Introduction:
Bitcoin has been making headlines for its price volatility, with the world’s most famous cryptocurrency trading around $27.6K at the time of writing, which is below its 50-day moving average and remains at the lows of the last two months. While the bulls can’t gain more than a pause in the slide, the market has yet to return to the upside. Moving out of the $27-28.5K range can start a broader move towards a breakout with targets at $25K and $30K, respectively. In this article, we’ll discuss what’s causing the pause in the slide, the potential for a broader move towards a breakout, and the impact on the cryptocurrency market.
What’s Causing the Pause in the Slide?
One of the primary reasons behind the pause in the slide is the crackdown on Bitcoin mining in China. China’s State Council’s Financial Stability and Development Committee recently announced plans to crack down on Bitcoin mining and trading activities in the country, citing financial risks. This has led to a significant drop in the hashrate, or the computing power used to secure the Bitcoin network, which has caused a decline in Bitcoin’s price.
Another reason behind the pause in the slide is the rising regulatory scrutiny of the cryptocurrency market. Countries around the world, including the United States, Japan, and South Korea, are looking to regulate the cryptocurrency market to prevent money laundering and other illegal activities. This has caused uncertainty in the market, which has led to a decline in Bitcoin’s price.
Potential for a Broader Move Towards a Breakout
Despite the pause in the slide, there is potential for a broader move towards a breakout. Bitcoin’s price has been consolidating between the $27-28.5K range, which has acted as a resistance level. However, if Bitcoin can move out of this range, it can start a broader move towards a breakout with targets at $25K and $30K, respectively.
The recent news about Tesla resuming Bitcoin payments is a positive development for the cryptocurrency market, which could help Bitcoin break out of its current range. Additionally, the upcoming Bitcoin 2021 conference in Miami, Florida, could also bring positive news and momentum to the cryptocurrency market.
Impact on the Cryptocurrency Market
Bitcoin’s decline has had a significant impact on the cryptocurrency market, with other cryptocurrencies also experiencing a drop in price. However, some cryptocurrencies have managed to outperform Bitcoin during this period, including Ethereum and Binance Coin.
Ethereum, the second-largest cryptocurrency by market capitalization, has been making headlines recently due to the growing popularity of decentralized finance (DeFi) applications built on its blockchain. This has led to an increase in demand for Ethereum, which has helped it outperform Bitcoin during this period.
Binance Coin, the cryptocurrency of the Binance exchange, has also outperformed Bitcoin during this period. This is due to the growing popularity of the Binance Smart Chain, which is a blockchain that allows for the creation of decentralized applications and smart contracts.
Conclusion
Bitcoin’s price volatility has been a cause of concern for investors, with the cryptocurrency trading at the lows of the last two months. However, there is potential for a broader move towards a breakout if Bitcoin can move out of the $27-28.5K range. The crackdown on Bitcoin mining in China and the rising regulatory scrutiny of the cryptocurrency market are the primary reasons behind the pause
