The world’s biggest cryptocurrency (by market cap) reached a low of $28,776.02 on Monday, its lowest since January 22, 2021
Although BTC closed above $30,000, Subsocial Founder Alex Siman believes a fall to $20,000 is not out of the question.
Bitcoin prices have failed to recover since the market corrected on June 14, the day it broke through the $40,000 mark.
Bitcoin’s crash below $30,000 on Tuesday and subsequent recovery to $34,000 in the current session has analysts anticipate a bullish breakout for the flagship cryptocurrency. However, for one analyst, Bitcoin continues to face risks of a huge decline towards $20,000.
Alex Siman, the founder of the Subsocial Network, a Polkadot-based open platform for a decentralized social network, told CoinChapter that Bitcoin falling to the $20,000 price level is not a farfetched scenario. He noted that the cryptocurrency’s strong downside momentum raises possibilities that it won’t hold even its strong support levels.
The executive also pointed out that individual and institutional bigwigs are not taking any action, hoping the prices will fall further to buy the dip. In his words, ‘[…] Big investors with the potential to reverse prices are choosing to watch from the sideline.‘
It’s not all doom and gloom for Bitcoin. With the US inflation at its highest in almost 12 years, the token has emerged as a viable hedging option. Although the US Federal Reserve still insists that current inflation trends are transitory, worried investors have turned to alternative options to safeguard their wealth.
Yet, with the crypto market unable to sustain a bull run since May’s crash, a further decline in prices may be on the cards. Mr. Siman shares this belief, saying, ‘While we can still see a positive dynamic before the end of this year, to me, steeper plunges to $20,000 won’t come as a surprise either.‘
What’s In The Charts For Bitcoin
Bitcoin’s latest price charts support Alex Siman’s prediction. BTC recently created a market pattern called a death cross.
Bitcoin daily price chart forms a death cross. Source: BTCUSD on Tradingview.com
A death cross happens when a token’s 50-Day Moving Average (Green) wave crosses below the 200-Day Moving Average (Violet) wave. Bitcoin prices created this pattern on June 19. Since the death cross is a bearish indicator, it may instigate fears of an extended bearish run in investors’ minds. As a result, buying action might decrease, impeding an upwards price rally.
Bitcoin prices traded below $30,000 for the first time since the end of January 2021. Although the token is rising today, its prices are still below the 20-Day EMA, indicating the trend still favors the bears.
The $30,000 support level is a psychological one. With a death cross on the chart and violation of a vital support level, a lack of confidence in BTC may pull its prices lower.
Relative Strength Index, an indicator of price momentum, sits at 42.70, considered neutral. Other technical indicators also forecast a neutral outlook for BTC.
China‘s central bank recently asked other banks and financial institutions to restrict payment channels for cryptocurrency trading. The government’s official statement behind its crackdown on cryptocurrencies is preventing money laundering and fraudulent activities. A similar crackdown on crypto mining precipitated the May 19 market crash.
At the time of writing, Bitcoin was trading at $33,970.
All Is Not Lost
The global economy has suffered due to the Covid-19 pandemic and subsequent lockdowns. As a result, digital currencies rose to prominence. Thanks to the US stimulus packages, and rising inflation, the dollar has been declining. With the growing adoption of cryptocurrencies and blockchain technology across sectors, there is significant upside support for BTC to fuel an upside trend once the token breaks free of the bears.
In 2019, BTC fell by 47% before the cross appeared, recovering by 52% afterward. Similarly, the death cross in 2020 was followed by a recovery rally for the rest of the year.
Following last week’s crash, PlanB remains optimistic that Bitcoin will rise to $100,000 per token. In a tweet, he gave his prediction for the token’s prices till December.
Bitcoin is below $34K, triggered by Elon Musk's energy FUD and China's mining crack down.
There is also a more fundamental reason that we see weakness in June, and possibly July. My worst case scenario for 2021 (price/on-chain based): Aug>47K, Sep>43K, Oct>63K, Nov>98K, Dec>135K pic.twitter.com/hDONOVgxH1
With Elon Musk tweeting that Tesla will accept Bitcoins once energy concerns are mitigated, auction house Sotheby’s announcement that a rare pear-shaped, worth roughly $15 million, can be bought using cryptocurrencies, and El Salvador’s adoption of the token as legal tender, Bitcoin does not lack in bullish fundamentals.
However, the current volatile market, coupled with the bearish sentiments of investors, can very well mean Bitcoin will bottom out at $20,000 before taking off.
A Delhi-based Markets writer, I did my bachelor's in engineering with major in electronics and communications. I first heard of bitcoin while writing an article about blockchain technology a few years back, and have been following it ever since. Bitcoin may well be current big thing happening in the finance industry, and it feels like the right time to join the crypto bandwagon.
