Bitcoin hits 6-month lows on reports of China crackdown, technicals
Editor's Note: Get caught up in minutes with our speedy summary of today's must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!
Editor's Note: The article was updated to reflect changes in prices.
(Kitco News) Bitcoin tumbled to $7,100 after low levels triggered a technical selloff amid reports that China stepped up its crackdown on cryptos.
The cryptocurrency was last trading at $7,135.20, down 6.99% on the day, according to Kitco’s aggregated charts.
“The near-term technical chart posture for Bitcoin has become more bearish recently, amid a strengthening price downtrend in place on the daily chart. That is likely prompting keener selling interest,” Kitco’s senior technical analyst Jim Wyckoff wrote on Thursday.
Also, reports of China possibly cracking down on most popular crypto changes might have contributed to the speed of the selloff, Wyckoff added. “[China] has reportedly taken steps to curb crypto trading despite recently saying it may start to use the blockchain technology more,” he said.
Crypto markets were dragged lower after news that Chinese authorities reportedly raided Binance’s Shanghai offices. The report first appeared in The Block, which cited unnamed sources.
The news quickly spread across the crypto world but many questioned the information.
Binance spokekesperson denied reports of a police raid in an email to Kitco News. "Rumors of a police raid are false," the spokesperson said.
“The Binance team is a global movement consisting of people working in a decentralized manner wherever they are in the world. Binance has no fixed offices in Shanghai or China, so it makes no sense that police raided on any offices and shut them down,” the Binance spokesperson said.
On November 20, Binance founder Changpeng tweeted: “Office and HQ are old concepts like SMS and MMS. Time is moving on…”
Office and HQ are old concepts like SMS and MMS. Time is moving on...— CZ Binance (@cz_binance) November 20, 2019
The CEO also tweeted on the same day: “HQ is Twitter.”
Also, a Binance spokeswoman told Bloomberg on Monday that “the exchange doesn’t have fixed operations in mainland China at the moment.”
But the pressure from China is real as Twitter-like Weibo suspended official accounts of Binance and blockchain platform Tron last week. Watchdogs in Shanghai also published notices that urged a cleanup of companies working with cryptocurrency trading.
The crackdown goes against what Chinese President Xi Jinping said last month, encouraging faster development of blockchain technologies. “[Blockchain would play] an important role in the next round of technological innovation and industrial transformation,” according to a report by state media Xinhua published on October 25.
Technicals could have played a major role in the latest move down in bitcoin, which has been declining for all of November.
“This price drop is a technical move; this is where the price was before the news of China’s support of blockchain, which is not crypto,” BitBull Capital chief executive officer Joe DiPasquale told Bloomberg. “So, the price of Bitcoin is simply returning to normal. However, more downside cannot be ruled out, since the recent drop has turned sentiments to negative.”