“Will Bitcoin recover?”: it’s the most popular question of the moment, following a week-long collapse in the price of BTC that dragged the top 30 cryptocurrencies by market capitalization. Here’s how the market trend responded.
Will bitcoin recover? Signs to watch
First, a look at the whales of the market, those holding between 10,000 and 100,000 BTC.
Morgan Creek Digital’s Anthony Pompliano said that bitcoin whales bought 122,588 BTC just last Wednesday, while BTC was at its bearish market low at the time.
Not only that, some crypto hedge funds have also claimed to have invested in bitcoin, as the Buy The Dip or BTD strategy teaches. Specifically, these are MVPQ Capital and ByteTree Asset Management, both based in London, along with Singapore’s Three Arrows Capital.
This mood of general buying by large numbers should balance the spirits of small investors who, in a panic, began to sell BTC actively participating in its collapse.
Another not insignificant aspect refers to a probable cause of the collapse dictated by China’s crypto ban, which the Hong Kong Bitcoin Association has described as follows:
— Bitcoin Association 香港比特幣協會 (@bitcoinorghk) May 18, 2021
“For those new to Bitcoin, it is customary for the People’s Bank of China to ban Bitcoin at least once in a bull cycle”.
China’s new crypto ban: “momentary” cause of the BTC price crash?
The new ban announced by the People’s Bank of China (PBoC) seems to want to increase all those crypto-related restrictions already announced in 2017 on Chinese territory.
In essence, back then, Chinese regulators had already imposed on financial institutions not to offer any cryptocurrency-related services, such as account opening, registration, trading, clearing, settlement and insurance.
At that time, the crypto market was flooded with the phenomenon of ICOs or Initial Coin Offerings, which Chinese institutions did not like so much that they created the ban. The price of Bitcoin (BTC) climbed to its first ATH or All-Time High which touched $20,000.
Now, according to reports, the PBoC is back to intensify regulation on crypto and has made it clear that institutions must not accept virtual currencies, or use them as a means of payment and settlement. Nor can institutions provide exchange services between cryptocurrencies and the yuan or foreign currencies.
By complicating the lives of its own institutions and citizens regarding the use of crypto, it is only natural that the sale of cryptocurrencies has accelerated, resulting in a price collapse of BTC.
It is not possible to say that the current situation is comparable to that of 2017. What is certain, however, is that in spite of the collapse, only on Sunday the price of BTC hit the low of the day at $31,000 and is now, at the time of writing, at $36,000.