17.11.202114:39 Forex Analysis & Reviews: Bitcoin drops sharply but regains losses

The last three days, bitcoin showed a clear depressive sentiment: on November 15, the rate of the most popular cryptocurrency closed with a decline, on November 16 it began to fall sharply, and on November 17 in the morning hours almost lost the chance to regain the lost growth. Wednesday began with bitcoin dropping to $58,000.

Bitcoin was trying to regain its important psychological level of $60,000, eventually reaching it. At the time of this writing, bitcoin drifted higher to $60,553.

Over the previous week, bitcoin declined by 10.7%. Amid yesterday's sell-off and this morning, the cryptocurrency reached support during a drop to $58,600, that is, near its 50-day moving average and the near pivot point of the correction that formed in late October. Bulls were able to hold the price at important levels yesterday, but bears threatened to crush the bull market.

What is the reason why bitcoin began to decline? There are many reasons for the sudden change in trend. One of them is the tightening of cryptocurrency regulation, including statements by Chinese authorities who do not welcome bitcoin mining. China's regulator has threatened to force all miners out of its country and impose high fines on those companies that engage in crypto mining and transactions using digital assets.

One of the reasons for the BTC/USD pair pullback could be an unexpected jump in the dollar on expectations of monetary policy tightening in the US. Notably, the dollar index at Tuesday's trading reached a 16-month high.

Moreover, US President Joe Biden signed the infrastructure bill into law. From now on, organizations that work with digital assets must notify the US Internal Revenue Service if they conduct transactions worth more than $10,000.

Bitcoin's market cap declined by 11% over the past week, individual second and third-tier coins continue to grow slowly but surely. For example, Sandbox and Decentraland gained 28% and 9%, respectively, while IoTeX gained more than 8%.

According to the institutional cryptocurrency investing report from CoinShares, there have been tremendous cash flows into the field of digital assets since the beginning of this year. In other words, big investors are still very optimistic about the future of cryptocurrency.

As for the upcoming forecasts, so far the situation with bitcoin will largely determine the outcome of today's trading session. Closure of positions above $61,700 is likely to ease bearish sentiment, buyers will be able to regain lost profits. At the same time, there is still a chance that bitcoin may close below $61,000, after which the cryptocurrency may drop to $55,000.