing;
Although BTC seems to be finding support at the $40k level, a break below this level would expose the $38,800 level as the next support. A plunge on BTC would result to a plunge on Ethereum since the two have a high positive correlation. The $40k zone is the most important level that every Bitcoin trader should be watching for now.
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