【Market Commentary】China's mining regulation reports deal a heavy blow to cryptocurrencies
We had attempted to provide explanations covering the entire financial market, but focusing on cryptocurrencies with a broader view is expected to achieve differentiationdifferentiation. We hope to deliver market commentary for traders and the positioning of cryptocurrencies within that context through this market analysis. Of course, traders can trade whatever they like, so you should trade the hot topics and promising products right now, and if cryptocurrencies aren’t moving, ignoring them is also an option. We are also considering a deeper analysis focused specifically on cryptocurrencies, so we plan to draft that outline.
On Friday, May 21, the major three U.S. indices closed mixed. Germany’s DAX and France’s CAC 40 rose by 0.44% and 0.68% respectively, while the UK’s FTSE 100 ended with a near-flat minus 0.02%. All indices are within a range that could reach recent highs, and the rally continues on expectations of improving vaccine rollouts and economic conditions in Europe. The U.S. 10-year yield declined slightly, and gold continued to rise, hovering around $1,880. As the image shows, gold was high in early January, but is steadily moving back into that range. Legendary investor Charlie Ellis warns that sudden inflation can hit bonds and equities, making it essential to monitor the financial markets.
【Source】Trading View Gold daily chart
The dollar index rose about 0.3%, while EURUSD softened relatively. However, with the euro-yen also falling, the euro itself appears weak. The Indian Nifty 50 in emerging markets is moving upward as the pandemic situation eases.
Cryptocurrencies also faced a broad downturn on Sunday, especiallynews of China’s mining restrictions and trading bans. Huobi Global responded promptly to this news. There have been reports about Chinese regulations before, but this time the impact is amplified by statements from Liu He, China’s vice-premier. Opportunistic and bearish comments about the crypto market spread on social media, and sentiment is at an all-time low. Currently, China accounts for more than half of Bitcoin’s mining activity. In response to this news, the founder and CEO of the mining pool BTC.top said they would halt services for consumers in mainland China.
Bitcoin recently topped out on April 14 when Coinbase listed, and more than a month has passed since then. JPMorgan strategists have commented regarding Bitcointhat failing to quickly reclaim the $60,000 level would undermine the trend, lending credibility to the concern. When Bitcoin was stagnant in 2018, it repeatedly rose and fell without reaching new highs. In 2017 there were major regulatory headlines from China, but the counterargument was that after a dip it reached a high of $20,000, and some bulls say fundamentals hadn’t changed. Bitcoin's dominance rate reversed on May 19, and is currently at 46%. There may be an unwinding as funds flow out of alts in bulk.
【Traded Opportunities】
Bitcoin
Ether
Gold
【Notes on Market Commentary】
Please read with the following points in mind.
① Whether it is temporary
② Whether it is likely to persist
Mindset for traders
・“Commentary after the fact” is fine to read casually. It does not affect forecasting ability or trading performance.
・The current market movement cannot be explained entirely.
・Even if the direction is unclear, it is possible to profit.
・Profiting from markets where analysts and strategists say “it will go up” is possible in retracements or corrective phases.
Traders who do not know market dynamics can still win, but there will be a different stance between reports written by those who do, and those written by someone like me who has a broader perspective. Still, please understand that even if I write something, it will superficially resemble “ordinary market commentary.”
