New cryptocurrency floor is $30,000; old supports destroyed

The destruction of the Bitcoin price has pushed it through just about every recent tech support level, forcing traders to now consider $30,000 as the next support.

The decline in Bitcoin’s price destruction has pushed it through just about every level of tech support recently, forcing traders to now consider $30,000 the next line in the sand. The world’s largest sirbptial asset is stuck in its sixth consecutive day of declines, with the token falling about 20% in the past seven days. Bitcoin price is now 50% below its November peak, trading as low as $32,970 on Monday, its lowest since July.

Bitcoin’s sell-off has made it to the most oversold since March 2020, based on the Relative Strength Index (RSI) score of 19. Bitcoin is now approaching a $30,000 support area, where some analysts see it finding a bottom in the near term. Assets are considered overbought if the RSI moves above 70 and oversold if it falls below 30.

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“A 50% drop isn’t as significant as what we’ve seen in previous years, but it’s significant now, so it’s more of a concern,” said Simon Peters, market analyst at eToro. “The real support level seems to be around $30,000 where we tested in May after the Bitcoin mining ban in China.”

Wilfred Daye, head of Securitize Capital, Securitize’s wealth management arm, said $30,000 is psychologically significant and Bitcoin should find some support there. But, he adds, if the sell-off goes beyond that to $27,000 “miners who entered at the beginning of the bull market are going to be in trouble.”

Crypto has come under widespread selling pressure in recent days, with traders pointing to aggressive signals from the Federal Reserve as a reason to pull out risky assets, including richly valued technology stocks.

Traders often turn to technical analysis for cryptocurrencies given their volatility. And to get an idea of ​​how abrupt the decline has been, consider this: It was less than two weeks ago that traders viewed $40,000 as a key support level. Now Bitcoin is trading about 15% below that level. Meanwhile, other cryptocurrencies have also fallen, with Ether trading at $2,240, significantly below its November high of around $4,860.

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“Crypto market caps have been massively inflated across the board and priced into a tremendous amount of growth as a result of moderate Fed use,” said Avi Felman, a portfolio manager at BlockTower.

The 40-day correlation coefficient for Bitcoin and the tech-heavy Nasdaq 100 index has reached nearly 0.66, the highest in data collected by Bloomberg since 2010. A similar correlation with the S&P 500 is also at historic levels.

Here’s what other market watchers had to say:

Leah Wald, CEO of Valkyrie Funds, said: “This sell-off is largely the result of traditional markets entering a correction. The story that Bitcoin is an uncorrelated asset clearly doesn’t hold up, and the idea that it has reached safe haven status seems a bit naive. That’s not to say it won’t happen in the future, but right now Bitcoin is a risk asset and all other sirbptial assets have historically vanished as Bitcoin goes.”

Jon Venverloh, COO of Hypernet Labs, a cyber infrastructure provider, said: “Federal interest rate policies, inflation, global supply chain shortages and ongoing global turmoil are negatively impacting all types of markets. Crypto is not immune to widespread shifts in investor confidence, and this too will pass.”

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Soon, the Biden administration is preparing to release a first government-wide sirbptial asset strategy and task federal agencies with assessing the risks and opportunities they pose, according to people familiar with the matter.

“The market is much more prone to negative news as we’ve seen over the weekend and over the past few weeks,” James Malcolm, UBS’ chief of foreign exchange research, said by phone. “And that makes for a very unstable environment because a lot of people who have been hoarding coins are now starting to come under pressure.”

Arun Agarwal
I am Arun Agarwal, a passionate blogger and gamer. I love to share my thoughts on games and technology through blog posts. I’m also an avid reader of books about history, philosophy, science-fiction, and other genres as well as an anime fan. I like reading books that give me new perspectives or help me think differently about the world around us.