More crypto pain coming from China this week. After the ICO and ICO exchanges ban announced last week, authorities could be banning bitcoin exchanges as well. Prices understandably crashed on the news, hitting a low of $3,969 on FXOpen before rebounding.
China Moving to Ban Crypto Exchanges
According to two major financial publications, Chinese authorities are drafting regulations that will ban all crypto exchanges from operating in the country. The news first broke on Friday in Caixin, a Chinese finance publication. On Monday a similar report was published in the Wall Street Journal. According to the articles, it appears that Chinese regulators plan to ban all crypto exchanges from operating in the country. Over the counter (OTC) trading as well as in-person trading would be tolerated.
The news crashed bitcoin prices to a low of $3,969 on FXOpen, with similar lows around the $4,000 level hit on most Western exchanges. Chinese sites traded to a low near the 20,000 Yuan mark ($3,100) before rebounding strongly. They are quoted at 26,800 CNY right now, or around $4,123 dollars per coin. Bitcoin is trading at $4,327 on FXOpen.
If the reports are indeed true, why are prices rebounding strongly? There is disbelief in the crypto community about the validity of the ban, with many calling it FUD (fear, uncertainty, doubt) or fake news. However, it seems unlikely that Chinese regulators would remain silent for days if they weren’t the ones who initially leaked the news to reporters.
The most likely scenario is that a ban on crypto exchanges will be announced in China soon. What’s not so obvious is where prices will trade after the initial decline. Technically, the important levels to remember are $3,930 and $5,000. A breakdown below $3,930 could start a new downtrend in prices, while a move above $5,000 would restart the rally. On the weekly and monthly charts, BTC/USD remains in an uptrend.
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