InstaForex

August 24, 2021

China continues to crack down on miners

 As we mentioned earlier, the last round of bitcoin's growth looks really strange. The cryptocurrency has grown by almost $21,000 in total over the past few weeks, despite the fact that there were no good reasons and fundamental factors for this. Moreover, these reasons are not observed even now, when bitcoin, in fact, continues to grow steadily. At the moment, the quotes of bitcoin are exactly around the level of $50,000 per coin, which can also be a psychological level. However, we have already said earlier that whatever the reasons for the growth or fall of bitcoin, whatever the fundamental background, if a clear trend is indicated, then you should trade according to this trend. And now, there is a clear trend at the disposal of traders. The trend line on the 4-hour timeframe still maintains an upward trend, so there is simply no signal for a possible fall yet. Therefore, the strategy now can be as follows: we expect a fall, but we trade for an increase while the price is located above the trend line.


Meanwhile, in Yunnan Province, China, the authorities issued a decree that orders all hydroelectric power plants to stop supplying energy to mining farms. All power plants in the region have been ordered to turn off cryptocurrency mining enterprises, as well as to dismantle all "data centers" on their territory. They must report on the implementation of this decree by tomorrow. As of April 2021, when the repression of miners in China had not yet begun, Yunnan Province generated almost 9% of the Chinese bitcoin hashrate. Earlier, China banned the mining of cryptocurrencies in the regions of Qinghai, Xinjiang, Inner Mongolia, and Sichuan.


Some experts support the current growth of bitcoin and believe that it can continue on the basis of a positive fundamental background. However, we are talking about a positive fundamental background for the entire cryptocurrency market and individual cryptocurrencies. For example, the possible reasons for the strengthening of bitcoin are the future hard fork in the Ethereum network, the launch of smart contracts in the Cardano network. Experts also believe that the news about SpaceX's investment in bitcoin could have a positive impact on the cryptocurrency. From our point of view, this is not the reason for the growth of the first cryptocurrency. Bitcoin has been going up in price for more than a month almost without a rollback. Either a new wave of buying is based on faith, or traders and investors are rushing to buy as much bitcoin as possible before the new legislation is passed in the United States.


Technically, bitcoin continues to be in an upward movement on the 4-hour timeframe and has overcome the level of $47,500, which is the minimum of April 26, as well as 50% of the movement from the absolute maximum of the value to the minimum of 2021. Thus, the next target for the growth of the first cryptocurrency in the world is the level of $51,350. It is advisable to sell bitcoin as soon as the price is fixed below the ascending trend line. The first target in this case will be the level of $43,852.