Bitcoin is Under Pressure, and the Anticipated $100K by the End of the year Looks Beyond the Reach.

China’s ban of cryptocurrencies is related to the migration of mining capacities to the US, just remember the April energy outage in Xinjiang which led to a major hashrate drop. And when the hashrate is in hands of the US, China doesn’t want to risk it, so cryptocurrencies are banned. This strategy also should increase the mass adoption of the Chinese digital currency, the digital yuan.

Digital yuan is already tested for cross-border inter-bank transactions between China, Hong Kong, UAE. In the cryptocurrency world, Bitcoin was meant to be the digital gold, the main counterpart and a hedge asset, and it is obvious that one world power is already restrained from this idea.

While China is restricting access to cryptocurrencies, the US is proposing various ways to regulate cryptocurrencies. Tom Jessop, president of the Fidelity Digital Assets, had a meeting with SEC officials and asked for the approval of Bitcoin-ETF and Bitcoin-futures-based products. While the US firms are competing to launch the Bitcoin-ETF in the US waiting for the approval from the SEC, Bitcoin ETFs and ETPs are already traded in Canada and European markets.

SEC Chairman Gary Gensler also stated that the launch of Bitcoin-ETF could be completed anytime this year, however the product should comply with strict rules of mutual funds to be listed in stock exchanges under the 1930 law.

It is very clear that Bitcoin and cryptocurrency trading will be normalized in the sense that there will be less to none sentiment driven price actions. Bitcoin will be less sensitive to news and other FUD-spreading gossips. Bitcoin will be bound to the global economic data and the economic data from the US, and the US Dollar index.

The digital gold’s price action will be similar to the traditional gold. And for the fund to be able to compete, it has to purchase as many Bitcoins as possible, to do that, the price of an asset should drop. The cheaper the price, the more assets you can buy and thus increase the total valuation of your ETF, just keep it in mind.

Speaking of the sentiment, the Fear and Greed index still shows slight greed in the market, which still signals the upcoming correction.

As for the technical analysis, Bitcoin is currently below an important support level, which currently acts as resistance. The price has formed a falling wedge pattern and in order to be able to jump to levels near $50K, it has to close above $43900.

Chart by TradingView

Chart by TradingView

MACD looks bullish, however, the resistance is strong. According to the rules of the Wedge pattern, BTC should drop one more time down to $37200 and $36300 levels to touch the lower edge of the falling wedge pattern (ending diagonal).

Let’s take a closer look at the pattern on a 4H BTCUSD chart.

Chart by TradingView

Chart by TradingView

As seen on the chart above, the red line (area of resistance) is a historical and local resistance line. For Bitcoin to show any signs of bullish move, it has to close above this area, otherwise the drop might continue.

Like I noted in this article above, BTC is bound to the DXY and we are expecting important economic data from the US later today. GDP and Initial jobless claims data will guide the market and the US dollar index. Positive US Labor data will boost the US Dollar as it is one of the core metrics and goals of the FED.

This article was originally posted on FX Empire


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