On Sunday, the world's first cryptocurrency crashed down by 15% of its value, but by the end of the day, it managed to eliminate about half of the losses. However, the main thing happened – the bitcoin quotes went beyond the ascending channel, as well as below the critical line. Thus, the probability of the beginning of a long and strong correction is now very high. Recall that bitcoin, as well as the entire cryptocurrency market, collapsed due to the news of power outages in one of the provinces of China, which caused many mining farms to be disconnected and the hashrate of the network fell by 40%. This message sounded quite harmless yesterday, as the power outages are clearly expected to end soon. But a little later, it turned out that the power outage occurred in the region where the largest number of mining capacities in the country, which accounts for the largest number of mining farms, is located. Thus, up to 30% of the participants were immediately disconnected from the network, which led to panic and mass closing of long positions on bitcoin and on other cryptocurrencies.
A little later, another thing became known: it turned out that in the United States, the Ministry of Finance may launch an investigation against several large financial institutions that allegedly laundered money in cryptocurrencies. What these institutions are is not reported. By and large, this message can only be considered as rumors at the moment, since there were no official statements from the Ministry of Finance. Nevertheless, in total, these two events caused the effect of an exploding bomb and the cryptocurrency market crashed down.
At the moment, bitcoin is trading around $56,000 per coin, but the most important test is ahead. The European and US stock exchanges, which were closed on Saturday and Sunday, will open today, and we will be able to find out the reaction of large and institutional investors to the events of this weekend. Recall that some stock exchanges have bitcoin futures, as well as listed shares of companies associated with bitcoin. That is, for example, the shares of Tesla and MicroStrategy today can greatly decrease in price. In any case, no one knows how big investors will react to what has happened. At least on Monday, everything will depend on them, as private investors showed their reaction yesterday. If the sell-off continues, bitcoin will resume falling. Thus, it is still very early to relax, as anything can happen. Also, from our point of view, it makes no sense to buy bitcoin now, as several technical signals at once indicate the beginning of a correction.
In technical terms, bitcoin is fixed below the critical line, as well as below the ascending channel. According to all the canons of technical analysis and the Ichimoku indicator, a downward correction should now follow. However, we must also pay attention to one important fact: yesterday, BTC quotes fell exactly to the previous local low near the level of $50,770, and they bounced off it. This point, of course, hardly speaks in favor of the fact that the correction is complete, but it forced us to reconsider the support levels. Now, they are located at the following price values: $43,850, $50,770 and $55,990. Two of them were worked out yesterday.