The crypto market had a dangerous moment yesterday. A negative news backdrop forced investors to close positions, which resulted in a broad sell-off of Bitcoin and a drop below the most important technical and psychological level of $30K. The benchmark cryptocurrency fell as low as $29K, where it was helped by buyers who were waiting for the moment to buy the asset at a substantial discount. By Thursday morning, the coin had bounced up 4% and was trading around $34,000. Bitcoin is once again proving its unique role in the crypto market, as all other coins would very likely have just gone into freefall.
Despite the rebound attempt, the bulls and bears will likely continue to play tug-of-war around $30K, and yesterday's drop below the round value may not be the last attempt by sellers to push the benchmark cryptocurrency below an important psychological level. In the case of a successful breakdown of $29K, we could see a drop as low as $25K. This has not happened at this stage, but that possibility remains. And the problem, in this case, is that the investors, who were ready to come to the rescue of the coin after the fall below $30K, ran out yesterday. Other "smart-money" investors will be waiting for even lower levels to open positions.
While the cryptocurrency is showing attempts to recover on the daily chart, things are much worse on a weekly basis. Bitcoin has been losing 15% in the last seven days. Ethereum and other top altcoins show declines of up to 33% over the week. As before, when the first cryptocurrency falls, altcoins show a much fiercer price dynamic and less obvious bounce attempts.
As always, a number of factors were behind yesterday's negative price trend. The most important contributor to the market decline was the Chinese factor and the drop in the Bitcoin network's hash rate. China's Central Bank continues to put pressure on Bitcoin, while this time, the country's authorities finally showed the remaining miners a "path to exit". As a result, we are witnessing a sharp decline in the hash rate. This indicator is commonly correlated with the decline in the price of the asset. In addition, yesterday the futures positions for almost $900 million were liquidated.
Nevertheless, from a broad perspective, the news is far from as bad as it initially seems. Miners will not disappear but are very likely to move to Texas, where they will be powered by clean energy, which removes the environmental issue of Bitcoin. In addition, state authorities have a positive attitude toward cryptocurrencies. Moreover, given the crucial role of the U.S. in the development of cryptocurrencies, as well as its tendency to favor projects that are based in the country, Bitcoin could get a significant boost. The fact that China is so fierce about Bitcoin is also seen positively in the community. This means that BTC really works and causes the authorities of the second-biggest economy to have serious concerns about competing with the national currency. In the long term, this means that Bitcoin will continue its global race at the "monetary Olympus".