Crypto News

China ban is good for Bitcoin, asserts Wall Street veteran as BTC drops to $31K

Key takeaways:

  • Cathie Wood defends Bitcoin against China ban.
  • Says that the bullish sentiment would return once the cryptocurrency addresses ESG concerns.
  • BTC/USD drops to $31K, meanwhile.

YEREVAN (CoinChapter.com) — The air is coming out of the so-called Bitcoin bubble, but Ark Invest’s Cathie Wood still believes in the flagship digital asset’s long-term growth prospects.

The Wall Street veteran defended Bitcoin as it wiped its valuation by more than half after hitting almost $65,000 in mid-April, mired by a flurry of negative fundamentals, one of which was the no-nonsense crypto ban across China. While many analysts treated the news as a reason to go aggressively bearish on Bitcoin, Wood saw it as a bullish opportunity.

Related: Bitcoin Price Recovery Cut Halfway as China Ban Worries Bulls

What Bitcoin FUD?

Speaking to CNBC, the 65-year old fund manager noted that the Chinese crackdown on the crypto sector, especially mining, would ultimately lead its operations outside China and into regions that would be more Bitcoin-friendly. Such places would offer crypto businesses clarified regulations and infrastructure to minimize mining’s environmental impact.

“I actually think it’s a healthier phenomenon to disperse that mining. And a lot of that is coming toward the United States and moving toward renewables,”

Wood said.

Nonetheless, Wood admitted that Bitcoin faced risks near term, citing ESG issues.

In detail, ESG stands for Environmental, Social, and Governance. Unfortunately, Bitcoin has a controversial track record regarding not respecting environmental concerns, given its excessive dependency on computing power to operate its network without a central authority. Elon Musk raised the issue in May 2021, causing the Bitcoin prices to dump from $65,000 to $30,000 within a few days.

Related: Bitcoin fails to attract new whales as BTC risks decline below $30K

Critics have used the same argument to discourage investors from putting their capital in Bitcoin markets, in addition to the cryptocurrency’s excessive price volatility.

Meanwhile, hardcore followers have defended its bullish bias by citing inflation caused by the US Federal Reserve’s unprecedented monetary policies, including near-zero interest rates and $120bn monthly bond-buying purchase. Bitcoin rose more than 1,800% against the said central bank programs.

Relentlessly bullish

Cathie Wood remains invested in Bitcoin for the same reason through direct and indirect exposure. Just recently, her ARK Investment Management dumped shares in chipmaker Nvidia and e-commerce solutions provider Shopify to use the proceeding capital to buy Coinbase Global shares, trading under the ticket COIN.

Coinbase is a US-based digital currency conglomerate, operating a trading platform, an exchange, and a digital asset custodian service. It recently went public on the Nasdaq Stock Exchange through a direct listing. ARK bought 27,844 COIN worth about $6.77 million, in addition to the purchase of 214,718 shares some three weeks ago. The fund now owns over 3.8 million Coinbase shares.

ARK has also teamed up a company called 21Shares US LLC to create and launch a Bitcoin ETF. Wood believes ETFs would assist sending the Bitcoin prices up to $500,000 a token in the distant future. The firm has also bought Grayscale Bitcoin Trust shares to gain a proxy exposure in the Bitcoin market.

Related: Cathie Wood’s ARK Sees Bitcoin Prices at $200,000-500,000

Bitcoin hits $31K

Wood’s upside prospects for Bitcoin follows another decline in the crypocurrency’s benchmark BTC/USD markets.

The pair dropped to $31,064 during the Thursday US session, after trading near $41,000 a month ago. It appeared to be adamant about retesting $30,000 as its support as bulls’ effort to break over the $34,000-35,000 resistance area failed repeatedly.

Bitcoin approached $30,000
Bitcoin approached $30,000. Source: BTCUSD on TradingView.com

Technically, BTC/USD intends to bounce back from $30,000-31,000 support range owing to its recent price behavior, and retest $34,000 as resistance in doing so. But some analysts remain worried about “disastrous” consequences should the pair break below $30,000 with breakout confirmation.

“When the $30K BTC level breaks it’s not going to be a quick dip, it’s going to be disastrous,” said Jonny Moe, an independent market analyst, adding that such a massive downside move “will be even worse” for altcoins.

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Yashu Gola

Yashu Gola is a Mumbai-based finance journalist. He is profoundly active in the bitcoin space since 2014 – and has contributed to several cryptocurrency media outlets, including CoinChapter, NewsBTC, FxDailyReport, Bitcoinist, and CCN. Academically, Yashu holds a bachelor's in information technology, with majors in data structures and C++ programming language. He has also won the 'Atulya Award' for his efforts towards raising $100,000 for an India-based farming project.

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