On September 8, Standard Chartered’s cryptocurrency research team predicted that Bitcoin prices could reach $ 100,000 in the last days of 2021 or the first few months of 2022. global. Advisor.
However, Bitcoin did not attract strong momentum, except that it slightly exceeded the price of $ 50,000 in the first week of September. The price of Bitcoin at the time of pressing is about $ 43,700. This is due to fluctuations between $ 41,000 support and resistance levels close to $ 50,000. So what is causing this downward pressure?
1. DeFi continues to grow exponentially
It goes back to last year. For most of 2020, the decentralized financial sector (DeFi) had unprecedented trading volumes, with thousands of crypto users closing their assets with various DeFi protocols to generate high interest rate returns. As a result, many investors are expected to take part in madness by converting Bitcoin stock into ether or other smart contract-backed tokens. From late 2020 to early 2021, DeFi-related activity declined temporarily, but the sector has seen a second wave of investment in recent months as non-fungible tokens (NFTs) have become prominent. I experienced it. On September 7, DeFi’s closed door set (TVL) totaled nearly $ 100 billion for the first time, according to DeFi Pulse. This latest increase has already outpaced last year’s growth, with TVL increasing 253% from $ 23.8 billion to $ 84.1 billion, compared to last year’s 183% ($ 8.39 billion to $ 23.8 billion).
Much of this new growth is due to the emergence of new competitors in distributed application spaces, including:
Each of these smart contract-centric platforms has already established its own native dapps DeFi ecosystem, offering lower rates and faster transaction speeds than current Ethereum blockchain technology.
2.2. Rise of NFT
DeFi isn’t the only one stealing the spotlight from Bitcoin. The NFT market was also very successful in 2021. The amount of money spent buying NFTs in 30 days increased dramatically from about $ 10 million in early 2021 to about $ 2.6 billion on September 17.
Due to the decline of DeFi and NFT, Bitcoin’s advantage (the total ratio of Bitcoin’s market capitalization to the market capitalization of cryptocurrencies) has decreased significantly. It was 69.7% at the beginning of the year, but is now about 41.9% lower. In other words, Bitcoin hasn’t received the same interest and attention as it did nine months ago. This may indicate why it was difficult to get the kind of buying pressure needed to exceed $ 50,000.
3. US regulatory pressure.
The US Senate recently approved a controversial infrastructure bill. This means a $ 1.2 trillion budget aimed at improving various areas of the economy. Part of the proposal includes amending the cryptocurrency tax rules to assist in the payment of this huge invoice. One of the changes includes requiring cryptocurrency brokers to report transactions. The requirement itself is seen as a way to ensure better tax compliance with crypto users in mind, but the main point of the controversy is the lack of a clear definition of the term “broker”. Cryptocurrency proponents argue that the term is too broad to be interpreted as including crypto miners, developers, and node verifiers who are not client fund managers.
There has been an attempt by a dual group of parliamentary crypto-friendly members to amend the bill, but many can be done to change the requirements for reporting crypto before it is passed by the bill. The sex is low. Historically, regulatory uncertainties like these have often affected Bitcoin’s performance. Next, there is an ongoing regulatory battle between US government security regulators and cryptocurrency lenders, including Celsius and Blockfi. Regulators claim that the interest-bearing crypto savings accounts offered by both companies violate state securities law. At the federal level, Bitcoin exchange-traded funds (ETFs) have not yet been approved in the United States because the Securities and Exchange Commission (SEC) maintains a cautious approach to cryptocurrencies. Analysts believe that Bitcoin ETF approvals could stimulate a new stream of interest for retail and institutional investors in Bitcoin. This can be essential to achieving a $ 100,000 price forecast.
The SEC does not seem to be very keen on Bitcoin ETFs fixed to physical Bitcoins, but it is unlikely that they will consider approving Bitcoin futures ETFs (ETFs with Bitcoin futures as underlying assets). 4. The dollar goes up
Following the release of the retail report in August, the dollar rose to a nearly three-week high in September. 17. Retail sales increased 0.7%, even though they were expected to decrease 0.8%. These data show that the US economy is on the rise and companies are adapting to the reality of new markets after the closure of COVID-19. Despite the outbreak of delta variants of the coronavirus, the desire to spend did not diminish. Thus, economic recovery means less interest in economic hedge assets such as Bitcoin. Another economic data that may have triggered a weak reaction in the Bitcoin market is that inflation in the US fell from 5.4% to 5.3% in August. Some people think this number is high compared to the historical numbers in the country, but others consider it a positive indicator because the situation may have been much worse.
5. China completely bans Bitcoin for the first time
On September 24, the People’s Bank of China (PBoC) issued a new statement on the illegality of cryptocurrency trading and mining, and cryptocurrency-to-cryptocurrency trading and cryptocurrency-to-legal tender trading are currently banned. I added that there is. This means that virtually all activities related to cryptocurrency trading, such as buying, selling and trading cryptocurrencies such as Bitcoin, Ethereum and Tether, have been banned for the first time in the country.
The central bank of China also revealed that citizens found for cryptocurrency exchange abroad will be investigated.
However, it was not only the PBoC that intervened in the new cryptocurrency, but the National Development and Reform Commission (NDRC) also expressed its intention to strengthen the application of current restrictions on domestic cryptocurrency mining. In a statement entitled “Notice of Cryptocurrency Recovery” mining activity, authorities estimated plans to completely eliminate domestic cryptocurrency mining.
First, new businesses that want to enter the mining industry are limited. Second, local governments are ordered to discontinue all support for existing mining projects. This includes interrupting the direct power supply and encouraging other suppliers to increase the cost of making the mining business economically viable. Finally, the NDRC said it would block the flow of new investment in this sector and block the remaining financial services to crypto companies.
Bitcoin prices have fallen almost 10% with the announcement, from $ 45,099 to $ 40,693. But since then, prices have recovered about 8% to $ 43,890.