- Bitcoin (BTC) (BTC) price slumps to a two-week low of US$31,277 on Tuesday (08 June 2021)
- Other major digital coins – from Ethereum (ETH) to Ripple (XRP) – also lost over 17% of their valuations at the peak of the sell-down
- Most analysts commented that investors should look out for BTC’s immediate support level at around US$30,000
- The bullish view, however, sees BTC’s current ‘oversold’ conditions as indicators for a recovery
- Buy and sell BTC, ETH, XRP and other cryptocurrencies with an IG account
What caused the latest crypto sell-off?
Bitcoin’s woes are weighing down the wider cryptocurrency market once again, with the latest sell-off taking down other major digital coins by as much as 20% in the last 36 hours.
BTC saw its price sink to a two-week low of US$31,277, after US investigators said they seized US$2.3 million worth of bitcoin paid as ransom to DarkSide, the cybercrime gang that last month hacked Colonial Pipeline, the country’s largest refined oil pipeline system.
Cryptocurrencies like Ethereum, Ripple and Litecoin (LTC) all lost over 17% of their valuations between Monday (07 June 2021) and Wednesday (09 June 2021).
Prices continue to remain suppressed, with BTC sitting at US$33,493 as at 13:50 SGT on Wednesday.
Could BTC drop to US$20,000?
Analysts say investors should pay attention to the US$30,000 price level for BTC in the near term, which is emerging as an immediate support zone.
William Noble, chief technical analyst of research platform Token Metrics, believes that the support level to watch is between US$30,500 and US$31,000.
‘If that breaks, a move to 24k could unfold,’ he said.
Julius de Kempenaer, senior technical analyst at StockCharts.com, echoed Noble’s sentiments, stating that there is ‘some intermediate support just below 30k’.
However, ‘the real level to watch is the former breakout level at US$20,000, which should provide major support for BTC in case of a drop that far’, he added.
De Kempenaer further cautioned that bitcoin is also ‘currently completing a breakout from a textbook symmetrical triangle’, which he posits points to ‘more downside price action in the near future’.
‘For the time being the trend is clearly down while upside potential is very limited,’ he said, adding that it’s ‘not really an ideal situation to get back into this market’.
BTC’s latest decline ‘not a decisive breakdown’
More bullish was Katie Stockton, the founder and managing partner of Fairlead Strategies, LLC, who opined that BTC’s latest decline is ‘not a decisive breakdown’, but that it ‘would become one if we see a couple of weak closes (today and tomorrow) at current levels’.
Stockton clarified that ‘oversold conditions are in place from short- and intermediate-term perspectives’, which gives bitcoin ‘a better chance to find its footing’.
‘Short-term momentum has deteriorated, but not to the degree with which we have a “sell” signal in the daily MACD,’ she was quoted as saying on Forbes.
‘A recovery and subsequent close above the 20-day moving average (MA) would be a bullish short-term development that would clear the path to the 50-day MA,’ she concluded.
Meanwhile, long-time crypto investor Mike Novogratz, who has been dubbed the ‘Warren Buffett of crypto’, believes that the market is currently in a period where it is ‘waiting for a new narrative to arrive that brings the next wave of money’.
He sees the Securities and Exchange Commission’s approval of a bitcoin ETF and the surge of capital as a result of more people buying into options to earn yields on digital coins as potential longer term price catalysts for the crypto market.