It almost seemed like there would be no action this weekend as volume dropped and most traders took a few days off to spend time with their families. However, Santa decided to liven up this weekend and cash out a few thousand coins. It is no surprise to see Bitcoin’s price slide on the weekend as that is a relatively common pattern, however, combined with Christmas today’s dumps set quite a panic on the market as Bitcoin’s price dropped over 10% in a matter of hours. In our last night’s technical analysis, we mentioned how volatility is incoming as multiple TA factors suggested, today’s drop confirmed our suspicion.

There are a few theories as to why Bitcoin’s price crashed $50 today. The most popular seems to be the fact that the Yuan is showing signs of recovery after loosing value as a direct symptom of China’s capital controls. As you can see in the chart below, the CNY / USD exchange rate has been increasing since August.

Chart Source: http://www.xe.com/currencycharts/?from=USD&to=CNY&view=1Y

Furthermore, the yuan is only allowed to rise or fall by 2 percent from the average parity rate each trading day, meaning that while we may only see a 20 cent increase, the Chinese Yuan maybe be gaining more value back then we think.

As WellsHunter mentions on r/Bitcoin, Zimbabwe has decided to start using the Chinese Yuan as the main currency for their country. According to this article

Zimbabwe announced to adopt the Chinese Yuan as its legal currency after China canceled its $40 million debt. Once the foreign institutions meet the criteria and receive approval from the China Foreign Exchange Trading System Center (CFETS), they are allowed to enter the inter-bank foreign exchange market and trade all the listed products.

After an upwards move into the demand level, the trend has stalled, and we stalled again giving us a double top at demand. We have multiple reversal candlestick patterns at the top of the range, showing us graphically where the bears were going to step in.

~$375 is simply a breakout retest of previous resistance that confluences nicely with 62% fib retracement and midpoint of a bullish daily orderblock. A nice opportunity for longs to fill pre ‘halving pump’ H1 2016