BTC price falls below $38K as Tencent leads worst China tech rout since July

Pressure on Chinese tech stocks adds to a potent cocktail of inflation and geopolitical strife, with Wall Street closed for trading.

Bitcoin (BTC) kept falling lower on Feb. 21 as $38,000 became the latest level to fail the test for bulls.

$40,000 eyed as BTC relief bounce target

Data from Cointelegraph Markets Pro and TradingView painted a grim picture for BTC/USD Monday, as $38,000 support abruptly vanished after holding throughout the weekend.

#BTC Update 1h TF

First retest of key trendline since reclaim @ $38,5k

Current range $36,6k – $37,8k pic.twitter.com/sjxUv7AGlV

— AN₿ESSA (@Anbessa100) February 21, 2022

While threatening to invalidate analysts’ hopes of a bottom being in, the chances of a rebound to $40,000 were nonetheless good, one argued.

“Not expecting this leg to go very deep tho, should see a bounce towards 40k soon,” Crypto Ed told Twitter followers.

In a video update on the day, Crypto Ed had forecast a multi-leg downtrend continuing, with $40,000 forming the target of a relief bounce before another dive ensued, this even having the potential to take out $30,000.

“If we somehow manage to get back above $40,000 and go up, then I’m bullish; otherwise not,” he concluded, adding that it would take a “miracle” for such a bullish case to come true.

To the downside, a silver lining came in the form of increasing bids at $37,000 appearing on the Binance order book as BTC/USD drifted lower.

Data from monitoring resource Material Indicators further highlighted large transactions staying fairly constant, indicating institutional-grade investors maintaining interest in BTC exposure. 

Smaller buyers, however, were in two minds at current levels.

“Some bid liquidity in the $20k range has faded upward to the $30s, but want to see a bigger concentration of bids to get market buyers off hands,” Material Indicators creator Material Scientist added in comments on a chart showing the latest action.

A familiar Chinese tech plunge enters

A Wall Street holiday meanwhile meant a lack of convincing volume on crypto markets Monday, this being apt to exacerbate moves in any direction due to thin liquidity.

Related: ‘Coin days destroyed’ spike hinting at BTC price bottom? 5 things to watch in Bitcoin this week

Macro cues, however, continued to flow in, with developments from the Russia-Ukraine conflict primed to unsettle already nervous sentiment.

Reports of deaths on the border came as European stock markets jittered, the FTSE 100 down 0.5% in London and Germany’s DAX down 1.3% on the day.

Another crackdown on tech in China fuelled separate troubles for Asian markets, with Tencent shedding over 6% during trading.

Tencent leads #China tech selloff amid fears of further crackdown. Tencent fell as much as 6.3%. Beijing’s banking watchdog issued warning against illegal fund-raising schemes & an industry association vowed Mon to resist speculative trades in cap mkt. Alibaba dropped 4%. (BBG) pic.twitter.com/OZBDK2Hbyv

— Holger Zschaepitz (@Schuldensuehner) February 21, 2022

The tech stock rout was highly reminiscent of July 2021, the period during which Bitcoin retraced the entirety of its year-to-date gains to bottom at near $29,000.