Bitcoin
The Bitcoin price rally has snapped back from a key trend line after a Dutch official calls for the immediate ban of the cryptocurrency.
BTC is trading at $35,050, down $2,200 (-6.10%).
El-Salvador may have won the first round of the fight. However, Holland may have just landed a knock-out blow on Bitcoin.
According to Cointelegraph, a senior Dutch official has published an essay titled “The Netherlands must ban Bitcoin.”
Peter Hasekamp, director of the Dutch Bureau for Economic Affairs and Climate Policy, launched a scathing attack on Bitcoin’s utility. Claiming it holds “no intrinsic value and is only valuable because others may accept it.”
Hasekamp also reasoned that cryptocurrencies are far inferior to Fiat currency, offering no store of value, means of payment, or unit of account.
Clearly, this view is in stark contrast to El-Salvador’s recent adoption of BTC as legal tender.
Which leaves the question, if El-Salvador’s announcement sent the Bitcoin price higher by $7,000, what damage could this news to the downside?
The daily chart shows that even the ‘El-Salvador rally’ wasn’t enough to clear the recent downtrend. The trend marks the top of the May 19th relief rally and has subsequently capped every price rise since.
On the 10th of this month, the Bitcoin price briefly scaled the trend line at $35,780, only to reverse back below the line.
This could be viewed as a false breakout. Moreover, yesterday, BTC again failed to clear the trend line (now at $37,500). This retest confirms the validity of the trend and is negative for the price.
So, as long as the price stays below the trend line, it is in danger of giving back last week’s gains.
In my opinion, the technical failure twinned with the latest announcement probably means the Bitcoin price is heading lower. I wouldn’t discount a move back to the 8th of June’s $31,000 low over the next day or two.
Of course, this isn’t the first time an official has called for Bitcoin to be banned, and I’m sure it won’t be the last. What is key is how the market reacts when the U.S wakes up in a few hours.
If BTC manages to clear the trend line resistance above, it will again be eyeing $40,000 and cancel my bearish call.
Follow Elliott on Twitter.
