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Turkey may tighten crypto regulation due to sharp fall in lira; BTC ends week on positive note

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Bitcoin was able to break through a wide range and end the week with bullish momentum. To cement the upward movement, BTC needs to consolidate above $50.5k-$52k. Now, the on-chain activity is high and investor sentiment is positive. The main threat for a rally comes from the governments of certain states. Their actions may undermine the upward movement of BTC until 2022.

Mining in Iran

Despite China’s government crackdown on Chinese miners, about 20% of the bitcoin hashrate is still concentrated there. Naturally, it would be quite reasonable to expect negative news about the problems of BTC mining from China. However, this time, the Iranian government has suspended the mining of cryptocurrencies due to power outages. Near 30 official miners will be able to resume work in the fall of 2022. It is still difficult to assess the impact of this ban on bitcoin, but this is definitely a bearish factor. Demand for BTC is reaching its peak. Therefore, a drop in the computing power of BTC may adversely affect the BTC quotes.

Turkey is to introduce a crypto law

As of December 27, more than a million crypto transactions are carried out daily in Turkey. The main reason for this is the record fall in the national currency – the Turkish lira. It plunged by 60% against the US dollar last week. The citizens of the country have invested heavily into crypto to protect their funds against the high volatility of fiat money. The euphoria around cryptocurrencies forced the Turkish government to intervene. At the beginning of 2021, Turkey’s President Recep Erdogan announced the adoption of a bill to tighten the regulation of digital assets. Earlier, Recep Erdogan stated that he did not rule out softening the country’s stance on cryptocurrencies but he did not actually intend to promote their widespread use. This is why the new bill is highly likely to bring nothing good to cryptocurrencies. “We will take steps on this issue by sending (the bill) to Parliament without delay. Turkey will make a leap forward with its new economic model. It is worth taking these risks,” he said.

BTC forms a bullish pattern

Despite negative fundamental background, bitcoin has risen above $50k. BTC exchange reserves dropped to the lowest level on record, while the number of unique addresses remains high. The main reason for optimism is the formation of a bullish pattern on the weekly BTC chart. This is the first green candlestick on the weekly chart since November 15. The price rebounded and closed near the previous highs of $52k, which indicates a possible breakout of the resistance level. To retain its bullish momentum, BTC needs to consolidate in the $50k support zone, push off from it and continue the upward movement.

Outlook for this week

On the daily chart, bitcoin has broken through the downward resistance line from November 10. It is trying to consolidate above it. In addition, a breakout of the Wedge took place. As of 12:00, bitcoin is hovering above $50.5k. The formation of weak bullish and bearish candlesticks on the daily chart indicates that the forces of sellers and buyers are approximately equal. If bulls want to assert strength, they need to push the price above $52k.

The 4H chart clearly shows that the price is moving within the range of $49.6 k-$52k. The $52k level acts as the resistance zone. Judging by the formation of 4H candlesticks, the bullish momentum has fizzled away. It may signal a decline in the price to the lower boundary of the area. If the support level is not broken, the price may attempt again to test $52k. If the attempt turns out to be unsuccessful, the price will most likely break through the $49.6k zone and dive into the $42k-$45k range. Traders are sure to close their long positions and lock in profits at this level. After that, BTC may move to ATH but already in 2022. If bitcoin breaks above $52k after a test, then the price is expected to move to the $56k level. If this scenario comes true, BTC is likely to end the year near $60k.

The material has been provided by InstaForex Company – www.instaforex.com

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