Analysts point to several factors
The reduction in investor enthusiasm around the Taproot update of the Bitcoin blockchain, the demands on US brokers in the new infrastructure law by US President Joe Biden and the statements of Twitter’s CFO have affected the market. It is also joined by possible regulations from China that could affect the cryptocurrency market.
The short-term technical aspect sends indications that the retracement in progress may widen to levels around $ 57,000, experts warn. In addition, the behavior of the queen of cryptocurrencies in October, when she starred in a rally of more than 40%, suggests that the improvements of the update that was activated on Sunday, had already been discounted in the price.
In the ‘altcoins’ red is also imposed. The pessimism of the last hours has also contributed the signing of the infrastructure law of the US president, Joe Biden, which has become official.
The bill, as approved, will apply stricter rules to companies that handle cryptocurrencies and expand the information requirements for intermediaries. The bill requires that, from now on, digital asset transactions worth more than $ 10,000 be reported to the Internal Revenue Service. A group of senators originally proposed an amendment to the bill that would have clarified tax reporting requirements for cryptocurrencies, but the proposal failed to get approval in August.
In the last hours, Bitcoin has also been beaten by the statements of Twitter’s CFO, who has stated that investing in Cryptocurrencies “does not make sense right now,” said Ned Segal in an interview with the Wall Street Journal. “We would have to change. our investment policy and choose to own assets that are less volatile, “concluded Segal.
But the looks also point to China: lThe National Development and Reform Commission (NDRC) warned that it will continue to clean up virtual currency mining in the country.
Earlier this year, China cracked down on Bitcoin mining, prompting an exodus of miners. Mining, the process through which new measures are created, is an energy-intensive process, which has triggered all the alarms from the authorities at a time of high electricity prices.
Mining “causes great energy consumption and carbon emissions. It does not have an active impact to lead industry development or scientific progress, ”NDRC spokesperson Meng Wei noted, according to a CNBC translation.
“The regulation of cryptocurrency mining activities is of significant importance in optimizing our industrial structure, saving energy and reducing emissions, achieving carbon emission and neutrality targets.” Chinese President Xi Jinping said last year that China aims to achieve carbon neutrality by 2060.
The NDRC said it will focus on state-owned companies that are involved in cryptocurrency mining. He also said that the possibility of imposing “punitive electricity prices” on those who participate in cryptocurrency mining activities is being studied but pay a residential electricity price.
What to Expect
“It appears that the Bitcoin bulls are losing power and are likely to be in battle, especially if the price breaks below the 50-day SMA on the daily time frame,” commented Naeem Aslam, analyst at Ava Trade. That said, “Bitcoin was supposed to have a correction based on the RSI indicator, and that correction has finally arrived,” he adds.
From a technical point of view, “if the price sustains above the 50-day SMA, we could see another substantial rally for Bitcoin. “, continues the expert.
Aslam also noted that “the biggest fear among crypto traders is whether crypto winter is here.” “Nobody wants to see another crypto winter, as it is difficult to forget the dire consequences of the previous one.” “On the other hand, what traders have been waiting for is a strong rally, especially given the fact that during this time of year, we usually see a strong rally for cryptocurrencies – of course, with the exception of the crypto winter,” concludes this expert.