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Bitcoin: China causes BTC to slip - 2-year low in sight

Cryptocurrency Nov 28, 2022 22:58
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Investing.com - Like most "risk" assets, Bitcoin is starting this new week in the red, with a recent low of around $16,050, while the cryptocurrency spent most of yesterday around the $16,500 mark.

At the time of writing, BTC/USD is thus showing a drop of almost 2% since yesterday, to $16,200, and remains stable over a week.

As is the case with stock markets, this weakness in Bitcoin is linked to the risk-averse sentiment hovering over global markets on Monday, as rare protests in China worry investors around the world.

Unrest in China hurts Bitcoin

Chinese civilians clashed with police in several cities, including Beijing and Shanghai, over the weekend as public discontent with the zero COVID policy reached a fever pitch after a deadly fire in western China last week.

The clashes also come after riots broke out in Zhengzhou following the government's reimposition of a lockdown in the city.

One risk is that the unrest in China could lead to further constraints in the global supply chain, resulting in a tougher fight against inflation and thus the risk of central banks raising rates more than currently expected, which would be detrimental to cryptocurrencies as well as all speculative assets.

Proportion of Bitcoin on exchange platforms at 4-year low

In more Bitcoin-specific news, and more positive for the cryptocurrency, we note that data from blockchain data analysis company Santiment shows that the amount of Bitcoin present on crypto platforms has fallen below the threshold of 6.95% of the total supply.

This is the first time since November 2018 that this figure has fallen below 7%. This is a positive factor in the long term, as investors' retention of their bitcoins outside of platforms suggests a long-term holding intention. In contrast, an increase in the amount of bitcoin present on platforms is interpreted as an imminent intention to sell.

Santiment noted that the trend of taking Bitcoins off of exchange platforms and storing them on crypto wallets has been around since March 2020, but was significantly accelerated by the FTX bankruptcy case.

Technical thresholds to watch for on Bitcoin

Finally, from a charting perspective, last week's low of $15,500 and the psychological threshold of $15,000 will be the first potential supports to consider if Bitcoin continues to fall below $16,000. Note that a drop below $15,500 would put the crypto back on a 2-year low.

On the upside, the short-term charts allow us to identify a first intraday resistance around $16,600, before the psychological threshold of $17,000.

Bitcoin: China causes BTC to slip - 2-year low in sight
 

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