Bitcoin is the primary price determinant for crypto, and from its price action, it is easy to deduce that the bottom is here. Its price action between June 21st and June 23rd paints a picture of crypto that has hit the bottom.
On June 20th, news started streaming into the market that China was cracking down on what remained of miners in the country. This saw Bitcoin crash for the better part of Monday (21st June). However, it found some support around $32,079.0 on the 23.6% Fibonacci retracement.
With the panic of a collapse in hash rate still present in the market, this support did not hold for long. What followed was a huge crash all through Tuesday (June 22nd) that saw Bitcoin test price levels below $30k. It closed Tuesday, trading at $29,240.4. This is not just support, but a crucial price level that, if broken, could see Bitcoin easily drop below $20k.
Interestingly, this support level proved to be pretty strong. By Tuesday night, the selloff was over, and Bitcoin was starting to show some green candles. This continued all through Wednesday, and as of Thursday 24th June, a clear uptrend was starting to emerge. Bitcoin has already smashed through two resistance levels and gaining.
What Does This Mean for Bitcoin?
The fact that Bitcoin held above a support level that would have broken it in the short term is a big deal. It means that Bitcoin has absorbed all the China FUD and priced it in, in the short term.
So why is this a big deal? Well, there may be multiple reasons why the market crashed in the first place, but China was the biggest one. China announced that it was cracking down on miners when Bitcoin was at highs of $64k. From that moment on, it has been a downward spiral for Bitcoin, up to Tuesday when it tested $29k.
The best part is that the recovery of the last 24-hours has touched altcoins as well. As such, if a Bull Run starts now, alt season would most likely be in too.
China Will Never be a Factor Again
Besides pricing in the Chinese crackdown on miners, it is noteworthy that China may never be a source of crypto FUD ever again. Back in 2017, the country cracked down on crypto exchanges. This means Chinese trading volumes are not a key determinant of overall trading volumes in the crypto market today.
Now that the country has wholly cracked down on miners, China will no longer be the determinant of the Bitcoin hash rate. If anything, mining will become more geographically decentralized, which is good for long term stability.
Regulators are Stepping up Their Game
Regulators across the world are waking up from their slumber with regards to crypto. In countries as diverse as the United States, Korea, to Nigeria, there is a growing awakening on the need for the authorities to offer clarity on crypto.
Enforcement is coming in too. This is evident in the move by the U.S DOJ to advertise for the position of a crypto attorney. In places like South Korea, exchanges are legally being forced to be more transparent about their dealings with customers.
While this may feel punitive in the short term, it lays the groundwork for the institutional adoption of cryptocurrencies. Already, institutional players like Goldman Sachs are laying down the infrastructure needed to draw in institutional money.
As the regulatory environment becomes clearer, institutions like pension funds could be more confident to bet on the market. Since most of them are betting on Bitcoin, the buying pressure it is creating could see the entire market test new heights going into the future.
Crypto usage is growing
Crypto has been a speculative investment for a long time. However, this is changing. More companies, and even public institutions, are increasingly accepting crypto for payments. In 2021, for instance, a number of real estates deals have been made in crypto.
The biggest pointer towards mass adoption is El Salvador. The Central American country recently made Bitcoin legal tender and is considering paying salaries in crypto.
Companies like Paypal have moved to integrate crypto into their systems too. All these points to a market whose value is moving beyond speculation, and more towards actual use. This is a factor that adds to the intrinsic value of crypto in the long term.
From a look at Bitcoin’s chart, it is clear that crypto is moving on from China FUD. The usage of cryptocurrencies is on the rise too, and El Salvador has opened the way for adoption in the public sector. A combination of these factors points to a market that has what it takes to grow to levels never tested before in the past.