Bitcoin holds above $40K as China FUD prompts regional investors to ‘long’ crypto

"Bitcoin 'Blockchain' Necklace" by btckeychain is licensed under CC BY 2.0
“Bitcoin ‘Blockchain’ Necklace” by btckeychain (licensed under CC BY 2.0)

Key Takeaways:

  • China issued a blanket ban on crypto transactions last week.
  • However, Chinese crypto hodlers are unfazed, buying the dip brought on by the ban.
  • Bitcoin (BTC) price stays above $40,000, though resistance at $45k is still too strong for bulls.

NEW DELHI (CoinChapter.com) — There is no stopping crypto investors.

Despite China’s absolute ban on all things crypto, regional cryptocurrency holders continue to buy the dip. The People’s Bank of China (PBC) on Sept 24 banned all crypto transactions and announced its decision to root out crypto mining in the country. The central bank’s decision also targets a loophole that allowed citizens to maintain accounts with offshore exchanges.

In an almost immediate response to the order, offshore exchange Huobi restricted new registration from mainland China phone numbers. The exchange further said it would close mainland China user accounts by Dec 31. Binance, the world’s largest crypto exchange, also stopped traders from registering using mainland China numbers.

However, both exchanges still allow registrations from Hong Kong numbers.

Meanwhile, Bitcoin is still reeling from several cliff diving adventures in September that began with the El Salvador sell-off. After Bitcoin ended its wildly volatile last week with a late-day rally on Sunday, BTC prices fell 4.3% high ($44,605) to low ($42,648) on Monday.

Support near $40,000 holds strong for BTC.

Chinese Bitcoin Hodlers Stand Strong

The latest ban order from the government has support from the Supreme Court, the central bank, and the police. China’s extreme ban on cryptocurrency trading and mining may dissuade new traders from entering the crypto markets. Still, seasoned crypto-traders would view this as an opportunity to buy at lower prices.

A Shanghai-based crypto investor bought $20,000 of BTC over the weekend. In a statement to Bloomberg, the investor said the ban is nothing new to Chinese investors, and they view it as a “buy signal.”

Recommended: Long-term Bitcoin holders now have 80.5% control over BTC supply.

CEO of crypto wallet firm Ballet Global Inc, Bobby Lee, also bought some BTC when it dipped. While these are just some examples, not everyone would likely view the ban as a boon. The government’s decision would probably scare off new entrants to the crypto market.

Moreover, Huobi, a crypto exchange popular with Chinese investors, is likely to suffer major losses as profits from Chinese customers formed a major chunk of the exchange’s profits. Nevertheless, in April, Huobi’s shares rose more than 700% as BTC prices rose to their ATH.

Even with BTC prices crashing, Huobi’s stocks are at levels double than last year’s. The overall crypto market would suffer from the imminent fall in Chinese investor numbers. Although the market would likely recover, the same cannot be said for Huobi.

Meanwhile, according to a report from Coinshares, investors pumped $95 million in digital asset investment products last week. As such, the total inflow over the last six weeks has now reached $320 million. Last week’s inflows emphasize that investors view China’s latest ban as a buying opportunity.

Bitcoin led the weekly inflow with $50.2 million, with Ethereum a distant second with $28.9 million in inflows.

Bitcoin Charts

Crypto on-chain data provider Cryptoquant shared a post that highlighted the BTC whale ratio. In detail, it is the ratio between the total amount of coins in the top 10 transactions of all exchanges divided by the total amount of coins flowing into the exchanges.

Interestingly, whenever the BTC whale ratio has spiked, it has always been followed by a decline in Bitcoin prices. So, as per the post shared by Cryptoquant, the spike might result from short-term selling.

Also Read: Ethereum bubble warnings return as ETH struggles below $3K.

Meanwhile, all exchange reserves for BTC are declining, indicating that the hodling sentiment among investors is strong. When the metric is low, investors are moving Bitcoin away from exchanges and into private wallets.

Bitcoin prices are struggling to break above resistance near $43,600. However, after closing near $45,000 ($44,984) on Sept 24, BTC failed to duplicate the feat. As such, BTC repeated tested support at $41,433 before rebounding. Furthermore, support near the $40k mark at $40,321 prevented further downside movement on Sept 21.

Bitcoin, Bitcoin holds above $40K as China FUD prompts regional investors to ‘long’ crypto
Strong support near $40k for BTC. Source: BTCUSD on Tradingview.com

If BTC breaks below $40k support, bulls would likely try to consolidate above $39,000 to arrest further downside movement. On the other hand, BTC needs to flip resistance at $43,676 into support for bulls to target the next resistance near the 200-Day (Green) Moving average line at $45,564.

Once prices move above $45.5k resistance, Bitcoin would become bullish in the long-term time horizon. However, bulls would need a sustained uptrend to take BTC above the next resistance at $46,847, near its 50-Day (Yellow) MA line. So, for now, Bitcoin is bearish across all time horizons.

The relative strength index for Bitcoin is near oversold levels, as the indicator clocked a value of 39.32. At the time of writing, BTC was trading at $42,181, down 2.35% on the day.

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