Bitcoin is looking weak today after prices failed to hold above $17,000 levels at the weekend.
Coindesk's Bitcoin Price Index (BPI) fell to a low of $15,253 earlier today and was last seen trading at $15,345 levels. According to data source OnChainFX, bitcoin (BTC) has depreciated by 8.86 percent in the last 24 hours.
Notably, fears of a China crackdown on bitcoin mining may have weakened the bid tone around the world's largest cryptocurrency by market capitalization.
Caixin Global reported last week that local regulators in China may not longer offer discounted electricity and tax deductions to mining companies. Further, a leaked document now suggests that China's top internet finance regulator is requesting that local governments push bitcoin-mining operations towards an "orderly exit" from the industry.
Given that China is the world’s capital of bitcoin mining, and accounts for more than two-thirds of the world's processing power devoted to the process of securing the network, such moves – if proved to be genuine – could bring more pressure to prices of the cryptocurrency.
The technical chart also indicates an increased risk of a bearish breakdown.
The above chart (prices as per Coinbase) shows:
- Bear flag – a bearish continuation pattern. A downside break – i.e. a close below $14,460 (flag support) – would indicate the corrective rally from the low of $10,400 (Dec. 22 low) has ended and the sell-off from the record high of $19,891 has resumed.
- The relative strength index (RSI) is back below 50.00 (bearish territory).
- Since Dec. 21, trading volumes have remained well below the 30-day moving average. A sharp rise in volume on negative price action today (today) would boost odds of a bearish breakdown in prices.
- A high volume bearish flag breakdown (close below $14,460) would open doors for a drop to $10,400 (Dec. 22 low). A violation there would expose the next support lined up at $9,965 (100-day MA).
- Bullish scenario: Only an upside break of the flag would revive the bull run and shift risk in favor of rally to fresh record highs above $20,000.
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