The ether has declined with many digital assets today, pushing lower after markets reacted to the latest announcement by the People’s Bank of China (PBOC) that it was banning virtual currencies.
The central bank said it had banned any service offering derivatives, order matching, token issuance and derivatives involving virtual currencies, according to TUSEN.
“Foreign currency exchanges abroad that use the Internet to provide services to domestic residents are also considered illegal financial activity,” the financial institution said, according to a text translated by TUSEN.
The announcement specifically distinguished bitcoin and ether as being virtual currencies that have the same status as legal tender. He described them as illegal, noting that they are not issued by the monetary authorities.
Cryptocurrencies reacted strongly to the news, with bitcoin dropping nearly 10% in less than 4 hours and ether dropping 12.1% during that time, according to data from CoinDesk.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Several market watchers weighed in on this, offering their take on the latest news from the PBOC.
“This isn’t the first time that China has banned digital assets and it won’t be the last – ultimately, the movement we saw in the markets today was less of a statement about China than it was. a statement on how many new investors out there are in crypto, ”said Pat White, co-founder and CEO of Bitwave.
“People who have been in crypto for a while have seen China ban crypto 10 times and have made it part of their mental models.”
Jesse Proudman, co-founder and CEO of crypto-robo-advisor Makara, also commented, saying that many market watchers will not be taken aback.
“Where China is likely signaling virtue to strengthen the digital yuan’s position, the rest of the world largely recognizes that it makes these statements several times a year and little to no action follows.”
In addition to offering insight into the latest moves in the PBOC, several pundits provided technical analysis, highlighting crucial support and resistance levels in the aether.
“$ 3,000 is ultimately the key level for Ethereum, both as a psychological level and at the top of the trading range where Ethereum was stuck from May to August,” said Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All. Street podcast.
“The bulls want to see this level hold as support on the weekly chart.”
Jason Lau, COO of the Okcoin cryptocurrency exchange, offered a similar view, describing the $ 3,000 level as key resistance because it previously offered crucial support.
“ETH had a 40-day run above $ 3,000 before this recent move and an inability to recover that would definitely be a blow to sentiment in the short term,” he added.
Additionally, Lau noted that the $ 2,700 level, close to the 100-day moving average, appears to be strong support.
“On the downside, the 100d and 200d moving averages converge, and a drop below both ($ 2,700 and $ 2,600) would open ETH to levels not seen since the summer.”
David Keller, chief market strategist at StockCharts.com, offered a similar perspective.
“The sudden drop in ether has brought the price down to the lows set earlier this week in the $ 2,700 to $ 2,750 range,” he said.
“With prices tested this range several times this week, we have now established this range as a new level of support. “
“Just before today’s fall, Ether retested resistance around $ 3,100, briefly rising above $ 3,150 before falling this morning,” Keller noted.
“We now have a clear trading range with $ 2,700 to $ 2,750 on the downside and $ 3,100 to $ 3,150 on the upside.”
“One of these levels is very likely to break in the next few days, and I would expect price to continue in the direction of that breakout.”
Proudman also discussed how the momentum of digital currency could be decided in the short term.
“This weekend is the key – if we see further consolidation and higher movement the bull run is back; if we go below $ 2,800 we could see some downward pressure up to the $ 2,500 mark. ”
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, and EOS.