The Bitcoin (BTC/USD) price sell-off resumed as concerns of tightening monetary policy and China crackdown continued. BTC declined to $32,639, which was substantially lower than Wednesday’s high of almost $35,000.
BTC demand wanes
Bitcoin and other cryptocurrencies have seen their demand wane in the past few months. That happened as many investors started exiting their positions after the strong performance.
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Investors have been worried about several things. First, there are concerns about the energy used to mine Bitcoin. Since BTC is based on a proof-of-work mechanism, it uses a large amount of energy to produce. This has made it almost impossible for many institutional investors to buy the coin because of ESG concerns.
Second, China has intensified its crackdown on the assets. It has already blocked some of the top influencers in social media. Further, it has asked Baidu to block search results for keywords like OKEx and Binance. Most importantly, the country has asked financial companies to avoid dealing with individuals and companies dealing with the coins.
Also, it has intensified its crackdown on Bitcoin miners. As such, there are concerns that these miners will dump cryptocurrencies, which will lead to more supplies.
Third, the Bitcoin price has struggled because of expectations that the Federal Reserve will start tightening. In last week’s Fed interest rate decision, policymakers sent hints that they will start hiking rates in the next two years. There are also indications that the bank will start exiting its quantitative easing program soon. As such, investors are still remembering how Bitcoin prices crashed in 2018 as the Fed made 4 rate hikes.
Finally, there are concerns that the US government will add more regulations in the industry after the recent high-profile ransomware attacks. Hackers linked to Russia, North Korea, and Iran have been accused of stealing billions of dollars.
Bitcoin price prediction
On the daily chart, we see that the BTC price has crashed in the past few months. That has helped push the coin below the 50, 100, and 200-day exponential moving averages. Indeed, the 50-day and 200-day EMAs are forming a death cross.
Further, the coin has formed a bearish flag pattern that usually sends a bearish signal. It has also moved below the 50% Fibonacci retracement level. Therefore, the BTC price will likely keep falling, with the next reference point being the 2017 high at $20,000.
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