China Evergrande’s Financial Problems Affected Bitcoin

On September 20, the crypto markets, as well as the U.S. equity markets, declined on fears that the collapse of China Evergrande Group couldn’t only hurt China but also have wider implications in other markets. 

Usually, when the sentiment is bearish, traders abandon positions that they perceive as risky in favor of safe-haven trades. So, this could be one of the reasons for the sharp fall in Bitcoin as well as most altcoins on September 20.

According to the data provided by Bybt, Bitcoin held in Binance wallets jumped by 29,717 Bitcoin in the last 30 days. Interestingly, history suggests that an increase in the Bitcoin balance on Binance results in a drop in the world’s largest cryptocurrency price. 

In less than three months, the BTC balance on Binance jumped from 99,700 BTC on April 20 to 347,590 BTC on June 26. Its price fell from around $57,000 to roughly $30,000 during that period of time. 

At the moment, the major question is, could the sell-off deepen, or will lower levels attract aggressive buyers from traders? It makes sense to learn about Bitcoin and other cryptocurrencies to find out.

 

Bitcoin and Dogecoin

The largest cryptocurrency’s selling exacerbated after bears pulled the price below the moving averages. The price action of the last couple of days created a head and shoulders pattern that will complete on a breakdown and close below the neckline.

When it comes to the moving averages, they are on the edge of a bearish crossover. The relative strength index fell below 41, suggesting that bears are in control. If Bitcoin’s price sustains below the neckline, the BTC/USDT pair could decline to $37, 332.70 and then to the pattern target of $32,423.05. 

If Bitcoin’s price rebounds off the neckline, the bulls will again try to push the price toward $50,000. But bears are likely to defend the 20-day experimental moving average (EMA) ($47,014) aggressively.

Also, if its price turns down on resistance, it will indicate that sentiment turned negative and traders are selling on rallies. The first sign of strength will be a break as well as a close above $48,843.20.

On September 20, Dogecoin’s tight range trading of the past couple of days resolved to the downside, as bears pulled the price to the strong support at $0.21.

Let’s discuss one scenario if the price of Dogecoin rebounds off the current level. In that case, the bulls will again try to push the DOGE/USDT pair above the 20-day EMA. If bulls manage to do that, the DOGE/USDT pair could rise to the downtrend line.