Bitcoin prices suffered significant declines today, falling to their lowest in nearly two months and repeatedly dropping below $53,000, a level that has been identified as providing key support.
The world’s most valuable digital currency by market value reached as little as $51,808.54 this afternoon, CoinDesk data shows.
At this point, it was trading at its lowest level since October 6, additional CoinDesk figures reveal.
Following this decline, the cryptocurrency bounced back, rising above $54,000, before continually falling below $53,000 this evening.
At the time of this writing, the digital asset was trading close to $53,000.[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Several analysts spoke to this particular level, emphasizing its importance.
“The support near $53K is important to us too, but so far it is still intact,” said Katie Stockton, the founder and managing partner of Fairlead Strategies, LLC.
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“Today’s weakness may have been sparked by the negative momentum behind high-growth stocks, which seemed to affect sentiment regarding bitcoin in Q2.”
William Noble, the chief technical analyst of research platform Token Metrics, also weighed in on this level, in addition to offering a short-term outlook.
“53k was the prior high from back in September,” he stated.
“So, that former ceiling might act as a floor near term. 53k will probably act as support for part of the weekend,” added Noble.
“Once equities reopen on Monday, selling in bitcoin could pick up again,” he said.
“If stocks go down all risky assets including crypto could have another leg down.”
Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, also weighed in.
“The assessment of the other analyst sounds accurate, we’d expect Bitcoin to have support around the $50,000-$53,000 level,” he stated.
“People are psychologically attracted to placing buy/sell orders at round numbers like $50,000. That same level was a prior resistance point, which is now being tested as new support,” Sifling noted.
“We also see support at the $45,000 and $40,000 levels if we fail to hold $50,000-$53,000,” he said.
Kiana Danial, CEO of Invest Diva, also commented, speaking to what could happen if bitcoin works its way through existing support.
“BTC/USD has formed a double top bearish reversal chart pattern on the daily chart pattern,” she stated.
“Friday’s dip was a test below both the 38% Fibonacci retracement level, and the lower band of the daily Ichimoku cloud; both being key psychological levels,” said Danial.
“The future Ichimoku cloud appears bearish. Confirmation of a break below this level (at around $53K) could indicate further bearish momentum [that] could push the Bitcoin price lower towards the 50% and 61% Fibonacci retracement levels at around $49K and $44K respectively,” she stated.
“Keep in mind that such volatilities are normal for cryptocurrencies like Bitcoin,” said Danial, before offering a bullish outlook.
“Once the pullback is completed, there’s a high possibility of Bitcoin bouncing back up and reaching new highs in the new year.”
Shiliang Tang, chief investment officer at cryptocurrency investment manager LedgerPrime, also offered a bullish take, contending that this latest pullback was a net positive for bitcoin’s future price action.
“This dip certainly tracked the fall in equity prices that we’ve seen as a result of Covid fears and concerns about inflation,” he stated.
“However, while crypto and equity markets do tend to fluctuate in tandem, they are different markets and crypto in particular is in a strong bull cycle.”
“Moreover, the on-chain metrics for Bitcoin – the king crypto to track in a bull run – are still strong: there are more coins getting taken off exchanges than flowing onto them,” said Tang.
“This means that once this flushing out finishes, we should see a supply shock in which the price of Bitcoin explodes upwards,” he predicted.
“If anything, this dip did more to wash out those cowboy leverage traders and in turn set up healthier conditions for continued price rises in the near future.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.