- An alternative explanation
- Is the $40K level next?
Earlier today, the price of Bitcoin, the leading cryptocurrency, plunged to an intraday low of $85,694, according to CoinGecko data.
This comes after the People’s Bank of China (PBOC) vowed to intensify its crackdown on virtual currencies, stressing that cryptocurrency-related activities are considered illegal financial operations.
The statement specifically singles out “stablecoins” (cryptocurrencies pegged to real-world assets like the US Dollar). The bank argues that stablecoins fail to meet requirements for customer identification and anti-money laundering (AML)
The central bank reiterates that virtual currencies are not legal tender.
China has historically taken a very strict stance on cryptocurrency. They banned crypto exchanges in 2017 and banned crypto mining in 2021.
Officials warned of a recent surge in speculative trading, which likely prompted the recent warning.
An alternative explanation
Meanwhile, former BitMEX CEO Arthur Hayes claims that the sharp Bitcoin (BTC) price drop was likely triggered by expectations that the Bank of Japan might hike rates in December. He has noted that the yen is currently very weak, which might prompt the BOJ to tighten its monetary policy.
Is the $40K level next?
If the price of Bitcoin drops below the high $70,000s, it will enter this lower support area, according to trader Peter Brandt.
Bitcoin’s next major correction could see its price drop from the high $70,000s all the way down to the mid-$40,000s.
Brandt has joked that the “shipmates” of Strategy CEO Michael Saylor might soon start asking about lifeboats.