Bitcoin spiked lower in Friday trading, dipping below $7,000 to reach a 6-month low. The selling came on the heels of Thursday’s statement from the People’s Bank of China (PBoC) Shanghai Head office, announcing plans to clamp down on illegal cryptocurrency trading.
Thursday’s statement confirmed the official government stance of embracing blockchain while warning of the dangers of cryptocurrency;
“Investors should be careful not to mix blockchain technology with virtual currency. There are multiple risks in virtual currency issuance financing and trading, including false asset risk, business failure risk, investment speculation risk. Investors should enhance their risk prevention awareness and beware of being fooled.”
In October Chinese President Xi Jinping openly endorsed blockchain technology, stating to committee members:
“We must take the blockchain as an important breakthrough for independent innovation of core technologies.”
Additionally, the Chinese government may soon be launching its own digital currency. According to a report by CNBC, experts forecast that China could start rolling out its state-backed digital currency within months.
Looking at the Bitcoin daily chart we can see the steady down trend that has formed since the recent highs of almost $14,000 in late June. Trendline support currently lies below at $6,633. The 50 period moving average is getting closer to potentially crossing the 200 period moving average, which would elevate the bearish scenario for Bitcoin.