Another exciting week in the crypto arena. Both bitcoin and litecoin clocked some gains since our last weekly update. But will these gains stick?
Bitcoin Drops on PBOC Comments
Bitcoin prices dropped from $1,255 to a low of $1,170 today on comments by PBOC’s Zhou Xuedong. The official said that while bitcoin exchanges will not be forbidden, strict regulations will be applied to the sector. The PBOC will undertake an observation period and may even close non-complying exchanges. Zhou Xuedong is the director of the PBoC’s Business Administration unit and was the person in charge of the audit conducted on bitcoin exchanges earlier this year.
This tone is the strongest yet to date from the People’s Bank of China so it’s not surprising to see the price fall a decent amount. However, BTC/USD has recovered about half of the losses already and is quoted at $1,226 right now. Chinese prices remain suppressed as bitcoin withdrawals are still not possible. One coin is selling from $1,150 t0 $1,165 on the Big Three, a discount of over $70 dollars from USD exchanges.
The uptrend is still in play, to end it we need to see a break below the $1,100 figure. A new downtrend will start on a breakdown below $990 dollars per coin. With the ETF deadline on March 12th, a decision should happen by Friday at the latest. With approval odds pegged at around 43% right now, the decision is viewed as a coinflip by markets. Thus either outcome could send prices up or down by 15-20 percent or possibly even more.
The move could happen faster than most people would be able to react and stops may be executed at unfavorable prices. Because of all of the above taking pro-active steps like lowering or cutting exposure ahead of the event should be considered.
Litecoin Breaks to the Upside
Litecoin prices ended their downtrend and have now switched to the upside. We are quoted at $3.94 right now, a gain of 14 cents or 3.7 percent since last Tuesday.
After an initial surge to $4.32 that didn’t stick, we are currently sitting inside a resistance area. There are previous notable levels at $3.90, $3.93 and the $4 round figure. A break below $3.72 is needed to end the current rally. But a new downtrend requires a break of the $3.67 swing low as well.
It seems likely that LTC will continue to take its cues from bitcoin. Thus the bitcoin ETF decision could have an effect on litecoin prices as well, with approval sending prices higher and the reverse for a rejection or withdrawal of the application.