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06.07.202116:09 Forex Analyse & Reviews: China furthers crypto crackdown with new restrictions

Bitcoin volatility continues to decline progressively in the summer. It looks like the cryptocurrency is becoming less interesting to the average person after its biggest drop in May this year. Against this backdrop, the Chinese authorities decided not to stop their "bitcoin crackdown" program and announced that they would soon take action against a number of companies that ignored the central bank's demand and continued to provide cryptocurrency-related services.

Apparently, the Chinese cryptocurrency market will soon go even further into the shadow sector, which will create new problems for the supervisory authorities. The largest cryptocurrency rose 3.7% to $35,094 before falling after the People's Bank of China and Beijing's local financial regulator announced that companies engaged in business in the field of cryptocurrencies need to close their businesses. The regulator requires financial and payment institutions to not directly or indirectly provide services related to digital currency, the PBoC and the Beijing regulator said in a statement. Among the prohibited activities are also marketing and promotion services.

Exchange Rates 06.07.2021 analysis

This suggests that although China does not yet directly influence the cryptocurrency by introducing a complete ban on it on its territory, its actions continue to exert pressure on the further growth of the industry in the country.

Bitcoin has long been under the crossfire of regulatory bodies not only in China but also in several other countries, as it is viewed as a threat to digital currencies that developed countries, including China, are planning to release soon.

Recently, China has been paying a lot of attention to the cryptocurrency industry, introducing restrictions on mining, trading, and other services, as well as putting pressure on banks and financial institutions that previously were involved in the purchase and sale of cryptocurrencies. Many miners have closed their business and are now trying to transfer it to other countries. This greatly affected the hashrate.

The situation is developing in a similar way in the UK. An increasing number of crypto firms out there are withdrawing their filings with the Financial Conduct Authority (FCA). According to the latest data, more than 64 firms have already withdrawn their applications and will not be able to work in the UK. Most likely, the list of cryptocurrency companies that refuse to register with the UK financial regulator will continue to grow. Companies wishing to provide cryptocurrency-related services in the UK must register with the FCA before doing business. However, the anti-bitcoin governance and this state of affairs endanger the whole existence of this industry in the UK. It is reported that only six firms have successfully registered with the FCA and that dozens more are being evaluated.

Let me remind you that recently the FCA announced that Binance is prohibited from engaging in cryptocurrency activities in the UK. The company has already removed all advertising material from its sites and mobile applications hosted and used in the UK. The exchange has also indicated on its website, social media channels, and all other communities that it is prohibited from operating in the UK. All transactions on Binance Markets are prohibited until a written order from the supervisory authority.

Exchange Rates 06.07.2021 analysis

As for the technical picture of Bitcoin, it has not changed in any way. Buyers have real problems with the breakout of the $36,000 resistance, which creates quite a lot of problems for further growth. A breakout of this range will lead to a new upward wave to the upper border of the side channel of $41,100. Only after the breakout of this range can we seriously talk about a new wave of BTC growth to the highs of $46,700 and $52,000. The bears face a completely different task. To begin with, they need to prevent Bitcoin from exceeding $36,000, but a breakdown of the lower boundary of the side channel around $30,000 will collapse the rate to the lows at $25,700 and $21,650.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2021
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