It’s a double whammy for Bitcoin (BTC) investors this week. After Elon Musk single-handedly crashing Bitcoin and the overall crypto market, the Chinese central bank PBoC gives another hammer blow. On Tuesday, May 18, the Chinese central bank warned local financial institutions and businesses from dabbling into cryptocurrencies.
Bitcoin (BTC) and the overall crypto market have come under severe pressure. The Bitcoin price tanked another 10% making a low of $40,347 as of press time. Another $200 billion have been eroded from the crypto market in the last 24-hours. The overall crypto market cap has once again tanked under $2 trillion and is currently at $1.94 billion. Of this 50% or over $90 billion erosion has been contributed by Bitcoin alone.
China’s crypto ban news has been nothing new for crypto investors. In a jointly issued warning, the three Chinese state-backed financial institutions said:
“The prices of cryptocurrencies have fluctuated wildly recently. Speculation has returned, which seriously damages people’s asset safety and disrupts normal economic and financial order.”
This statement from the financial institutions further strengthens Beijing’s restrictions on financial firms and preventing them from further involving in any crypto-related activities. Speaking to Bloomberg, Adam Reynolds, CEO for APAC at Saxo Markets said:
“It’s no surprise to me, as Chinese capital controls can be challenged by cryptocurrency purchases in the country and transfers out of the country. So avoiding use of them in the country is essential to maintaining capital controls. The only tolerable digital currency to a government with strong capital controls is their own CBDC.”
Bitcoin Skeptics Growing With Traders Staying Fearful
With this sharp price crash and Bitcoin breaking below its crucial support levels, Bitcoin traders have been skeptical of buying the dips at this point. There’s was a major spike in Bitcoin derivatives bearish options as reported by on-chain data provider Skew analytics.
— skew (@skewdotcom) May 18, 2021
However, the technical chart and Bitcoin’s 14-day Relative Strength Index (RSI) showed that Bitcoin is in the oversold regions.
#Bitcoin daily RSI finally closed oversold for the first time since March, 2020.
— The Wolf Of All Streets (@scottmelker) May 19, 2021
$40,000 stands as the crucial support for the BTC price as of now. If it falls further, the next support levels stand at $30,000.