Bitcoin bears are watching cryptocurrency prices – here’s how low they could go

Bitcoin is preparing for a short-term recession, which could see it throw away much of its recent gains, even if the long-term outlook looks healthy for crypto no. 1 in the world.

This is the opinion of a number of analysts after bitcoin BTCUSD prices,
violated a key technical level due to the exuberance of digital assets due to Coinbase Global,
listing on the Nasdaq last week.

Bitcoin fell 1.8% late Wednesday morning in New York, exchanging its hands for about $ 56,000 on CoinDesk. It places the crypto about 14% below its all-time high of $ 64,829.14.

On Tuesday, researchers from Bespoke Investment Group mentioned that on Tuesday it marked bitcoin for the first time, in a period of 24 hours, in which it fell below the 50-day moving average of at least 2014, after recording 193 days consecutive prints above this level. Bitcoin was first created in 2008-09.

Technicians in the market use moving averages as barometers of bullish and rising trends in an asset.

Bespoke Investment Group

Pankaj Balani, CEO of Delta Exchange, in e-mailed comments, said that Bitcoin managed to stay above the 50-day moving average of recent transactions, but warned that a sustained short-term price breach could lead at a slip of about $ 40,000.

“50 DMA has been a crucial support for Bitcoin since October last year and has supported this support every time in this rally. However, this time, we see the momentum of Bitcoin disappearing and BTC is struggling to have this support “, Balani explained.

Bespoke researchers mentioned that bitcoin tends to see declines in periods of a week, a month, three months, after the upward trends that last at least 100 days are fast.

“A week later, [bitcoin] it fell four times to an average decline of 4.6% and fell four times. One and three months later, the performance was even weaker, with average decreases of 6.5% and 13.4%, respectively “, the report shows.

Bespoke Investment Group

Researchers at JPMorgan Chase & Co. JPM,
+ 0.69%,
including Nikolaos Panigirtzoglou, wrote in a report Tuesday that the declining momentum for bitcoin could increase a smaller spiral for volatile assets. Analysts said the failure to take over $ 60,000 could be the trigger for a sharp drop.

The JPMorgan strategist highlights the downward trends in the bitcoin futures markets BTC.1,
where institutional and professional investors go to protect their crypto exposures.

JPMorgan’s bitcoin chart Figure 9

Referring to the attached chart, JPMorgan says the four episodes with a 10% drop in the proxy of the futures position, including the one in the last few days, were attributed to the inability to evolve above.

“Similar to the previous three episodes, it’s likely that impulse traders like [commodity trading advisors] and cryptocurrencies, have been at least partially behind the accumulation of long futures contracts in bitcoin in recent weeks and, therefore, probably also behind the development of the last days “, concluded JPMorgan.

“If the price of bitcoin fails to soon exceed $ 60,000, the momentum signals shown in Figure 9 will naturally decline from here for a few months, given their still high level,” the analysts wrote.

JPMorgan researchers are not 100% sure that this time bitcoin will follow a decline, with a stronger return, as seen in November and mid-February. In particular, analysts say bitcoin flows have been tempered and the recession seems to be gathering steam.

So far this year, bitcoin prices have been strong, rising by 94% so far. By comparison, GC00 gold,
+ 0.78%,
which is seen as a rival to bitcoin, fell 5.5% in 2021. Media Dow Jones Industrial DJIA,
+ 0.78%
and the S&P 500 SPX index,
+ 0.68%
both have increased by about 11% in the year to date.