Bitcoin Drops on China Rumors

FXOpen

The crypto-market took a set back last week after rumors about new China restrictions. Bitcoin dropped from $725 to $675 on Fxopen during a short 12-hour period. Litecoin followed a similar pattern that day, falling from $3.99 to $3.80 in 8 hours.

Bitcoin Drops $50 on China Rumors

Bitcoin prices dropped $50 or close to 7 percent on November 3rd on speculation about new China restrictions. According to a news story that first appeared on the Bloomberg terminal, Chinese officials are mulling restrictions on domestic bitcoin exchanges. The new rules would impose limits on moving certain volumes of bitcoin and other digital currencies abroad. Allegedly officials are worried that the exchanges are used to circumvent domestic capital restrictions.

btcusdh4-nov8-copy

If the restrictions are imposed, it could have a negative impact on the price of bitcoin because the majority of trading happens on Chinese soil. But until we get confirmation from government sources or the exchanges themselves, this news is in the realm of speculation.

On the technical front, the November 3rd drop didn’t break any major support levels. Thus the rally is still underway. To end it, the bears will have to push prices below the $670 level. But a new downtrend wont be triggered until bitcoin falls below the $622 swing low as well. Above here more support can be found in the $640-$650 area.

On the upside, weak resistance can be found at this month’s high of $730. A stronger level however will be this year’s high on Fxopen at $744 dollars. This is followed by the multi-year high printed on other exchanges this year near the $800 handle. On the Chinese side, prices formed a double top pattern, peaking at 5180 Yuan few months ago and this month almost matching that level at 5150 Yuan. A decisive breakout above this resistance level would nullify the pattern and likely intensify the gains.

Reaction to US Election

There is growing speculation among the crypto-trader community that a Trump win in today’s US election would lead to a bitcoin rally. We expect that, similarly to Brexit, a Trump win will only have a short-term positive effect in the crypto-market. Any rally should be short-lived and will likely fade in the next few days. You can read more opinions about the US election reaction HERE.

Litecoin Loses Fight with $4 Resistance

Litecoin lost the fight with the $4 resistance area, mainly due to bitcoin-induced selling on the China ban news. On the chart below you can see the reaction in LTC/USD.

ltcusddaily-nov8-copy

Litecoin is the second most trader crypto-currency in China and any restrictions will likely affect LTC users as well. The major LTC/USD levels haven’t changed much, for more on this please take a look at our previous article HERE.

FXOpen offers the world's most popular cryptocurrency CFDs*, including Bitcoin and Ethereum. Floating spreads, 1:2 leverage, 30% margin call, 0.01 lot minimum transaction size with no maximum — at your service. Open your trading account now or learn more about crypto CFD trading with FXOpen.

*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules respectively. They are not available for trading by Retail clients.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Cryptocurrencies

BTC/USD Analysis: Bulls Lose Progress Amid SEC Defeat Bitcoin Trading Volumes Fell to a Minimum of 4 Years BTC/USD Price Analysis: RSI Drops to Lowest Since March 2020 BTC/USD price analysis: The Price of Bitcoin Collapses by about 8% in One Day Market Analysis: XRP/USD Price Rolls Back to Important Support

Latest articles

Trader’s Tools

Momentum Trading Strategies for Day Traders

Momentum trading is a highly-regarded trading strategy used to seize opportunities in trending markets. This article explores momentum trading and offers two comprehensive strategies for capitalising on rising and falling markets. What Is a Momentum Trading Strategy?Momentum trading is

Trader’s Tools

Selecting a Reliable Broker

When it comes to trading and investing, choosing the best online brokerage service is crucial. There are many options available, so it can be difficult to decide which one to go with. To choose wisely, you need to look at

Indices

Market Analysis: S&P 500 Falls amid News from the Fed

Yesterday was an important evening that had an impact on many financial markets. The Federal Reserve (as expected) kept the rate at the same level. According to Powell: → The full effect of tightening the monetary policy has yet to be

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.