The crypto-market took a set back last week after rumors about new China restrictions. Bitcoin dropped from $725 to $675 on Fxopen during a short 12-hour period. Litecoin followed a similar pattern that day, falling from $3.99 to $3.80 in 8 hours.
Bitcoin Drops $50 on China Rumors
Bitcoin prices dropped $50 or close to 7 percent on November 3rd on speculation about new China restrictions. According to a news story that first appeared on the Bloomberg terminal, Chinese officials are mulling restrictions on domestic bitcoin exchanges. The new rules would impose limits on moving certain volumes of bitcoin and other digital currencies abroad. Allegedly officials are worried that the exchanges are used to circumvent domestic capital restrictions.
If the restrictions are imposed, it could have a negative impact on the price of bitcoin because the majority of trading happens on Chinese soil. But until we get confirmation from government sources or the exchanges themselves, this news is in the realm of speculation.
On the technical front, the November 3rd drop didn’t break any major support levels. Thus the rally is still underway. To end it, the bears will have to push prices below the $670 level. But a new downtrend wont be triggered until bitcoin falls below the $622 swing low as well. Above here more support can be found in the $640-$650 area.
On the upside, weak resistance can be found at this month’s high of $730. A stronger level however will be this year’s high on Fxopen at $744 dollars. This is followed by the multi-year high printed on other exchanges this year near the $800 handle. On the Chinese side, prices formed a double top pattern, peaking at 5180 Yuan few months ago and this month almost matching that level at 5150 Yuan. A decisive breakout above this resistance level would nullify the pattern and likely intensify the gains.
Reaction to US Election
There is growing speculation among the crypto-trader community that a Trump win in today’s US election would lead to a bitcoin rally. We expect that, similarly to Brexit, a Trump win will only have a short-term positive effect in the crypto-market. Any rally should be short-lived and will likely fade in the next few days. You can read more opinions about the US election reaction HERE.
Litecoin Loses Fight with $4 Resistance
Litecoin lost the fight with the $4 resistance area, mainly due to bitcoin-induced selling on the China ban news. On the chart below you can see the reaction in LTC/USD.
Litecoin is the second most trader crypto-currency in China and any restrictions will likely affect LTC users as well. The major LTC/USD levels haven’t changed much, for more on this please take a look at our previous article HERE.