Business

Bitcoin Veterans Know to Keep Their Eyes on $19,511 Level

(BLOOMBERG)— Round numbers tend to be a fixation for Bitcoin chart-watchers, with many keeping their eyes peeled on $20,000 amid the latest swoon. Veterans are aware of the need to look for something more: $19 5,511.

That’s the high the coin hit during its last bull cycle in 2017, which it reached at the end of that year. According to Jaran Mellerud of Arcane Research and Vetle Lunde, Bitcoin has not fallen below its previous cycles peaks in the roughly 12 years it’s been trading. A break below that would be catastrophic.

“A potential visit below this level could lead to a lot of hodlers capitulating and a wind-down of leverage, making this a very important support level to pay attention to onwards,” the pair wrote in a note, referencing long-term, staunch holders.

In addition, besides the psychological importance of the level, most of the open interest in Bitcoin options is based on the $20,000 strike price, according to Arcane, “which can contribute to selling pressure in the spot market should the price fall below.”

This year has seen cryptocurrencies fall by as many as 90%, as some of the digital assets have fallen as high as 90%. The Federal Reserve is raising interest rates to fight rampant inflation. The central bank has been more aggressive in pricing the markets this week which is causing tokens to suffer a tough week. Bitcoin has fallen 30% in the past six days, making it one of its most difficult periods. It hasn’t seen a single up day over the last nine sessions.

The coin’s drop this year has brought it to around $20,700 Wednesday, its lowest point since December 2020, meaning no one who bought over the past year and a half has made a profit. Analysts are watching other indicators for signs of selling pressure.

Whether crypto prices continue their declines going forward is anyone’s guess, but market-watchers say that a lot will depend on the Fed. The US central bank on Wednesday raised its main interest rate by three-quarters of a percentage point—the biggest increase since 1994—and signaled they will keep hiking aggressively this year. Riskier assets such as crypto have suffered from a higher rate environment.

Katie Stockton, founder of Fairlead Strategies, a research firm focused on technical analysis, is seeing a “decisively negative shift in short-term momentum” for Bitcoin. The risk that the currency will drop below $27k has increased to $18,300-$19k500. This is another area of support. “Bitcoin and most other risk assets remain out of favor in this environment,” she wrote in a note this week.

Read More From Time


Reach out to usAt letters@time.com

Tags

Related Articles

Back to top button