Bitcoin Price Analysis: BTC Slumps As China Bars Financial Institutions From Servicing Crypto Businesses

Daily Bitcoin BTC Price Forecast

Last Updated July 23rd 2021
3 Min Read
  • Bitcoin price looks to drop below the $40,000 psychological level.
  • The MACD shows increasing bearish market momentum.
  • Since May 9, the Bitcoin price has crashed from $59,000 to $40,000 – losing almost $20,000 in the process. The main cause of this recent dump, along with Tesla kicking out Bitcoin payments, is the fact that Chinese government has officially banned financial institutions from servicing businesses that deal with cryptocurrency payments. Three industry bodies said in a joint statement:

    "Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people's property and disrupting the normal economic and financial order." 

    The Bitcoin Price Sits On Top Of 200-day SMA

    Over the last ten days, the Bitcoin price has flashed three separate sell signals:

    • The 20-day and 50-day SMAs have been flipped from support to resistance.
    • The MACD shows increasing bearish market momentum.
    • The parabolic SAR has flipped from positive to negative.

    Image: BTC/USD daily

    Bitcoin BTC Daily Chart

    Bitcoin price has a strong support line at the 200-day SMA ($39,800). As per the IOMAP, previously - at this level - ~175,000 addresses had purchased ~ 162,000 BTC coins.

    Image: IntoTheBlock

    Bitcoin BTC Volume Chart

    Exchange Outflows Going Up

    BTC Exchanges Outflows

    According to the Kostas Flow chart, “Total Exchange outflows at highest level since 3/2020. Someone is buying the dip.”

    Plus, according to “Dilution-proof” a well-known crypto analyst:

    “#Bitcoin supply depletion of all exchanges slowed down since Nov 4th & is increasing since Apr 19th ..but if you zoom in, you see that supply depletion of spot exchanges has accelerated since Dec 8th Fire Increasing derivative exchanges reserves has skewed the overall picture”

    Musk Denies Bitcoin Dump

    Elon Musk recently denied rumors that Tesla has sold its remaining Bitcoin holdings. The comments came after his second attack on Bitcoin, where he called out the dominance of Chinese mining pools in a now-deleted tweet.

    Last week, Musk announced his firm would no longer accept Bitcoin as payment for its electric vehicles. The reason he gave was a growing concern about the use of highly polluting coal by miners. This coincided with a mass sell-off in which Bitcoin's prices were impacted, closing the day down 13% to $49.5k.

    Musk took to Twitter again to say that Bitcoin is highly centralized due to the small number of mining pools that control the network. He noted that coal is a significant power source for miners, despite counter claims that the network runs mostly on renewable sources. 

    A single coal mine in Xinjiang flooded, almost killing miners, and Bitcoin hash rate dropped 35%. Sound decentralized to you? 

    Musk's tweet received many responses. Analyst "@CryptoWhale" suggested that Tesla will sell their Bitcoin holdings. They added that if that happened, Bitcoiners would only have themselves to blame. He was referring to the outpouring of hate directed at Musk.

    Mr Whale BTC Tesla Tweet

    Musk replied to the tweet with a response of “indeed.” Some publications interpreted this as confirmation that Musk had already dumped his Bitcoin holdings. But he later clarified that Tesla has not dumped its BTC holdings.

    To clarify speculation, Tesla has not sold any Bitcoin. 

    Bitcoin Price Is Expected To Reach These Levels

    The Bitcoin price could drop below the $40,000 psychological line and the 200-day SMA, if the current bearish market sentiment continues. If this does happen, all eyes will be on the $35,500 support barrier.