Bitcoin tested support levels once more as China fears dragged the market lower. Storeum blasted 8,000% on the week and MMO was up 400%.
As I noted in last week’s article,
Support in BTC is in the $7,000 to $8,000 level and this is vital to continue the uptrend which started in 2019.
The market did sell off through both levels mentioned and BTC has seen a bearish weekly close that also comes under the 61.8% Fibonacci level from the late-2018 rally. This is not ideal for bulls and the market will continue to look for other technical support levels.
On the monthly chart, BTC has seen heavy selling this month and this is likely a sign of increased institutional participation. The 50 moving average in BTC comes in around the $4,700 level, which may be a target but last years’ price action involved a late-year sell-off and a rally starting in January so that cannot be discounted for 2020. Continued weakness in gold has been a drag on BTC and U.S. stock markets have also been buoyant, meaning there is no appetite for a safe haven play at the moment.
Part of the gloom surrounding the cryptocurrency market this week has been a further crackdown on crypto trading in China. Officials in China had identified 39 cryptocurrency exchanges that were defying their trading ban. One of those exchanges, BISS, was closed and staff arrested.
These actions would apparently negate the previously positive blockchain comments from President Xi but I have said before that China wants to keep their control over the money supply and they will fight any attempt to undermine their upcoming digital currency as the key payment system in the country. Governments were always going to push hard against payment solutions that reduce their power and it is likely better to focus on coins that provide different solutions to payments such as the internet of things (IoT).