Bitcoin rebounds after week marked by Chinese pressure

Bitcoin recupera depois de semana marcada pela pressão chinesa

After last week's declines, triggered by the Chinese government's announcement that it would step up efforts to eradicate cryptocurrency mining, bitcoin started a new week in positive territory near the $30,000 mark. The volatility that characterizes the cryptocurrency, however, remains, according to analysts.

"Based on recent events, the current market conditions are seen by some as a golden opportunity to accumulate, while others assume the current situation is a genuine nightmare. Analyzing the recent Glassnode data, one can see that long-term holders have started to accumulate bitcoin at the current price, while newcomers continue to liquidate their positions in the market," comments Henrique Tomé, market analyst at XTB.

The information from Beijing took many investors by surprise, given that it is the world's second largest economy attacking a business, on its territory, corresponding to 70% of the global cryptocurrency supply, according to "Reuters".

Bitcoin mining difficulty decreased by 16% over the weekend, the biggest drop this year. Henrique Tomé comments that the recent drop "indicates that there is less competition. This is due to the fact that mining companies from China have withdrawn their operations from the country as the government intensifies pressure around the cryptocurrency market."

"Furthermore, when we look at the major players in the market, such as Grayscale Bitcoin Trust, one can see that the premium is starting to increase, suggesting that institutional investors are also continuing to buy at lower prices. On the other hand, the amount of open contracts remains low, as many leveraged investors suffered significant losses during the recent downturn and are unlikely to return to the market, at least for now," the XTB analyst added.

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