Bitcoin is bearish, cryptocurrencies are on a downtrend, April 2021 is going to be a replay of December 2017 for Bitcoin. The gossip about the end of the crypto starts with Bitcoin’s drop on April 18, days after reaching a new ATH and the listing of COIN.
The mystery of Bitcoin’s dump is unknown, though there are several versions of possible causes. The first version is a tweet by a FXEdgers about the US Treasury pressing charges on the money laundering scheme of companies that purchased Bitcoin. The US Treasury never made an announcement of such since then nor commented, but the same tweet of FXEdgers was soon deleted. The second version is that Bitcoin was sold by a Chinese miner when a province of Xinjiang was blacked out for safety inspections, due to an accident on one of the coal mines. The power outage caused a massive dump in the Bitcoin network’s hashrate. The hashrate is a computational power provided by miners to keep the blockchain running and generate new blocks, higher hashrate stands for miner’s greed to receive higher reward for providing the computational power.
According to the data from the CBECI, China holds 65.08% of the total Bitcoin hashrate, and Xinjiang province holds 30.13% of the total Bitcoin hashrate, making the province the largest mining pool of the World, due to it’s cheap energy.
The situation went noticeable on the market on April 16, when there were several reports about Chinese mining pools going down by over 20%. These reports caused a slippage of Bitcoin price down by 2.89% on April 16 and by 2.17% on April 17, until there was a panic sell of BTC on April 18, causing Bitcoin to plummet by %6.43 even though the hashrate was slightly resoterd. Bitcoin dropped from $64 000 to $52 000, resulting in a $4.87b long liquidations, but soon was able to regain some of the losses intraday.
The situation and the cryptocurrency market didn’t go unnoticed and soon after the Deputy governor of the PBOC Li Bo called Bitcoin as an investment alternative, the US President Joe Biden urged cryptocurrency regulations. The battle for the mining capacity between China and the US ongoes, with the US building up pools and states legalizing mining, so does the battle for Bitcoin’s market cap. US Global hashrate share in January was 3.44% and in April that number grew to 7.24%. With more companies holding Bitcoin and accepting Bitcoin as a payment, with tensions between US and China growing, for the US economy the Bitcoin and cryptocurrency market becomes fragile without proper regulation, especially looking at what the malfunction of the hashrate can cause. The SEC will more likely approve Bitcoin ETF’s and as a part of the US regulation, Bitcoin ETF will be a less risky asset to invest in.
Coinbase IPO was a black swan for many retail investors, as many went to buy stocks of the first publicly traded crypto exchange, the price of the COIN plummeted. Starting price of the stock higher than the disclosed earlier was an early signal of stock prices drop but things went further when Coinbase’s executives sold nearly 100% of their shares worth over $4.6 bln, which led to a growing fear sentiment in the market, forcing investors and traders to apply more conservative strategies in crypto-investing and crypto-trading.
Source: Twitter, Dereck Coatney
As a result of these happenings during the last days, cryptocurrency market sentiment calculated by the “Fear and Greed” indicator is below 50 since January 22, when Bitcoin was trading at $32K, and is in “Fear”.
This indicator usually signals the arrival of the bullish run, however as the daily Bitcoin trades show on the chart, the market awaits a strong bullish signal. Another reason why investors do not want to rush purchasing Bitcoin is the approaching of Bitcoin futures on April 30th, the previous futures expiry led to a 21% correction of BTC.
As per the technical analysis, Bitcoin on a daily chart approaches the bottom line of the RSI indicator, and below the EMA50.
BTCUSD is below the ascending parallel channel, though has found support at 1.75 Fibo level of the Pitchfork. If Bitcoin closes above this level, it will continue the downtrend towards $50700 and below that towards a strong accumulation zone located at the $41000-$43000 area.
There is a symmetrical triangle formed on a 4H BTC/USD chart and the triangle is in a downtrend, hence might be a continuation of the correction to $50700.
There is no signal of Bitcoin entering a bearish period, these moves are still considered as a correction, accumulation of a purchasing power among investors to bring Bitcoin higher. Cryptocurrency market and Bitcoin became part of the Global financial system, hence Bitcoin and the whole market still impose value with a market cap of $2.127 trillion.
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