Bitcoin Dropped Back To 10K; China Struggles With Crypto-traders
FxPro Financial Services Ltd | Sep 24, 2020 09:10AM ET
Bitcoin confirmed its dependence on the stock market, declining sharply alongside the traditional market on September 21st and remaining under pressure on Thursday. The trigger for the stock market decline early in the week was fears around the second wave of COVID-19, along with the Fed's warnings that the economy remains in a deep hole. Bitcoin began sinking towards $10K on Thursday, where the decline has now paused. It is worth noting that precious metals are declining even more actively.
In the last seven days, Bitcoin has lost more than 5%. Nevertheless, Bitcoin's dominance index grew by almost 1.5% over the same period, as the liquidation of altcoins strengthened. Thus, the leading altcoin—Ethereum—lost 14% in 7 days, and Chainlink sank 23%, the worst TOP-10 performer.
The Crypto Fear And Greed Index for Bitcoin and other major cryptocurrencies continues to dive into the "fear" zone, dropping by 10 points in a week. This is the result of falling prices and could well mean the approaching of a rebound moment, in the case of extreme oversold conditions.
News from China is likely to play against the crypto sector as well, as a struggle against crypto traders in the country continues. People's Bank of China can block accounts of traders who are associated with over-the-counter bitcoin trading for five years. These actions are in place as part of the fight against money laundering, and since the OTC market often deals with "millions of dollars" worth of positions, it is not surprising that the central bank of the country has paid attention to this sector.
It is worth noting that "normal" and relatively small deals are likely to be exempt from prosecution. The crypto market as a whole remains in the "grey zone", which is convenient to authorities, as it is possible to turn the law towards the needed direction. It is highly likely that after the launch of the digital yuan, pressure on other cryptocurrencies will increase many times over.
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