The world’s most favoured cryptocurrency, bitcoin, has fallen sharply, following a warning from Chinese banking regulators to not conduct business related to virtual currency. The popular digital currency fell below $40,000 – down nearly 40% from the record it set in April of nearly $65,000. This is according to Bloomberg, who notes that aside from the warning issued by Chinese regulators, Tesla CEO Elon Musk is also fuelling the volatility of the cryptocurrency. While this is certainly a significant plunge in value for bitcoin, interestingly, the digital currency is still up by more than 300% when compared to last May. Speaking to Bloomberg, strategist David Grider remarked âWe donât know the future, but we think odds are weâre close to the bottom and donât want investors to âpanic sellâ here.â – Jarryd Neves
Bitcoin chartists see rout worsening with $40,000 in focus
By Joanna Ossinger
(Bloomberg) – A cohort of chart watchers on Wall Street say Bitcoinâs deepest selloff since crypto mania kicked off last year looks set to intensify.
Evercore ISIâs Rich Ross reckons prices are destined to fall back to the 200-day moving average, following a path of other speculative assets, which would put Bitcoin back at $40,000, compared with around $42,600 in early Asian trading Wednesday.
Others are watching for a pattern of âlower highs and lower lowsâ and say Elon Muskâs unpredictable tweets will keep traditional investors on the sidelines. Thereâs also speculation that gold is starting to draw money away from crypto.
âThe momentum has now quite decisively shifted to the bears,â said Tallbacken Capital Advisors Chief Executive Officer Michael Purves, who correctly predicted last month that Bitcoin would decline.
Bitcoin is still up more than 300% since last May, but the speed of the recent rout has shaken cryptoâs new believers and cast doubt on the idea that itâs maturing into a more stable asset class. Prices have fallen about 30% from intraday highs in April, when they topped $64,000.
Purves says the next important level for Bitcoin is $42,000 because it roughly equates to where the rally topped out in January and a 50% retracement from December 2020 levels. If Bitcoin breaks through that level, more losses are ahead, but if prices can hold above the support, then it might be the beginning of a new rally, Purves predicted.
âA pullback was bound to happen,â said Justin Chuh, a senior trader at Wave Financial, which invests in crypto assets. âThis is healthy, but I think we all wish this didnât happen.â
The counterpoint comes from Fundstrat Global Advisors. In a note on Monday, strategist David Grider laid out nine reasons explaining why he thinks prices are primed to bounce, including high levels of short interest and the fact that corrections like this tend to be normal in a crypto bull market.
âWe donât know the future, but we think odds are weâre close to the bottom and donât want investors to âpanic sellâ here,â Grider wrote.
Anchorage Digital, which runs a digital asset platform for institutional investors, said itâs seeing clients maintain or increase crypto holdings. âTheyâre looking at this as good entry point,â said Diogo Monica, president and co-founder of the California-based company.
Other chart watchers are turning to ETFs as a proxy for where the crypto market is headed. SentimenTraderâs Dean Christians is monitoring a blockchain-focused fund called Amplify Transformational Data Sharing ETF.
âI would watch the breakdown pivot point at $48.75,â he wrote in a note Monday. âIf it fails to recover above that level, take note.â
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