Bitcoin (BTC) posted a local top of $24,600 on July 30 before closing three consecutive daily red candles. Peak to trough losses over this period came in at $1,800, or 7%.
Today, August 3, sees some reprieve, as buyers give rise to a 3% upside swing. As of press time, BTC was trading at $23,300, while the rest of the market was trading flat with a slight upside bias.
According to Bloomberg News, a consideration of recent crypto price action was the heightening tensions between the U.S. and China over House Speaker Nancy Pelosi’s visit to Taiwan.
Weeks before, the Chinese hierarchy had warned Pelosi to cancel the trip. However, on August 2, the House Speaker touched down in Taiwan, stoking geopolitical tensions.
Bitcoin falls short of $25,000
The threat of escalation between the two superpowers led investors to ditch stocks and U.S equity futures. Bitcoin also suffered a minor sell-off, dropping 3% on the day before closing at $22,900.
Since July 13, BTC has been trending upwards after making a local bottom at $18,900. This run peaked just short of $25,000 during the weekend, as tensions between the U.S. and China intensified over Pelosi’s Taiwan visit. Bloomberg noted that this was Bitcoin’s best run since October 2021.
As ever, technical analysts are split on what happens next. Michaël van de Poppe noted this run meant BTC closed (marginally) above the 200-day moving average for the first time in five weeks. An asset trading above the 200-day moving average is considered a long-term uptrend.
Whereas JoeChampion sees a head and shoulders pattern playing out to drop the price further in the short term. However, he stopped short of giving a predicted bottom.
U.S-China tensions deepen
The Chinese Communist Party considers Taiwan a breakaway republic that will one day be reintegrated with the mainland.
In the run-up to Pelosi’s visit, a phone call between President Xi and President Biden ended with Xi insinuating repercussions if Pelosi went ahead with her visit to Taiwan, according to ZeroHedge.
“The public opinion cannot be defied. Those who play with fire will perish by it.”
Addressing the press on landing in Taiwan, the House Speaker said it was “unequivocally clear” from the start that the U.S would not “abandon” Taiwan.
“Forty three years ago, America made a promise to always stand with Taiwan… today our delegation came to Taiwan to make it unequivocally clear we will not abandon our commitment to Taiwan.”
In response, China has imposed sanctions on Taiwan that will suspend the exports of natural sand and certain food products, such as fish and fruits. Natural sand is a component of semiconductor manufacturing.
Live ammunition military drills will commence on August 4 around the Taiwan Strait, with some exercises to occur less than ten miles from the Taiwanese coastline.