Bitcoin is falling for a fourth-straight day to trade at one-week lows in the $13,150 area. Following a brief breach of the $17,000 mark, the price failed to preserve its gains and have surrendered to the bears again. Over the last three weeks, the digital currency plummeted 30%.The recent retreat is due to growing concerns over the regulatory and government crackdown on bitcoin, notably in China and South Korea. The market fears that these two countries’ aggressive steps will have major widespread consequences for the industry due to their large share in the global cryptocurrency trade.
In particular, China, which previously banned ICOs, is going to clamp down on the local miners as they are consuming huge amounts of resources in the country. Meanwhile, South Korean authorities are inspecting six large local banks offering virtual accounts to institutions. Moreover, the South Korean government has called for financial regulators of other countries to cooperate in curbing virtual currency trading.
In such circumstances, it’s difficult to bet on bitcoin recovery in the short term. Due to bearish drivers mentioned above, bitcoin traders are getting more cautious and will likely stay away from buying, so the downside pressure will persist so far. The immediate support is now at $13,150. Failure to hold above the $13,000 level may allow for weakness back to the $11,550 area.
By Helen Rush
Senior Analyst at Capital Markets