Cryptos bounce back after Friday’s China-fueled selloff as investors ‘buy the dip’

Bitcoin rally meets resistance as price approaches its 200-day moving average


Cryptocurrencies staged a solid recovery Monday following Friday’s slump, when China declared all crypto-related transactions illegal in the country, intensifying its crackdown on digital assets. Bitcoin
BTCUSD,
+1.47%
rose above $43,000 on Monday, from its Friday low of below $41,000, while ether
ETHUSD,
+1.41%
returned to above $3,000, after trading below $2,800 on Friday. 

The number of bitcoins held by long-term holders has reached a record high of 80.5%, Matt Blom, global head of sales and trading at Eqonex, wrote in a Monday note, citing data from Glassnode.  Traders in the Americas have been “buying the dip” of bitcoin and some other smaller coins, as they consider the Friday crash “an overreaction,” crypto exchange Kraken’s OTC desk wrote in its Friday notes.  So far, tokens of decentralized exchanges such as dYdX and Uniswap have been leading the price rebound, as Chinese investors turn to them as alternatives to over-the-counter crypto services, such as those provided on crypto exchange Huobi, which was particularly targeted in the country’s most recent strike. On the other hand, centralized crypto exchanges such as Huobi, OKex and Binance, with large market share in China, have been slow to reclaim the losses.  China’s crackdown on crypto has resulted in more companies restricting or shutting down their Beijing operations. Increasing activity on decentralized exchanges   Over the past 24 hours, the trading volume on decentralized crypto exchange dYdX rose 163%, reaching $8.7 billion, according to CoinMarketCap. In comparison, the 24-hour trading volume for Nasdaq-listed centralized crypto exchange Coinbase
COIN,
+0.18%
was about $3.1 billion. A centralized crypto exchange relies on middlemen, unlike a decentralized exchange.

“The capital that has been stored in centralized exchanges in the past [in China] will be moved on-chain to decentralized wallets,” Vince Yang, co-founder of decentralized exchange zkLink, told MarketWatch in an email.  “What’s yet to be known is whether dYdX and other decentralized platforms will capture all of the capital flow,” Yang wrote. “Right now, most decentralized exchanges are not prepared for a large number of users and trading volume.” The token of Uniswap
UNIUSD,
+2.22%,
another major decentralized crypto exchange, recorded a more than 40% surge since Friday.Huobi to retire Chinese users’ accounts; Ethereum mining pool SparkPool shuts down After China issued its most recent crypto ban, the token of crypto exchange Huobi global has fallen 37%, recently trading at $7.60. Huobi terminated new customer registration in China starting last Friday, and will “gradually retire existing Mainland China user accounts” by Dec. 31, the company said in a Sunday statement.  “At the same time, we want to ensure the safety of these users’ assets,” Du Jun, co-founder of Huobi Group, parent company of the Huobi Global exchange, said in a statement. “Customers will be able to transfer their assets to other exchanges or wallets over the next few months.” Du said he expected any short-term impact on Huobi’s revenue to be mitigated, as the company’s businesses outside of China accounted for nearly 70% of its total trading volume. Meanwhile, China-based SparkPool, one of the world’s largest Ethereum mining pools, said Monday that it will shut down all its services by Sept. 30, according to a statement on its official WeChat account.  The company had stopped providing services to new users from mainland China since Friday, it said. 



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