Daily Market Recap – BTCUSD Plunges below $30,000 for the first time in five months

The price of bitcoin fell below $30,000 on Tuesday for the first time since late January, with the leading cryptocurrency suffering from Chinese efforts to regulate the decentralized market.

At around 12:50 GMT, bitcoin was trading for $29,590 (-9.25%), moments after hitting a five-month low of $29,334. The cryptocurrency then recovered back above the critical $30,000 mark later in the session and is trading at around 32,771 at the time of writing.

The highly volatile cryptocurrency remains up 2.2% year to date but plunges 54% from its all-time high, reached in mid-April at $64,870.

Many bitcoin mines in Sichuan were closed on Sunday after authorities in the southwestern Chinese province ordered a halt to crypto-currency mining, according to a report by the Communist Party-backed Global Times newspaper. According to the newspaper, more than 90 percent of China's bitcoin mining capacity has been shut down.

Bloomberg and Reuters also reported on the Sichuan authorities' decision. It follows similar developments in China's Inner Mongolia and Yunnan regions, as well as calls from Beijing to stamp out crypto-currency mining amid concerns about its massive energy consumption.

Separately, the People's Bank of China said Monday that it had urged Alipay, the payment service run by Alibaba subsidiary Ant Group, and some major banks to crack down on crypto-currency trading. China has already banned financial institutions from providing crypto-currency-related services.

Meanwhile, Michael Burry, who rose to prominence after his winning bet against mortgages was featured in the book and movie “The Big Short,” posted a series of tweets Thursday warning individual investors of “country-sized” losses if cryptos decline.

“All the hype/speculation is doing is luring retail investors before the mother of all crashes,” Burry wrote on Twitter before the posts were deleted. “When crypto falls by trillions, or meme-stocks fall by tens of billions, #MainStreet losses will approach the size of countries. The story hasn't changed.”

From a technical perspective, we reiterate our view that below the USD 42,000 level, Bitcoin remains under pressure. In the short term, the crypto currency is in a horizontal channel between this level and the psychological support at 30,000 USD followed by technical support at 28,815 USD.

In the short term, Bitcoin is back down after bouncing off support at the 20-period descending moving average with an evening star pattern last Tuesday signaling the end of the short-term bounce.

(Chart Source: Tradingview 22.06.2021)

Bitcoin showed a negative candlestick yesterday hinting at the formation of a bearish marubozu but has been invalidated by the late surge in prices. The scenario would have been much more negative had Bitcoin remained below the $30,000 mark as a firm close below this crucial support could cause a wave of decline with a target below 20,000 USD.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.