Overnight, the bitcoin price flash crashed to $9,100 across major crypto exchanges in the likes of Bitstamp and Coinbase, dropping by nearly seven percent against the U.S. dollar.
The bitcoin price flash crashed to $9,100, recovered beyond $9,500 within minutes (source: coinmarketcap.com)
Within minutes, however, the bitcoin price surged from $9,100 to over $9,500, rebounding beyond $9,700 at the day’s peak.
Throughout the past week, various reports suggested that the investigation into BitMEX by the Commodities and Futures Trading Commission (CFTC) and the pending case of Bitfinex have been factors behind the volatility in the crypto market.
Some technical analysts have stated that the volatility in the crypto market has been caused by the indecisiveness of traders battling for control over the market, which bears have had a strong hand in mid-July.
Josh Rager, a cryptocurrency technical analyst, said that based on the short term movement of bitcoin, if the asset falls below a key support level at $9,420, it may signal further downtrend.
“Price still needs to break above $10,830+ and close for higher-high Close under the previous daily support ($9,420s) would be bearish On higher time frames, price is in a potentially large range Hammer reversal candle is bullish but I’m neutral at the moment,” he said.
For fundamental factors, growing efforts of the U.S. to strengthen its oversight on the cryptocurrency sector are being considered.
According to MEHR News Agency, the government of Iran has authorized cryptocurrency mining, allowing individuals and businesses to file licenses with the Ministry of Industry, Mine and Trade.
“According to the decision, those who use cryptocurrencies should accept its risks and the government and banking system will not provide any guarantees for them. It also notes that using digital money in domestic transactions is not allowed,” the local report read.
Amidst rising tension between the U.S. and Iran, there exists a possibility that the U.S. government expresses concerns over the potential usage of crypto assets by Iran to circumvent the sanctions imposed by the U.S. government.
In July, Iran is said to have breached the Iran Nuclear Deal established with the U.S. and other countries by acquiring low-enriched uranium. The government of Iran noted that it was a response to the abandonment of the deal by U.S. President Trump and it intends to break other parts of the deal in the future.
Following the remarks of Treasury Secretary Steve Mnuchin and President Trump on the usage of crypto assets to finance illicit activities, the sudden approval of cryptocurrency mining by Iran could result in the U.S. tightening policies around the market.
On July 26, Bloomberg reported that Secretary Mnuchin hinted at the imposition of new regulatory frameworks for the cryptocurrency sector.
“We’re looking at all of the crypto assets. We’re going to make sure we have a unified approach and my guess is that there are going to be more regulations that come out from all these agencies,” Secretary Mnuchin said.
Alternative cryptocurrencies such as Ethereum, Bitcoin Cash, XRP, and Liteoin have struggled to outperform bitcoin since the beginning of the year, with most assets being down by well over 70 percent from their all-time highs.
Some assets including Litecoin and Bitcoin Cash are down more than 90 percent against the U.S. dollar, unable to demonstrate signs of short term recovery.
Click here for a real-time bitcoin price chart.
Last modified: March 4, 2021 2:39 PM