fell below $30,000 on Monday for the first time in a month and kept declining over the course of the trading day, reaching the next strong support around $29,290. Bears have already made three attempts to break below this barrier since the beginning of this year, but the bulls would always seize the initiative back.
The recent dynamic suggests that the world's most popular cryptocurrency is increasingly perceived as a risky asset. When risk appetite dominates the market, the BTC rate rises. When traders abandon risky assets and move their capital into safe-haven instruments, Bitcoin falls along with the market. This week was no exception. Investors' fears that an increase in the number of new coronavirus cases in many regions of the world could lead to the renewal of restrictions and lockdowns triggered a total risk-off sentiment. As a result, the global stock market faced the largest selloff in several months. Along with the stock markets, the capitalization of the crypto industry has also significantly decreased. Nevertheless, on Wednesday, sentiment improved again, which helped BTC quotes to recover. This was facilitated by traders' awareness that new lockdowns, similar to those in 2020, are unlikely.
Despite the fact that the Bitcoin rate has recovered and climbed back above the $31,000 mark, most experts believe that the potential for BTC correction has not yet been exhausted. The Robinhood platform, which plans to go public next week, warned potential investors on Monday that cryptocurrency trading is likely to crash in the third quarter, hitting the company's bottom line.
The negative news backdrop keeps supporting bitcoin sellers. First of all, it's worth mentioning the ongoing pressure on the Binance exchange. The National Commission for Companies and the Stock Exchange that oversees the Italian financial services industry said that the site has no right to provide investment services in the country and that investments in digital assets are risky. The Maltese Financial Services Authority has also stated that Binance does not have a license to operate. Clear Junction, a British digital payment processing platform, has also cut its ties with the crypto exchange, saying that it will no longer process payments related to Binance.
Meanwhile, China keeps cracking down on BTC mining. According to local media reports this week, the State Grid Corporation of China circulated a document demanding a complete halt of cryptocurrency mining, explaining it by the general lack of electricity in the country. To date, 90% of mining companies have completed their business in China, and this number may increase in the near future.
With that said, we recommend that you don't rush into BTC purchases to see how the market behaves in the coming days. The BTC/USD bears will most likely make another attempt to test the $20,000-25,000 range. After that, we can expect a long-term recovery in prices, back to their previous highs in the $60,000 region.