Can China's recent crypto optimism trigger a bull run in Bitcoin price?

Back until 2021, in addition to the United States, China used to have considerable dominance over crypto. This has since not only declined but completely disappeared owing to the blanket ban by the country two years ago. Thus it would be surprising if the crypto market suddenly went swinging again.

China becomes crypto "tolerant"

As per a recent tweet from the Chief Executive Officer (CEO) of Binance, Changpeng Zhao (CZ), , a state-owned channel, China Central Television (CCTV), recently broadcasted crypto-related news. This was an impactful event considering the staunch anti-crypto policy the country has upheld for the last two years. The executive stated.

"It's a big deal. The Chinese speaking communities are buzzing. Historically, coverages like these led to bull runs.

This tweet from CZ came hours after China launched its government-backed Metaverse platform called the "China Metaverse Technology and Application Innovation Platform". The launch was in accordance with the Metaverse Strategy announced in February this year, headed by the Nanjing University of Information and Science Technology (NUIST).

This is indeed a surprising turn of events for the country, given it has been standing against cryptocurrencies for more than two years now. Back in April 2021, China began its crackdown on cryptocurrency mining establishments which led to a major crash in Bitcoin price. 

The initial drawdown pulled BTC to just under $50,000, but the decline continued with Elon Musk's announcement of Tesla discontinuing the acceptance of BTC as a payment method. This brought the cryptocurrency down to 42% in two months to trade at $36,700.

Bitcoin price May 2021

Eventually, by September 2021, China placed a blanket ban on the mining, trading and usage of cryptocurrencies. This is why according to CZ, an optimistic attitude by China might hold the key to a bull run. Another popular trader, lilili.eth, seemed to have a similar opinion stating,

"It is not necessarily a bull market when there are Chinese people involved, but it is definitely not a bull market when there are no Chinese people involved.

However, Wu Blockchain dismissed this possibility, saying that crypto broadcasts by China have happened before. However, he is in favor of  Hong Kong allowing retail investors to access licensed crypto exchanges.

Thus put simply, the “observed” bullishness is merely circumstantial as there is no concrete evidence suggesting that China has made any significant advancement in terms of becoming accepting of crypto. So investors must not expect any kind of major impact on Bitcoin price.

Bitcoin price at a two-month low

Bitcoin price is currently trading at $26,350 after declining by more than 3% in the last 24 hours. The biggest cryptocurrency in the world is testing the 100-day Exponential Moving Average (EMA) line as support at the moment.

The cryptocurrency might be susceptible to further declines, given the Relative Strength Index (RSI) is in the bearish zone below the neutral line at 50.0.

If the cryptocurrency does lose the 100-day EMA support line, it could fall to test the 200-day EMA at $25,000. But a daily candlestick close below it might push it towards $21,500. 

BTC/USD 1-day chart

However, if the cryptocurrency turns around and recovers to breach the resistance marked at $27,500 coinciding with the 50-day EMA, it might be able to continue rising toward $30,000.