BTCUSD is still in an uptrend for now as it moves inside an ascending channel on the 1-hour chart. However, price is making another test of support and might be considering a break lower. If so, a short-term selloff could ensue and take price back to the lows around $750.
The 100 SMA is above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. Also, the 100 SMA is close to the bottom of the channel, adding another line of defense in case of a spike lower. However, a break below the moving averages could be enough confirmation that bears have taken control of price action.
If support around $890-900 holds, BTCUSD could still climb back to the channel resistance around $940-950. Stronger bullish momentum could take it back up to the $1000 level but that might be a long shot given the recent market developments in China. Also, RSI is heading south so bitcoin price could follow suit. Stochastic is moving down but is already dipping into oversold territory, possibly leading to a turn higher and return in buying pressure.
Still, industry updates suggest that further losses could be in the cards as a couple of major bitcoin exchanges in China recently announced that they would no longer be offering margin trading accounts as these would magnify the risks involved in bitcoin trading. The Chinese government has stressed that bitcoin is inherently volatile and carries a higher than usual amount of risk compared to other assets.
Meanwhile, Chinese authorities continue to investigate bitcoin exchanges and clients in the mainland, leading many to speculate that more firms will announce changes in their offerings as well. Officials have been stressing the need to conduct checks on anti-money laundering and KYC, and these threaten the anonymous nature of bitcoin transactions.
These restrictions could wind up discouraging more bitcoin activity in the mainland, dampening price gains and volumes. China is the largest market of bitcoin so any constraints in that arena could have major repercussions. Nonetheless, persistent uncertainties in the global markets could be enough reason for some investors to keep holding on to bitcoin.
For one, there’s the upcoming Trump inauguration that could cause a riot in US assets. A lot of profit-taking activity is expected in the hours leading up to the event and the President’s speech but some have pointed out that a repeat of the US stock market rally after the November elections could take place.
Another source of uncertainty is the Brexit negotiations, after UK PM May previously reiterated that they are willing to forego access to the single market in exchange for immigration controls. She has also stressed that making things difficult for the UK during the negotiation process could backfire on the EU so there is some degree of unease in European markets for now.