Bitcoin Lurches Lower Amid China Crackdown

Bitcoin Daily Chart

By Dan Blystone June 21 2021, 9:16AM GMT

Bitcoin entered the week on the back foot, following a slew of negative headlines. Most significantly, China’s crackdown on bitcoin mining expanded to the province of Sichuan, a major mining center. A bitcoin mining map produced by the University of Cambridge showed that China accounted for about 65% of the world’s Bitcoin mining as of April 2020.

However, according to a report in the Communist Party-backed Global Times, over 90% of China’s Bitcoin mining capacity is now estimated to have been shut down, at least for the short term. Chinese regulators reportedly made the move in order to control the financial risks posed by speculative trading of cryptocurrencies.

Bitcoin was also pressured by last week’s crash in price of the Titan token, which fell from $64.04 to nearly zero within just 24 hours. Billionaire Mark Cuban stated that he “got hit like everyone else” after investing in the partially collateralized stablecoin. 

Last week, the US Federal Reserve’s unexpectedly hawkish tone triggered a move away from risk assets as they brought forward the timeline for an anticipated interest rate hike. The US dollar enjoyed it’s largest two-day gain of the year while risk assets such as the Australian dollar sold off sharply on the heels of the news.

Meanwhile, Coinbase cofounder Fred Ehrsam made a stark warning about cryptocurrencies and NFT’s during an interview with Bloomberg TV. He drew a comparison to the dot com bubble, stating: “People are going to try all sorts of things. There’ll be millions and millions of cryptocurrencies and crypto assets, just like there were millions and millions of websites. Most of them won’t work.” On the subject of NFTs (non-fungible tokens) he said:  “I go so far as to say that 90% of NFTs produced, they probably will have little to no value in three to five years.” 

Technical analysts have pointed out that a death cross pattern has formed on the Bitcoin daily chart. The bearish pattern occurs when the 50-day moving average drops below the 200-day moving average. However, it’s worth noting that the death cross that took place in March 2020 was not a reliable signal – it was followed by a major rally.