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FX.co ★ What contributed to Bitcoin's collapse?

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Crypto Analysis:::2021-09-21T10:20:07

What contributed to Bitcoin's collapse?

Bitcoin closed the previous trading week at $ 48,000, which inspired optimistic investors before the weekend. But considering the historical context, we could expect a weakening of the cryptocurrency's positions and a local pullback to support levels. This would have happened all other things being equal, but we should not rule out the fundamental factors that were not on the side of BTC, which worsened the decline of the coin this week.

When determining the further dynamics of Bitcoin's movement, it is important to take into account third-party factors that are not related to various metrics. The news background played the main role here, which can contribute to the price increase but may also be the reason for a mass sale. Bitcoin's collapse on the night of September 20 was indirectly provoked by the negative news background and contributed to the adoption of short and medium-term BTC holders of decisions to sell their coins. This is clearly visible on the fear and greed index, which fell to the level of 27.

The fear and greed index is an indicator that reflects the current sentiment of the cryptocurrency market. The value can range from 0 to 100, where the indicator 0 indicates fear, a bearish market, and a desire to sell. As for the value of 100, the market is in euphoria caused by the growth of quotes, which means a bullish market and active investments.

What contributed to Bitcoin's collapse?

Despite the gradual recovery of Bitcoin's positions, its audience is skeptical, which means that a local sale may begin anytime that will put pressure on the price of the main cryptocurrency. When Bitcoin declined by 8%, a lot of news appeared in the information background that could contribute to the collapse of the asset. First of all, the alarming statements were published by the Turkish government, which opposed cryptocurrencies and decided to develop a state-owned digital currency. Back in the summer, a ban on the use of cryptocurrencies as a means of payment was introduced in the country, and the regulator is actively involved in the development of a draft law on the regulation of cryptocurrencies. The document will be considered in October 2021, and experts are inclined to believe that Turkey's current policy will be commensurate with the expulsion of mining from China at the end of July in terms of the degree of influence on the market.

Another important news that has been floating in the information space for some time is the termination of the work of more than 40 crypto exchange operators in South Korea. This will limit access to the cryptocurrency market for millions of users, which will also negatively affect the quotes of coins. The final and extremely disturbing news is the SEC investigation into the largest crypto exchange Binance on the fact of money laundering and opaque transactions.

There was a negative news background on the cryptocurrency market, which caused the fall in bitcoin quotes. And although this is not able to significantly affect the price locally, it will be extremely difficult for BTC to recover to its usual positions. A while ago, the coin is trading at $43,500, where a strong support zone is concentrated. A bearish candle is forming on the daily chart, which indicates the continuation of the downward movement. Technical indicators of the coin also indicate that Bitcoin's downward dynamics will resume. The MACD indicator has crossed the zero mark and entered the red zone, while stochastic and RSI are moving into the oversold zone.

What contributed to Bitcoin's collapse?

At the same time, a strong buyer appeared on the hourly chart, who is trying to absorb the volumes of coins offered by the bears. Due to this, the price has slightly stabilized near the support zone of $ 45,200. The technical indicators of this digital asset have also acquired an upward direction, but the main reason for optimism is the development of a bearish triangle, which may indicate a continuation of price growth.

Similar dynamics are also visible on the four-hour chart, which indicates the beginning of the recovery period. If this trend continues, the coin will try to return to the key position of the current fluctuation area at $45,000. However, we should note the negative news background, which can worsen and collapse Bitcoin's quotes again, and therefore is an important auxiliary tool when analyzing the current and further movement of the BTC price.

What contributed to Bitcoin's collapse?

Defining terms:

A bearish candle is a figure on the horizontal charts of cryptocurrencies, the opening price of which is higher than the closing price.

The oversold zone is an area on the technical chart that is below the 40th mark and indicates a powerful sale of the cryptocurrency, which increases the pressure on the price and contributes to its fall.

The bearish triangle is a technical formation on the charts of the cryptocurrency, showing the prerequisites for further price movement. Going beyond the bearish triangle can be considered a powerful signal to buy.

Analyst InstaForex
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