The bears of Bitcoin (BTC), who lost out in the end as 2021 ended, are now being blamed by China.
BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView
China’s “last hammer” may now be a source of optimism for Bitcoin
BTC/USD plunged $2,000 on Bitstamp hours before a small recovery saw a line below 2021 at $47,000. This data is from TradingView and Cointelegraph Markets Pro.
Although Bitcoin is a bit of an anticlimax, and far below popular projections it has seen recent explanations shift to exchanges for the absence of parabolic upside.
After years of tightening crypto trading regulations, Chinese users had until December 31 to withdraw from the major Chinese exchanges. They were required to deregister.
Bobby Lee, the former CEO of exchange BTCC said that this is the “last hammer” Beijing has and could have had a significant impact on selling behavior.
In a series tweets, he suggested that “Maybe that is why the hotly anticipated year-end bull market hasn’t taken off yet.”
“Waiting to see the last hammer drop in China!” We can expect a mini-correction once the enforcement news is out. Then, we could see a relief rally that could get us back on track to a true Bitcoin bull market.
Others supported this theory. Blockstream acknowledged this week that there could be pressure to offload Chinese users. These Chinese users could be selling BTC to withdraw capital. This could lead to higher balances.
This is also an opportunity to be optimistic going forward, as the Chinese exchange excess will be removed at the end of the month.
Blockstream analyst Jesse Knutson stated in the company’s weekly newsletter that he believes this explains why Bitcoin trades weaker during Asia hours than US or European hours.
“It’s also an opportunity to be optimistic going forward, as the Chinese exchange excesshang will be cleared by the end of the month.”
Balance chart for Bitcoin exchange BTC Source: Coinglass
Holiday volatility: Stay cool
Thin holiday liquidity, which could be for shorter periods of time, could also make it difficult to avoid price drops such as the one on Friday.
Related: First US Bitcoin ETF a dud’ in 2021, as GBTC discounts remain near record lows
BTC price action may not be reliable in predicting how the market will perform after Wall Street and institutional traders return.
This flush is not going in my favor. It’s not as clear (currently), as it was in late July (short squeeze setup), for example. It will happen, you just have to be patient. Clear invalidation points are why I advocated for them. $53K was a good price to not buy the top Monday.
— Will Clemente (@WClementeIII) December 31, 2021
One forecaster this week predicted that 2022 will see a significant “flipping” in Bitcoin ownership, with large-volume institutional traders taking over from retail.
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