Bitcoin Tests Support At $40,000 As China Bans Financial Firms From Crypto Business

Bitcoin Video 19.05.21.

Bitcoin’s Sell-Off Continues

Bitcoin and other cryptocurrencies found themselves under pressure after China decided to ban financial firms from providing services to crypto business. In addition, China warned investors and traders about the dangers of speculative trading activity in crypto markets.

China stated that huge volatility of the crypto markets was dangerous for people’s property and was disrupting the normal financial order.

Not surprisingly, China’s decision had a chilling effect on the crypto market. Ethereum moved below the $3,000 level after China’s statement. It has already lost more than 30% of value since it reached all-time highs on May 12. Dogecoin made an attempt to settle below the $0.40 level, and other cryptocurrencies were under similar pressure.

China’s move is a significant blow to the bullish thesis as cryptocurrencies will clearly need wider adoption to justify their current market capitalization. I’d also note that China is the world leader in Bitcoin mining, and it remains to be seen whether mining will have to face additional regulatory pressure in the upcoming months.

Technical Analysis

Bitcoin settled below the support at $42,000 and is trying to settle below the next support at $40,000. I’d note that RSI has moved into the oversold territory, and the risks of a rebound are increasing.

If Bitcoin manages to settle below $40,000, it will head towards the next support level which is located at $37,000. A move below this level will open the way to the test of the support at $35,000. In case Bitcoin declines below $35,000, it will move towards the next support at $32,000.

On the upside, the previous support at $42,000 will serve as the first resistance level for Bitcoin. In case Bitcoin manages to get back above this level, it will head towards the resitance at $44,000. A move above the resistance at $44,000 will push Bitcoin towards the next resistance at $46,000.

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