Bitcoin’s breach of US$10,000 mark may portend deeper losses
Bitcoin is falling in tandem with U.S. stocks, and technical indicators suggest the digital token could decline further if it fails to reverse recent downside momentum.
The largest cryptocurrency is dithering around US$10,000 Tuesday. However, a sustained breach of that level could trigger a bigger drop to US$9,000 or — should the rout in equities persist — to US$8,000, technical analysis suggests. Additionally, the coin is trading in oversold territory, with its GTI Global Strength Indicator at 21, well below the level of 30 that signals oversold conditions.
“One by one, the dominoes of what were the most popular trades in the market have fallen,” said Brad Bechtel, head of global currency trading at Jefferies LLC. “The market is in a bit of a liquidation mode, unwinding many of the popular trades from the summer or from the start of the post-COVID rebound. Bitcoin is one of them.”
Bitcoin traded above US$12,000 as recently as last week, but has dropped about 16 per cent since last Tuesday. A summertime rally in U.S. stocks has taken a pause as well, wiping out billions in market value. Bitcoin fell as much as 2.2 per cent to US$9,928 on Tuesday, before paring losses to trade around US$10,130 as of 1:41 p.m. in New York. Dash, Ether and Litecoin also retreated though bitcoin Cash and Monero posted gains.
Still, many bitcoin fans remain bullish. “Crypto cynics and finance traditionalists will use the current — and temporary — fall in bitcoin as an excuse to knock its inherent strengths to fit their own agendas,” said Nigel Green, chief executive officer and founder of deVere. “However, the reality is that the case for bitcoin to break out this year is stronger than ever,” he said, citing central bank stimulus initiatives as well as the coin’s underlying fundamentals.
Many investors may use a drop below US$10,000 as a buying opportunity, Green added. “The fundamentals that make bitcoin an attractive investment are, in fact, gaining strength.”