Bitcoin (BTC) proves the loss at the last minute, when 2021 came to an end – and the consensus is forming around China again being the reason for the weakness.
China’s “last hammer” may now provide optimism about the BTC
Hours before the annual close, BTC/USD plunged $2,000 to lows of $45,630 on Bitstamp before a modest rally traced a line below 2021 at $47,200, data from Cointelegraph Markets Pro and TradingView show.
While somewhat anticlimactic and far below many popular forecasts, the lack of parabolic valuation for Bitcoin has recently seen explanations shift for exchanges.
Chinese users, after years of the government tightening the screws on the cryptocurrency trade, have had until December 31 to leave major Chinese exchanges, which have been forced to de-register them.
For Bobby Lee, former CEO of the BTCC exchange, this constitutes the “last hammer” in Beijing’s arsenal and may have had a considerable impact on sales behavior.
“Maybe that’s why the long-awaited year-end bull market hasn’t taken off yet,” he argued in a series of tweets about it in early December.
“Waiting for the latest blow to land in China! Expect a mini-fix when news of the application breaks out and then a rally of relief that could get us back on track for a real Bitcoin bull market.”
Other voices supported the theory, while this week Blockstream also acknowledged the possible pressure of offloading Chinese users, who could be selling their BTC in order to withdraw capital – leading to rising balances.
It is also a potential cause for optimism in the future, as the Chinese currency backlog will be released from the end of this month.
“I think that probably explains why we’ve seen Bitcoin trade typically weaker in Asian hours compared to US and European times,” wrote Blockstream analyst Jesse Knutson last week weekly newsletter from the company.
“It is also a potential cause for optimism in the future, as the pending Chinese exchanges will be released from the end of this month.”
Stay calm with holiday volatility
In shorter terms, the low liquidity of the holiday may provide another reason to rule out price drops like the one seen on Friday (31).
Prior to the return of Wall Street and institutional traders, BTC’s price action in general may provide an unreliable impression of how the market will behave later.
I’m not very confident in the direction of this flush. Don’t think it’s (currently) as clear as the end of July (sold tightening configuration) for ex. Just know it will come.
That’s why I’ve been advocating clear invalidation points. $53,000 went well in not buying the top on Monday.
– Will Clemente (@WClementeIII) December 31, 2021
2022, a forecast this week said, is likely to see a major “reversal” of Bitcoin ownership in favor of high-volume institutional traders away from retail.
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