Bitcoin selling pressure increased due to exchanges eliminating Chinese citizens before the deadline, which was the end of last year, CoinTelegraph reported. Bitcoin bears lost out at the last minute as China was widely considered the reason for weakness. Just hours before the end of 2021, Bitcoin dropped to around $46,000 on Bitstamp prior to a modest recovery to $47,000, data from Trading View and CoinTelegraph Markets Pro showed.
Explanations shift to exchanges
The absence of an upside for the king of crypto has been accounted for by the role of exchanges albeit being an anticlimax and far below many popular projections. After the Chinese crackdown on crypto, Chinese users had until December 31 to leave major exchanges in the country as those were obligated to deregister them.
According to ex-BTCC CEO Bobby Lee, this was the last hammer in China’s arsenal. He pointed to it as having a major influence on selling behavior. He tweeted in early December:
“Maybe that’s why the hotly anticipated year end bull market hasn’t taken off yet. Waiting for the last hammer to drop in China! Expect a mini-correction when the enforcement news gets out, and then a relief rally that could bring us back on track for a real Bitcoin bull market.
Binance taking up deregistered Huobi users
Blockchain tech company Blockstream recognized the potential pressure from offloading Chinese users, who could be selling Bitcoin, resulting in rising balances. Changes in China account for rising balances elsewhere. At the end of last year, Binance’s BTC stocks rose, indicating that traders were preparing for risk mitigation if the price of BTC continued to drop.
Chinese investors locked out of international spot trading venues
After China’s crackdown on crypto trading, Chinese investors are being locked out of international spot trading venues. On December 15 last year, Huobi Global stopped users in mainland China from accessing its trading services.
Blockstream analyst Jesse Knutson wrote in a newsletter:
I think this probably explains why we’ve seen Bitcoin typically trade weaker over Asia hours vs US and European hours. It’s also a potential reason for optimism going forward as the Chinese exchange overhang will be cleared from the end of this month.
The aftermath of thin holiday liquidity
Thin holiday liquidity could develop as another reason to eliminate price dips. Overall Bitcoin price action could leave a false impression of subsequent market performance before Wall Street and institutional traders return.
