Bitcoin began to fall rapidly after the news that three associations under the People's Bank of China issued a document prohibiting various institutions from doing business with cryptocurrency. It called on the public not to invest in this asset, emphasizing that all such operations are not protected by law. Recently, a huge number of new investors have appeared amid the popularity of altcoins in China. Naturally, this fact has attracted the attention of regulators. Although this warning was made only by the central bank, we can definitely conclude that the Chinese authorities are extremely concerned by the increased demand for cryptocurrencies and other altcoins.

In China, there are three official terms that are applied to the description of bitcoin: digital currency, cryptocurrency, and virtual currency. The attitude of China's government to digital assets radically differs from positive to negative.

News from China has more than once had a short-term impact on the market. Now, traders are rather nervous. Yet, about 77% of cryptocurrency wallet holders prefer not to give up their assets even at current prices even despite the warnings from the central bank. However, new resections on crypto in China may adversely affect bitcoin, pushing it to 29,000. These are the realities of cryptocurrency trading.

As for the technical analysis of BTC, it has not changed much compared to yesterday. Nevertheless, the bullish bias is weakening. As you can see on the chart, BTC is fluctuating in the area of 43,000. If BTC breaks through this range, it may reach the level of 37,900, and then quite possibly test the 33,300 level. Yet, if BTC breaks this level, it will trigger a strong bearish trend in the market, pushing bitcoin to the area of 29,000. The 200 daily moving average passes in the area of 39,500. Usually, when it is broken, a major downward movement occurs, which can be completed around 33,300. Bitcoin's growth will be limited to around 47,500 and 52,000.

If the technical picture is very bad, things are even worse with a number of key indicators of blockchain data. As noted in Glassnode, the market correction, among other things, was caused by new investors who sold off cryptocurrency in a panic, not understanding what is happening to the market and how to react. According to the SOPR indicator, which shows the short-term holders of cryptocurrencies, and the STH-SOPR indicator, which filters wallets and coins on them with a period of 155 days, both indicators fell below the key threshold of 1. It means that new market participants succumbed to panic and sold off BTC, incurring significant losses.

The SOPR indicator reading for long-term holders also tends to decrease but its value exceeds 4, which is generally not so bad.

There is also good news. The number of addresses that accumulate bitcoins continues to grow. The number of addresses with a non-zero balance has fallen by about 2.8%, indicating that long-term holders are buying up bitcoin after the latest price drop. Glassnode also notes that since bitcoin is still being sold at a much higher price than during the last bullish trend, a more significant number of investments is needed to boost BTC price.