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Bitcoin prices plummeted nearly $ 1,000 on Thanksgiving Eve, recording their worst dip in three weeks as traders grappled with overbought conditions and rumors of tighter regulations.
The flagship cryptocurrency hit an intraday low of $ 17,150 in the early Asian hours on Monday, down more than 12 percent from its year-to-date peak of $ 19,500 set a day earlier. The collapse further accompanied lower volumes and an attenuated momentum oscillator, suggesting that the market was simply cooling down after an inexorable rally for seven straight weeks.
Bitcoin corrects to the downside to neutralize its overbought sentiment. Source: BTCUSD on TradingView.com
However, the sell-off of the Bitcoin market has accelerated, particularly after Brian Armstrong, famous for Coinbase, warned about tougher cryptocurrency regulations in the United States.
Cold wallets at risk
In a Twitter thread, the CEO She said that his company “has heard rumors” about US Treasury Secretary Steven Mnuchin’s plans to introduce new rules for “self-custody portfolios” by the end of his term.
The open nature of cryptocurrencies allows anyone to create a private wallet by downloading third party software onto their computers / smartphones or through hardware devices that store digital assets. These types of self-custody solutions are cheaper than traditional financial services and ensure privacy.
But the rumored regulation seems to limit many of these features. Mr. Armstrong noted that – if Mr. Mnuchin approves the law – they should carry out identity verification on every user who downloads his software wallet. This could potentially put their financial privacy at risk.
“[The regulation] sounds like a reasonable idea on the surface, “he explained.” However, in practice it is a bad idea because it is often impractical to collect identifying information about a recipient in the crypto economy. “
Many cryptocurrency users send cryptocurrencies to various online merchants, paying for goods and services. Does it make sense to require customers to help verify a company’s identity before they can purchase a product there?
– Brian Armstrong (@brian_armstrong) November 25, 2020
Bitcoin Bulls defensive
Despite the growing uncertainty of the US Treasury, Bitcoin recorded an interesting rebound after reaching $ 17,150.
Bitcoin forms a large bearish wick in a sign of bullish rejection. Source: BTCUSD on TradingView.com
BTC / USD recouped around 4 percent of its losses immediately after the crash, leaving behind a long wick famous for defining false breakout moves. It means that traders are still short-term bullish on Bitcoin, believing that the cryptocurrency will continue to rise upward in a favorable macro environment.
“The average influx of all trades increased a few hours ago,” said Ki-Young Ju, CEO of the data analytics platform CryptoQuant. “It indicates that the whales, relatively speaking, have settled BTC to exchanges. But long-term on-chain indicators say buying pressure prevails. I still think we can get over 20,000 in a few days. “
Meanwhile, some traders expected the price to continue falling further before finding a support level to attempt a rebound towards $ 20K.
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