It almost seemed like there would be no action this weekend as volume dropped and most traders took a few days off to spend time with their families. However, Santa decided to liven up this weekend and cash out a few thousand coins. It is no surprise to see Bitcoin’s price slide on the weekend as that is a relatively common pattern, however, combined with Christmas today’s dumps set quite a panic on the market as Bitcoin’s price dropped over 10% in a matter of hours. In our last night’s technical analysis, we mentioned how volatility is incoming as multiple TA factors suggested, today’s drop confirmed our suspicion.
There are a few theories as to why Bitcoin’s price crashed $50 today. The most popular seems to be the fact that the Yuan is showing signs of recovery after loosing value as a direct symptom of China’s capital controls. As you can see in the chart below, the CNY / USD exchange rate has been increasing since August.
Chart Source: http://www.xe.com/currencycharts/?from=USD&to=CNY&view=1Y
Furthermore, the yuan is only allowed to rise or fall by 2 percent from the average parity rate each trading day, meaning that while we may only see a 20 cent increase, the Chinese Yuan maybe be gaining more value back then we think.
As WellsHunter mentions on r/Bitcoin, Zimbabwe has decided to start using the Chinese Yuan as the main currency for their country. According to this article:
Zimbabwe announced to adopt the Chinese Yuan as its legal currency after China canceled its $40 million debt. Once the foreign institutions meet the criteria and receive approval from the China Foreign Exchange Trading System Center (CFETS), they are allowed to enter the inter-bank foreign exchange market and trade all the listed products.
After an upwards move into the demand level, the trend has stalled, and we stalled again giving us a double top at demand. We have multiple reversal candlestick patterns at the top of the range, showing us graphically where the bears were going to step in.
~$375 is simply a breakout retest of previous resistance that confluences nicely with 62% fib retracement and midpoint of a bullish daily orderblock. A nice opportunity for longs to fill pre ‘halving pump’ H1 2016
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