Bitcoin Bounces Back, Still in Downtrend

Bitcoin prices have bounced back sharply from the $2,970 lows and are currently quoted at $3,974 dollars. Litecoin followed a similar pattern, hitting a low of $32.35 and is now at $54.48 dollars per coin.

Bitcoin Bounces From Lows

Bitcoin prices bounced hard from the $2,970 lows to a hit a high of $4,103 earlier today. We have since dropped a bit after renewed bad news from China.

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According to a Wall Street Journal article, China will go much further than just banning exchanges in the country. Plans may include banning OTC (over the counter) trades as well as restricting the access to foreign exchanges, by putting them behind the great firewall of China. There are fears that even bitcoin mining could be affected, if the country blocks all bitcoin transactions, like some have speculated. With 65% of BTC mining in China, this could have a severe impact on the bitcoin network in the short-term. As the WSJ says:

”Until now, Chinese miners considered themselves immune from Beijing’s evolving stance on bitcoin trading. One entrepreneur said miners are now worried about authorities moving to limit their operations. Using VPNs as a workaround will be difficult, he said, referring to virtual private networks that allow users to circumvent China’s so-called Great Firewall.”

This is still a developing story and no new actions have been taken by the Chinese government since the exchange ban. It remains to be seen just how far they will go.

Technically BTC/USD remains in a downtrend on the daily charts. To end it, the bulls will have to push us above the $4,378 swing high. A new rally, however, requires a break of the all-time high at $4,960 dollars. On the weekly and monthly charts, bitcoin remains in a bull market.

Litecoin in Downtrend as Well

With the break below the $60.55 swing low, Litecoin ended the rally. And with the break of the important $50 round figure, it joined big brother in a downtrend. Prices traded as low as $32.35 on FXOpen before a market bottom was found. We are currently trading at $54.48 dollars.

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Despite the sizeable bounce, LTC/USD remains in a downtrend on the daily charts. A breakout above the $72.36 swing high is needed to end it. A move beyond the all-time high at $93.60 dollars would restart the rally. The large drop pushed Litecoin in a range on the weekly charts. The monthly is still looking bullish.

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Petar Kotevski

Petar is a forex trader and writer with 9 years of experience in financial markets. He has been following bitcoin since 2010. A year ago, as the BTC market matured, he started getting more involved by writing articles on bitcoin and other alternative currencies.

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