By Samuel Indyk
Investing.com – The price of Bitcoin dropped below $33,000 on Monday on further evidence that China is looking to clamp down on cryptocurrencies and as the technical picture flashes a major sell signal.
China crackdown
On Friday, the local Development and Reform Commission’s Energy bureau in the province of Sichuan, China ordered the largest 26 local mines to stop operating as an investigation was conducted.
The probe will last until 25th June and has been viewed as a warning to many Bitcoin miners that it is time to relocate outside of China.
Local governments in other Chinese provinces with major cryptocurrency mining operations have also recently announced plans to halt mining, including in Qinghai and Xinjiang.
A video widely circulated on social media showed employees at what looked like a large cryptocurrency mining operation in China switching off the servers.
Further weighing on prices was a notice published on Agricultural Bank of China’s website that said the bank would not be participating in virtual currency transactions and related activities. AgBank, which is one of China’s big 4 banks, said customer accounts participating in such activities will be closed and customer relationships would be terminated. However, the notice on the website was deleted just minutes after being published.
Technical Picture
A major technical sell signal was formed in Bitcoin over the weekend where the 50DMA crossed below the 200DMA, marking what is known as a ‘Death Cross’.
The ‘Death Cross’ typically signals short term momentum has slowed and is a major signal that technical chartists follow. However, the last time a ‘Death Cross’ was formed in Bitcoin, in March 2020, a deeper sell off did not occur and a ‘Golden Cross’, when the 50DMA breaches the 200DMA to the upside, was formed two month later.
Bitcoin now trades at its lowest level since 8th June and further downside support is seen at $31,500 before the key psychological $30,000 level, according to OANDA Senior Market Analyst Jeffrey Halley.
At 10:30BST, Bitcoin was trading around $32,800, down 7% in the last 24 hours. Other major cryptocurrencies were also trading with losses with Ethereum dropping below $2,000 for the first time since 23rd May.