China’s Third Largest Lending Bank’s Anti-Bitcoin Notice makes BTC Price Tumble to US$32,258.06: What’s Next?

June 23, 2021
China’s Third Largest Lending Bank’s Anti-Bitcoin Notice makes BTC Price Tumble to US$32,258.06: What’s Next?

Agricultural Bank of China, the third-largest bank of China, said that it’ll not participate in any kind of virtual currency transactions and related activities. In its notice, the bank also said that they will close a customer account and also terminate customer relationships that they find to be participating in virtual currency transactions and related activities. This notice made the Bitcoin price tumble to near the US$32,258.06 level. The concerned bank statement was deleted in just 15 minutes after being published. However, the damage was already done. 

China becoming a Headache for Cryptocurrency Miners and Enthusiasts

China has come up as the latest headache for Bitcoin bulls. After a crackdown on BTC miners in recent weeks and Chinese officials reiterating the country’s restrictions on Bitcoin and other cryptocurrencies (which is in effect since 2017), the Agricultural Bank of China’s announcement was the recent anti-crypto move of China.

In a series of tweets, CEO of asset manager Capriole, Charles Edwards, has said:

“Half the Bitcoin network has now been shut down by China. Bitcoin hash rate at levels of mid-2020.”

He went on to say:

“The Bitcoin network has just experienced the biggest attack in its history… The worst case scenario for a China mining ban has now played out.”
Paulo Ardoino, the Chief Technology Officer at Bitfinex said:
“Ah more China FUD. Glad we are consistent.”
FUD refers to “Fear, Uncertainty, and Doubt”.

There are many others who believe that the shift away from China-dominated cryptocurrency mining will benefit the crypto industry globally. With the continued restrictions on mining and other activities related to Bitcoin and other cryptocurrencies, miners have started to shift to friendlier and more reliable jurisdictions. 

While commenting on a farewell message from a crypto-miner in China’s Sichuan province, chief strategy officer at the Human Rights Foundation, Alex Gladstein, said:

“The China-dominated Bitcoin mining era may be coming to an end. It will be a source of rich irony for future historians to teach that the world’s free, open, and decentralized monetary network was secured in its early years by individuals inside a repressive dictatorship.”

What’s Next?

The tumbling down of the BTC/USD pair below the US$35,000 mark and then closer to the US$30,000 level on Monday has increased concern and confusion among the traders and investors. While the indicators are indicating a bullish turnaround, the Bitcoin price is moving in the opposite direction. 

A classic indicator of a bullish turnaround is the negative funding rate. This is confirmed by the moves of the seasoned hodlers. Even before the BTC price’s tumbling down on Monday, Bitcoin was ferreted away within the US$35,000-US$40,000 range. 

Popular analyst and statistician Willy Woo said:

“Oh my, Rick Astley is back. Coins are moving back to the HODLer who never deserts his BTC.”

“Rick Astley” is a popular metaphor for strong hands. 

Analyst William Clemente has pointed out the net position change data to suggest that “HODLers (are) stacking BTC heavily here”. His analysis pointed out that “reaccumulation” is happening and there is a significant similarity with the market conditions as in 2013. Just like in 2013, in 2021 also two bullish phases are being separated by a major retracement.

The fundamentals of the Bitcoin network have got a body blow with the crackdown of the Chinese authorities on the cryptocurrency miners in China (the latest being in the Sichuan province). These crackdowns have led to a significant fall in the hash rate (especially from its peak a few months back). As BTC price follows hash rate, analysts point out that both the fall in has rate and BTC price is temporary in nature. The inherent setup of the Bitcoin mining network and moving away of the miners to favorable jurisdictions are paving the way to future growth. 

Adam Back, CEO of Blockstream, has pointed out that the maximum effect of China on hash rate is just 39%. He said:

“PSA to front-run the next round of confused china hashrate FUD: hashrate has NOT halved, you are looking at VERY inaccurate data. 7-day peak 130 EH, current 98 EH maybe -25% down. and ATH peak 160 EH vs 98 = -39%. please. get. your. basic. facts. right. when reporting. Thanks.”

Despite current external pressures, on-chain indicators are suggesting “oversold” position. A popular Twitter analyst Root said:

“So bearish today even though we are still hovering around the same range (~35k) totally in line with previous bull markets!”

Stock-to-flow model creator PlanB has said that he still remains highly bullish. He said that the worst-case BTC’s price scenario by the end of 2021 is US$135,000. 

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