Bitcoin crashed after the bans by China’s authority, and big investors use the opportunity to buy.
For the first time, information that China bans the cryptocurrencies’ circulation appeared on September 3. Soon after bitcoin started to decline from a local high above $52,800. The local low was reached on September 22 at around $39,800. Following the king of cryptocurrencies, almost the entire market rolled back down. Market capitalization has decreased by almost a quarter, from $2.28 trillion to $1.73 trillion. Experts call this period FUD (fear, uncertainty and doubt) and are assessing that the People’s Bank of China aims to destroy the cryptocurrency market or cause unacceptable harm.
On September 24, the PBoC issued a new memorandum in which it announced a ban on all cryptocurrency transactions. Bitcoin dropped again after it was recovered to nearly $45K, now it crashed by 8%. This is when institutional investors have made their move. According to investment firm CoinShares, big funds have increased their BTC holdings over the past week, taking advantage of the dip of the leading cryptocurrency. This brings hope for the upcoming bitcoin rising. The actions of the People’s Bank of China increased the volatility of cryptocurrencies but did not damage the market. And experienced investors and traders got the opportunity to use volatility to their advantage.
According to a new report by CoinShares, the inflow of funds into cryptocurrency assets from the side of institutionals has been growing for the sixth week in a row. Last week, the inflow amounted to $95 million, which is 26% more than a week earlier. Investment in BTC grew by 234%. In league with the king of cryptocurrencies, institutionals have also invested in Solana (SOL), Cardano (ADA), and Polkadot (DOT).
Analysts note that the historically banning measures of the Chinese authorities are driving the cryptocurrency market up following a short period of decline. In September 2017, the Chinese government banned citizens from using cryptocurrency exchanges and participating in ICOs (initial coin offering – investments in cryptocurrency startups). Soon after that, the price of BTC skyrocketed from $4K to $20K.
Popular strategist Raoul Pal of Real Vision notes that he has also bought the low in anticipation of the price increase, he has no more funds to invest. He says:
– I added the dip last week [and] earlier this week, and I have no cash left to put in.
The expert predicts the rally beginning in 2-3 days.