GXChain, one of the most highly rated blockchain projects in China, was recently raided by Chinese authorities. The price of the project’s native token GXC plummeted in response to the news.
Police crack down on GXChain
On Sept. 11, the Gushu Police Department raided GXChain’s headquarter office, taking sensitive documents and computers as evidence for an ongoing investigation. The office was then sealed to prevent anyone from entering the premises.
Currently, all executives of GXChain are being held for interrogation, according to Dovey Wan, founding partner at Primitive Ventures.
Although Chinese authorities have not released an official statement about the case, it appears to be related to a range of business activities that are highly supervised in the country, as reported by Jinse Finance. The firm was allegedly scraping and processing sensitive information including personal credit data from its more than 2 million verified users. According to one of Jinsen Finance’s sources, the investigation was related allegedly related to data harvesting and not GXChain’s native cryptocurrency.
One of China’s legitimate projects
GXChain was one of China’s few legitimate projects that came out of the 2017 ICO mania. The project raised 2,451 BTC, worth $3 million at the time, through its initial offering of its GXC token.
The blockchain was focused on making making decentralized applications (DApps) easier to build for developers. The company partnered with Celer Network, a second-layer scaling platform, to deploy off-chain solutions, lower fees, and increase transaction speed, which took one of its services to reach 2.4 million active users.
Moreover, GXChain has been listed several times on the CCID Research Institute cryptocurrency rankings. This is an initiative put up by the Chinese Ministry of Industry and Information Technology to assess the top crypto projects based on basic technology, applicability, and innovation. On its latest issue, GXChain ranked number 9, while XRP and Litecoin ranked number 17 and 33, respectively.
Due to GXChain’s high ranking on the CCID list, the recent move by Chinese authorities came as a surprise to many investors and the impact can be seen in GXC’s precipitous price drop.
GXC price analysis
GXC plummeted over 34 percent to hit a low of $0.49 after the news broke out on Sept. 11. The coin was able to recover 14 percent of its value and is now trading at around $0.56.
In technical analysis, when price movements are directly related to news events, standard practice is that news has been completely factored into the price within three days. Therefore, even if the selling pressure has decreased in recent hours there may still be more legs down for the token.
Based on support and resistance levels, if this cryptocurrency moves once again below $0.50 it could try to test the major support zone around $0.45. This price point marked the bottom of GXC’s most recent bear trend. If it is not able to hold, a steeper decline could follow.
Otherwise, a move above $0.70 could signal that GXChain could have the potential to recover.
As more information is released about the ongoing investigation against GXChain, price action around GXC will become clearer. In the meantime, setting up channels to get information more quickly about GXC would be a clear route to profitable trading.