Bearish Sentiment Prevails as China Issues Another Crypto Ban

By Harry Smith

Affected by the news that the Federal Reserve maintained the benchmark interest rate unchanged at 0%-0.25%, the US stock and cryptocurrency markets, which had been dipping for many days, rebounded positively. NFT and the metaverse sector saw the most significant rise. And scaling-related projects received closer attention from investors. With BTC coming back to the heavy pressure zone, long/short ratio was significantly lower. Bearish sentiment prevails as the People’s Bank of China released a ban this Friday triggering a plunge in cryptocurrency prices.

Strategy Analysis

The news that the Federal Reserve left its benchmark interest rate unchanged sent the cryptocurrency market on a rally. And its chairman Powell said that a report on central bank digital currencies, stablecoins and cryptocurrencies will be introduced soon, which means that the US government will increase its supervision of digital currencies in the future. However, South Korea, one of the world’s largest cryptocurrency markets, set September 24 as the deadline for exchange registrations, negatively impacting the crypto market.

Good news also exists. Cryptocurrency exchange Bakkt was approved by the SEC for its upcoming IPO, ARK Ark Fund bought 92,500 shares of Coinbase stock this week, and US-listed company Zhenghe Technology added 8,500 new bitcoin miners, indicating that institutional investors are still entering the crypto market and become a dominant force. However, this Friday, the People’s Bank of China and other departments released the Notice on Further Preventing and Disposing of the Risks of Hype in Virtual Currency Transactions, causing an overall crash in the cryptocurrency world.

Market Analysis

BTC: After a few days of shock last week, BTC saw a plunge in the early part of this week to break below $40,000, but then rebounded sharply and kept climbing in recent days, briefly standing on the $44,000 line before diving again to $42,000 due to policy reasons. Bearish sentiment prevails with the support expected to be around $42,000, and a lower support line expected to be near $40,000.

ETH: The trend in ETH is not promising, as the price has fallen below the important support of $3,000 multiple times this week. The two big drops have offsetted the last wave of gains. Looking at the daily average line, the Bollinger band is curling down, with price falling below the lower support. Although it rebounded after hitting rock bottom just like bitcoin, the average lines are above the K line to form a suppression, indicating a weak upward momentum. Due to policy reasons, it plunged again with the support line expected to be around $2800, and a lower support line expected to be near $2650.

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