Bitcoin tumbles below $60,000 as US regulation and China crackdown weighs

[MongiIG]

By Samuel Indyk. 16th November 2021

Investing.com – The price of Bitcoin fell back below $60,000 on Tuesday for the first time since 1^st November as the passage of the US infrastructure bill and a further crackdown on cryptocurrency mining in China weighed on most major digital coins.

US Infrastructure Bill

Yesterday evening the much talked about US infrastructure bill was signed into law by President Joe Biden. The legislation included new rules for the cryptocurrency industry that will expand the reporting requirements for brokers.

Under the new law, digital asset transactions that are more than $10,000 are required to be reported to the Internal Revenue Service (IRS). The recipient of the transaction will need to verify the sender’s personal information within 15 days of the transaction.

The new reporting requirement is scheduled to go into effect from 2024.

China Mining Crackdown

Further weighing on cryptocurrencies on Tuesday was additional comments emanating from China on cryptocurrency mining. The National Development and Reform Commission plans to further crack down on industrial-scale Bitcoin mining as well as any involvement by state companies.

China also announced it would consider punitive measures, such as higher power prices, on companies that flout the rules.

It’s not the first time that China has attempted to rein in the cryptocurrency industry. In June this year, China told banks and other financial institutions to stop facilitating transactions and banned mining currencies.

In September, China announced that all transactions of cryptocurrencies would be illegal.

Data from the University of Cambridge showed that Bitcoin network hashrate in Mainland China went to zero in July as miners moved out of the country. Previously, Mainland China’s share of the global hashrate had been as high as 75%.

It is unclear exactly what the motives are behind China’s blanket ban on cryptocurrencies, but some have suggested that China’s development of its own Central Bank Digital Currency (CBDC) may be why China wants to limit other cryptocurrency transactions.

Technical Picture

After dropping through $60,000, Bitcoin dropped towards its 50-day moving average around $58,750 before finding support and bouncing back towards $60,000.

A break below that level brings in support around $58,200 which is the low seen on 27^th and 28^th October. Below there and the $57,800 could act as support as it represents the 61.8% fib level from the September low to the November all-time high.

“Bitcoin has broken support at $60k, which could point to more losses unless it can break back above round number resistance,” writes interactive investor Head of Investment Victoria Scholar on Twitter. “Although this is shaping up to be the biggest one-day sell-off since Sept, its only at 3 week lows with a 33% further drop required to test the September trough.”

At 10:55GMT, Bitcoin was trading lower by 9.2% at around $59,800