January 27, 2023

What caused the sharp drop in the rate of Bitcoin?

What caused the sharp drop in the rate of Bitcoin?

The reason for the sharp collapse of Bitcoin, and with it the entire crypto market, seems to be established. The thing is that the Chinese government dealt a powerful blow to cryptocurrency exchanges in the country and threatened to eliminate any opportunities for trading digital currencies.

China brought down Bitcoin

Ban on the activities of cryptocurrency exchanges inChina has been operating since 2017, but until now, people could get around it through the "gray" and illegal platforms. Apparently, the authorities decided to end this: the country's central bank announced that all illegal exchanges would be closed, and any attempts to create a cryptocurrency exchange point would be stopped at the very beginning.

Increased attention to exchanges bygovernment caused by a chain of factors. After the country's president announced the intention of China to become a leader in the development of blockchain technology, the interest of the people of China in cryptocurrencies has grown tens or even hundreds of times. Of course, many of them decided not to waste time and invest in bitcoin, which led to its growth a month earlier. They hoped that after the president’s words, cryptocurrencies would be legalized, but in reality everything turned out differently.

Seeing that the statement of the head of the country led togrowing demand for cryptocurrencies, the authorities decided to block any channels for its purchase. Only at the beginning of the investigation, almost 40 sites operating in the country were announced, and every day the number of found exchanges will grow. As a result, we observe how all this brings down Bitcoin.

Reasons for the fall of Bitcoin

The connection between all this is simple. Residents of China who own the cryptocurrency began to mass sell it. This is due to a well-founded fear that soon they will no longer have such an opportunity. As a result, a sad situation arises: a month ago, the Chinese began to buy bitcoin on a massive scale, and now all this is thrown back to the market.

Because of this, Bitcoin has already lost 10% per day, dropping to $ 7.140 at the time of writing the news. Trading volumes rose to nearly $ 30 billion, which also underscores the panic sale.

There is only one question left: when will the collapse end? By the morning of November 23, the BTC depreciation ended and he was able to find a support level at around $ 7100-7200. How the market will behave further is impossible to predict, so now all that remains is to remain calm and not make rash transactions.