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Bitcoin is “Fragile” as It Trades Below Multiple Crucial Levels

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  • Bitcoin witnessed an intense influx of selling pressure yesterday that caused its price to reel down towards lows of $11,600
  • Although it was able to find strong support at these lows, this recent selloff forced it back below the $12,000 region
  • This is a grim sign for its mid-term outlook, as it points to underlying weakness amongst the cryptocurrency’s bulls
  • Analysts are now noting that it does appear to be in a “fragile” position
  • This means that any further selling pressure could result in it seeing a major selloff that sends it reeling below its crucial near-term support

Bitcoin and the aggregated crypto market are currently caught within a slight downtrend.

This came about after BTC lost the buying pressure that was previously allowing its price to stabilize within the mid-$12,000 region.

Its inability to sustain this recent technical breakout shows that bulls are losing their momentum, which may be a sign that downside is imminent in the days and weeks ahead.

The coming few days will be vital for understanding Bitcoin’s near-term trend, as the cryptocurrency is now in a “fragile” position – according to analysts.

Bitcoin Shows Signs of Weakness as Selling Pressure Ramps Up 

At the time of writing, Bitcoin is trading down just under 1% at its current price of $11,880. This is around the price at which it has been trading throughout the past few hours.

This price region is also where the benchmark cryptocurrency consolidated for several weeks previously. This indicates that the crypto may see another bout of sideways trading within this region.

While speaking about this, one analyst explained that BTC will consolidate around its current price levels because seeing a continuation of its downwards momentum.

“Well, we did get the fake-out, didn’t we? I thought the drop would be towards $11,500 but came close. The general scenario is that we’ll be ranging a bit here, before continuation of the downwards momentum. Overall -> alts (smaller ones) continue to do well.”

Image Courtesy of Crypto Michael. Chart via TradingView.

BTC Looks “Fragile” Following Overnight Decline

Another analyst echoed a strikingly similar sentiment within a recent tweet, explaining that he believes Bitcoin look “fragile” and may be poised to decline further in the near-term.

“Cloud still doing its thing. Currently keeping price (1h) below it acting as resistance – will look for scalp entries once we chill back inside/above it. Till then, looks a bit fragile,” he explained.

Image Courtesy of Teddy. Chart via TradingView.

Where Bitcoin trends throughout the coming days will likely offer investors significant insights into where it may head in the weeks to come.

Featured image from Unsplash.
Charts from TradingView.





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China’s attempt to kill Bitcoin failed — Here are 3 reasons why

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Bitcoin (BTC) might have suffered its largest coordinated attack over the last couple of months, but in this instance, the investor community did not capitulate. China outright banning mining in most regions after giving BTC miners a two-week notice and this caused the single largest mining difficulty adjustment after the network hash rate dropped 50%.

The market sentiment surrounding Bitcoin was already damaged after Elon Musk announced that Tesla would no longer accept Bitcoin payments due to the environmental impact of the mining process. It remains unknown whether China’s decision was influenced or related to Musk’s remarks, but undoubtedly those events held a negative effect.

A couple of weeks later, on June 16, China blocked cryptocurrency exchanges from web search results. Meanwhile, derivatives exchange Huobi started to restrict leverage trading and blocked new users from China.

Finally, on June 21, the People’s Bank of China (PBoC) instructed banks to shut down the bank accounts of over-the-counter desks and even their social networks accounts were banned. OTC desk essentially act as a fiat gateway in the region so without them it would be difficult to exchange from Bitcoin to stablecoins.

As these events unfolded, some analysts were reluctant to describe the tactics as nothing other than meaningless FUD, but in hindsight, it appears that China launched a very well-planned and executed attack on the Bitcoin network and mining industry.

The short-term impact could be considered a moderate success due to the collapse in Bitcoin price and the rising concerns that a 51% hashrate attack could occur.

Despite the maneuvers, China’s attack ultimately failed and here are the main reasons why. 

The hashrate recovered to 100 million TH/s

After peaking at 186 million TH/s on May 12, the Bitcoin network hash rate, an estimate of the total mining power, started to plunge. The first couple of weeks were due to restrictions to coal-powered areas, estimated at 25% of the mining capacity.

However, as the ban extended to other regions, the indicator bottomed at 85 million TH/s, its lowest level in two years.

Bitcoin estimated hashrate. Source: Blockchain.com

As the data above indicates, the Bitcoin network’s processing power recovered to 100 million TH/s in less than three weeks. Some miners had successfully moved their equipment to Kazakhstan, while others shifted to Canada and the U.S.

Peer-to-peer (p2p) markets carried on

Even though the companies involved in crypto transactions have been banned from the country, individuals continued to act as intermediaries—some of these recorded over 10,000 successful peer-to-peer transactions according to data from the exchange’s own ranking system.

Huobi Global peer-to-peer market advertisement. Source: Huobi

Both Huobi and Binance offer a similar marketplace where users can trade multiple cryptocurrencies including USD Tether (USDT). After converting their fiat to stablecoin, transacting on a regular or derivatives exchange becomes possible.

Asia-based exchanges still dominate spot volume

A complete crackdown on trading from Chinese entities would likely be reflected in the exchanges previously based on the region, like Binance, OKEx, and Huobi. However, looking at the recent volume data, there hadn’t been a meaningful impact.

Weekly spot volume, USD. Source: Cryptorank.io

Take notice of how the three ‘Asia-based’ exchanges remain dominant, while Coinbase, Kraken, and Bitfinex are nowhere near their trading activities.

China’s ban on Bitcoin mining and transactions may have led to some temporary hiccups and a negative impact on BTC price, but the network and price have recovered in a way that is better than many expected.

Currently, there is no way to measure the OTC transactions where larger blocks are traded but it is just a matter of time until these intermediaries find new gateways and payment routes.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.