First Elon Musk, then China: two big supporters criticize the well-known cryptocurrency. This now has drastic consequences for the course.
IIs that the end of the big cryptocurrency hustle and bustle? In any case, on the night of Wednesday, the Bitcoin price slipped below the $ 40,000 mark. The center of the crypto world, at the same time the oldest and the one with the largest volume, has lost more than 30 percent of its value within eleven days. In mid-April it was still $ 63,530.
What worries crypto supporters is that China has now clearly positioned itself against cryptocurrencies. The Chinese central bank had once again emphasized that digital currencies should not be used as a means of payment. They seriously violated the security of public property and disrupted the order of the economy and the financial system, said three industrial associations via the National Bank’s WeChat account.
Since this is just a repetition of an already known point of view, it might not have been that bad.
But it comes at an inopportune time. Because a few days ago, Tesla boss Elon Musk had already sent the course clearly downhill with statements. Musk had only triggered a price increase at the end of February with the statement that Tesla used Bitcoin as a means of payment and had invested in it.
However, after Tesla announced that they would no longer accept Bitcoin and Musk criticized the currency’s environmental footprint, and then seemed to indicate at the weekend that Tesla had sold part of its Bitcoin holdings or had previously sold some of its Bitcoin holdings, something came together that made the Bitcoin Course now almost drops into the abyss. By the way, Musk denied on Monday that Tesla had made further sales. However, the company had given up part of its holdings in the first quarter.
The end of the crypto bull market?
For the crypto disciples, this borders on treason and they let Musk feel it too. Opinions differ on the entrepreneur. His extroverted, often controversial demeanor, especially on social media, has made him something like the enfant terrible of the established business world and the revolutionary hero of technology disciples who transferred their own uncritical attitudes to him.
The same applies to China, which they have repeatedly seen as the model for the introduction of crypto currencies. Elsewhere, however, you are not so surprised. It is the latest chapter in China’s efforts to tighten the noose around the crypto world, said Antoni Trenchev, co-founder of crypto lender Nexo, told Bloomberg news agency. Buying cryptocurrencies threatens the effectiveness of China’s capital controls, said Adam Reynolds, Asia-Pacific director of derivatives trader Saxo Markets. So it is essential to avoid using them in the country. The government can only use a digital currency that it controls itself. It is no secret that in China, especially under Secretary General Xi, it is ultimately only about power.
The Chinese position on cryptocurrencies was clear from the start, writes Ipek Ozkardeskaya, senior analyst at Swissquote Bank: Trading and the use of cryptocurrencies are simply prohibited. Therefore, the news is actually nothing “new”, but crypto traders are currently sensitive to negative news. Musk comments barely made Bitcoin a more serious asset class, said David Bianco, DWS’s chief investment officer for America. Under these circumstances, it appears to observers to be more than a fashion trend and popular culture.
The industry is trying to appease: The statement does not mean any new regulatory steps, said Yu Lingqu, Vice Director at the Chinese Development Institute on Bloomberg, all the more since it was written by three industry associations. Liu Yang, a lawyer at the DeHeng law firm, said it was of lesser importance. For Bobby Lee, founder of the crypto custodian Ballet, authorities and associations just want to be careful. They had the impression that the market was overheating and that only the best of the people was on their mind.
Of course, you don’t know whether the current development will (once again) be the end of the crypto bull market. But at least it is the end of the most recent spike in speculation that began in mid-December. Bitcoin has entered a medium-term consolidation zone, writes Ozkardeskaya. The indicators pointed to a further sell-off. The next key support level is near $ 37,000, followed by the $ 30,000 mark as major technical support and vital psychological support. In the short term, there is the possibility that the course could fall under it. It should not be forgotten that the price had previously fallen from $ 20,000 to $ 3,000. “The Titanic is made of iron and can sink,” the analyst concludes. This is consistent with the patterns of earlier rashes. However, the price at the end of a cycle was always a multiple of the starting level.