The world’s leading cryptocurrency has now shed more than half of its value since reaching an all-time-high of $64,895 on April 14.
Hopes for a recovery grew earlier this month as bitcoin briefly moved above the $40,000 mark–a psychologically important level for many traders. But the down-trend resumed on June 15 with a decisive rejection from the 200-day exponential moving average on the daily chart.
That was followed one day later by a warning from the US Federal Reserve that inflation is likely to be higher than the central bank had originally forecast, raising the specter of an interest rate hike to cool demand.
Global stock markets fell on the Fed’s announcement, triggering a broad sell-off that spread to perceived inflation hedges bitcoin and gold (down 6% last week).
Bitcoin’s price then deteriorated over the weekend as it emerged that China is intensifying its clampdown on bitcoin mining.
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Beijing had already ordered the closure of digital mining facilities in Xinjiang and Inner Mongolia, citing pollution from the coal-burning powerplants that provide electricity for miners based in those provinces. On Friday, it extended those measures to Yunnan and Sichuan–provinces that draw most of their energy from environmentally-friendly renewable sources.
The cryptocurrency’s price appears to be interacting with the 144-day exponential moving average on the 3-day chart–which currently sits at about $30,000–having found support at the level three times in the past five weeks. Both of the previous touches triggered rapid but short-lived bull-runs of more than 30%.
A sustained breach below $30,000 would embolden bearish predictions of $20,000–the all-time-high of the previous market cycle.
However, opinions are divided on the likelihood of that scenario. Bulls contend that both of the news events coinciding with the latest sell-off could actually be positive in the mid-term: bitcoin’s fixed supply makes it a natural hedge against monetary inflation; and its environmental credentials will only be enhanced by an exodus of miners from coal-dependent China.