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Crypto takes a new hit from China

Over the past week, bitcoin shed 8.77%, to $35,600. The world’s leading cryptocurrency came under pressure amid a dollar rally after the FOMC meeting. The Fed has revised its dot plot and is now calling for one or more rate hikes in 2023. Thus, Fed Chair Powell officially kicked off taper talk at the meeting.

The dollar rally lasted from Wednesday until the close of the trading week. Weekly losses of key currencies against the US currency exceeded 2%. US indices, gold and oil were also under pressure. During the flight from risk-sensitive assets, the dollar and US bonds morphed into defensive assets.

Other news also exerted a negative impact on the market:

  • The World Bank declined to help El Salvador adopt bitcoin.
  • The Sichuan government ordered local mining operations to shut down by June 25.
  • Authorities in the Chinese city of Yaan (southwestern Sichuan) promised provincial authorities to halt all Bitcoin and Ethereum mining operations within one year.
  • notified at least one local mining farm of its decision to close all bitcoin and Ethereum mines within its jurisdiction within one year.

The crypto bulls tried their best to defend themselves over the weekend, but on Monday news from China dealt another blow to the market. According to a tweet from Journalist Colin Wu, The Agricultural Bank of China has confirmed that it will not allow its services to be used for any virtual-currency transactions.

"The statement (of the bank) emphasizes that as soon as such actions are detected, the ability to conduct transactions on the account will be immediately suspended, the relationship with the client will be terminated and the relevant departments will be notified."

Plus, Binance CEO Chanpeng Zhao tweeted: "It takes multiple dips then ATH for people to believe." Apparently, he also wants to buy.

ATH is an abbreviation for all-time high. In the context of cryptocurrencies, this refers to the highest price point that any coin or token has ever reached in its history.

The bitcoin price action fell to $32,083, and ether to $1,950. The decline was modest as the dollar reverted to a correction on Monday. Oil, gold and currencies are all moving higher. A sharp rebound can also be seen S&P 500 index futures.

When the greenback turns into a defensive asset, the correlation between bitcoin and the S&P 500 increases. Bitcoin is now trying to correct higher amid a weakening dollar and heighted risk appetite. The price action currently hovers at $32,632.

On Sunday, the daily bar closed with a pin bar. The crypto bears wiped it out this morning on the back of negativity. The bulls are on the defensive at this point. Without a rebound, we could see another leg down, this time to $30k or even lower.

Selling pressure is so strong that there is no way to hold the 32k level, as technical signals show. More buying is needed to close the day at $35,700 so that a new pin bar can form. In this case, we could see the price action trend sideways, with a bounce to $40k amid a rebound in risk-sensitive assets on global markets.

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