Chinese burn
“When crypto prices fall, the lurches lower can be rapid,” said Adam Samson and Katie Martin in the FT. We saw as much when the price of bitcoin plunged by 12% in a day on Tuesday, taking the price below $30,000 for the first time since January and dragging down many other “alt-coins”, including ethereum and dogecoin, with it.
The “dominant driver”, according to Michael J. Saylor of MicroStrategy, was further regulatory pressures from China – once the centre of bitcoin production – which has banned the “mining” of bitcoins in major provinces. The country’s central bank has also warned several of the largest state-owned banks and Jack Ma’s Alipay to “identify” and “block” bitcoin transactions.
Death crosses
Bitcoin recovered some ground midweek, said Bloomberg, rising to $34,000 on Wednesday. But it is still down by almost 50% since its April peak of $65,000 – and that has got some “chart-watchers” nervous. “Any meaningful break below $30,000 is going to make a lot of momentum players throw in the towel,” said Matt Maley of Miller Tabak + Co. According to Sean Rooney of Valkyrie Investments, “bitcoin traders could find themselves in choppy waters for weeks to come”.
Traders are muttering about “death crosses” (an ominous chart pattern), said The New York Times. But crypto supporters are still looking “past short-term pain”. Some are optimistic that mine operators will move to the US – particularly Texas, where the governor, Greg Abbott, is promising to make the state a “crypto-leader”, said the Daily Express. There’s also hope in El Salvador, which has adopted bitcoin as legal tender. “China doesn’t have the moral character to mine bitcoin,” said pundit Max Keiser. “America and El Salvador do.”
Harsh lessons
One of the more remarkable findings of the UK financial regulator’s report on cryptocurrencies is that 2.3 million adult Britons are now invested – up from 400,000 a year ago, said Nils Pratley in The Guardian. “The most extraordinary”, though, is that 12% of consumers think crypto investments are “protected”. Nope. “If you lose your shirt on bitcoin, you are not going to be compensated.” There may be some harsh lessons learned this week.
