Bitcoin plummeted 25% overnight and was testing the key $10,000 mark in Asia today. The attempts to break the psychological level attracted some buyers, but the momentum is too sluggish to expect a more robust recovery.
The digital currency remains under the regulators’ thumb. Asian governments are committed to widening their crackdown on cryptocurrency trading. The Chinese authorities are going to block its citizens from trading bitcoin on foreign exchanges, while South Korean regulators are considering a crypto trading ban in the country. Due to a large share of global crypto trading volume in these countries, the aggressive steps from local regulators may well cause further bitcoin freefall. Due to the scale of a threat, the digital currency will hardly attract buyers on dips in the foreseeable future, unless the Asian authorities take a somewhat more flexible position.
A break above $12,000 is still needed in order to somehow ease the short-term bearish pressure. However, out of fear of fresh aggressive statements from China and South Korea, the market participants will likely continue to exit longs at bitcoin’s attempts to regain bullish momentum.
By Helen Rush
Senior Analyst at Capital Markets