Crypto Weekly Outlook: September 27, 2021

After a volatile weekend following China’s Friday announcement of it’s updated cryptocurrency ban, the crypto market has recovered somewhat with the total cryptocurrency market cap sitting at $1.93T as of this writing, almost the same level as one week ago. The market’s main source of concern appears to have moved quite quickly from the Evergrande Group debt crisis to the updated China crypto ban to this week’s expected vote on the bipartisan infrastructure bill with the threatening crypto provisions.

China’s Crypto Ban Update: The widely coordinated update explicitly states that virtual currencies are not legal in China and that any crypto-related transactions are illegal. The ban makes clear that in addition to financial firms being barred from working with crypto firms, other business areas ranging from IT to marketing are also included in the ban. Moreover, the new guidance also specifies that Chinese residents overseas are also banned from using crypto services - a blow to exchanges such as Huobi and Okex. What remains to be seen is how effective the Chinese government will be in enforcing the updated ban and how it will impact individuals who still hold crypto - something that has not yet been explicitly banned.

Bitcoin, as of this writing, is moving near the $43.2K support level. The next line of support is at the $42K and then the $41K area. Resistance is present at $44K as well as the $44.8K-$45K levels. It would be quite bullish if these levels were overcome. In positive news for BTC, according to the President of El Salvador, 2.1 million Salvadorans are now actively using the Chivo Wallet, more users than any bank in El Salvador - after only three weeks in operation. Most analysts still expect BTC to rally higher throughout the remainder of the year as the amount of BTC on exchanges continues to be near historic lows. Just recently, the head of asset management at Counterpoint compared Bitcoin to the South Park character Kenny - “he dies every episode, and is back again.” For the month of September, Bitcoin is currently down approximately 8.5%, not unusual performance for the month. However on Friday a new month begins and Bitcoin has historically had very strong performance in October.