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XTB TRADEBEAT

Bitcoin tries to make its way back above $7k mark

Summary:

  • South Korea ordered exchanges to revise consumer contracts

  • Bitcoin (BITCOIN on xStation5) reversed ahead of the $6500 handle

  • Who is a Bitcoin mule in China?

Bitcoin price fell sharply in the past hours yet the famous coin managed to recoup some of the losses in today’s early trading. In general cryptocurrencies are posting moderate gains today. Before moving to charts we will move to South Korea where financial regulators once again target cryptocurrency exchanges with their actions. At the end we will also explain a term "Bitcoin mule" and why mules are not profiting today as they used to few months earlier.

South Korean financial regulator ordered about a dozen of country’s cryptocurrency exchanges to revise its consumer contracts. The financial watchdog is concerned that the contracts are constructed in a way that make it harder for customers to withdraw their fund from the exchange. Apart from that regulators seem to be worried about customers’ burdening all costs connected to seceding from the exchange membership. The cryptocurrency exchanges in South Korea seem to take a more friendly approach towards country’s regulators and the Upbit exchange case of introducing a reward system for reporting multi-level fraudulent schemes makes a perfect example.

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Bitcoin price reversed a notch above support level at $6500. Source: xStation5

In line with our previous analysis Bitcoin price declined towards $6500 mark after failing to breach $7400 resistance level. In fact, the price did not reached the $6500 handle but reversed a notch above it to trade in the vicinity of $6800 at press time. The large candlestick painted during the rebound may signal that Bitcoin bulls still have some fuel thus a longer upward move may be on cards. However, before even thinking about repeated attack on the resistance level at $7400 buyers must overcome 33EMA that is localized around $7100 at the moment. In case bulls fail to break above $7400 Bitcoin price may trade in the consolidation range for some time limited by $7400 resistance level and $6500 support level.

While the Chinese ban on cryptocurrency trading may be a gridlock for the masses it became an opportunity for enterprising few. These people are called “Bitcoin mules”. Who is a Bitcoin mule? It is a person that takes advantage of ban on crypto trading by buying coins abroad and later selling them at domestic OTC market at premium. At the turn of the year Chinese retail investors were willing to pay up to 30 percent premium just to get a coin which they believed will allow them to make stellar profits overnight. However, as the word spread the business became less lucrative due to increased number of Bitcoin mules and diminishing interest in cryptocurrencies. In turn the premiums went down significantly making it less profitable and sometimes even unprofitable. How can it be unprofitable to arbitrage? As China banned Internet access to foreign crypto exchanges Bitcoin mules have to physically go abroad to buy coins and with diminishing premiums these entrepreneurs may find it hard to pay for their travel expenses.

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