Bitcoin prices bounced back today after falling below $30,000 yesterday.
Bitcoin prices have suffered some turbulence lately, dropping under $30,000 yesterday and reaching their lowest since July.
The world’s largest digital currency by market value fell to less than $29,900 last night on TradingView.
Since then, the cryptocurrency bounced back somewhat, rising to $32,650 today, additional TradingView figures show.
Following this recovery, the digital asset fell back, and was trading close to $30,750 at the time of this writing.
[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.]
Key Market Drivers
Analysts have cited varying factors when explaining these recent declines, including central banks hiking benchmark rates and selling assets they accumulated during the recent pandemic.
Several market observers pointed to risk-off trading when describing the recent downward movement in bitcoin prices. Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All Streets Podcast, commented on this development.
“Bitcoin has fallen alongside global markets as traders and investors risk off in the face of recession and inflation concerns,” he stated.
“Bitcoin dropped to below 30K, the tail end of which was largely the result of the Luna Guard Foundation dumping Bitcoin on the market in a desperate attempt to fix the UST peg,” said Melker.
“This was insult to injury on a down day.”
Melker also offered some technical analysis, pointing out key levels of support and resistance that traders should keep in mind.
“The 30K psychological level remains important, although technically 33K is the area to watch for bulls to attempt to flip key resistance back to support,” he stated.
Richard Usher, head of OTC Trading at BCB Group, elaborated on the subject, offering further detail.
“Whilst the market has been fixated on a move below 30,000k in BTC being the key level, last night’s dip below was actually the fourth such move in the last 14 months,” he stated.
“The key support for us is at 29,000, a break of which targets a move to 25,500 and ultimately the significant support at 20,000 which triggered the rally last year when it broke,” said Usher.
Julius de Kempenaer, senior technical analyst at StockCharts.com, outlined some similar support levels.
“Since mid February BTC formed some intermediate support around 33-34k. Breaking that level downward yesterday opened up the way to major support around 30k,” he stated.
“That level is in play since the start of 2021 and should be considered a major support level,” said de Kempenaer.
“A clear break lower will free more downside risk as the next serious support level is only found near 20k which is the peak of 2017 (!) and a cluster of smaller peaks/highs in November 2020, just before the break that took BTC all the way to 65k,” he added.
In addition to providing this input, the analyst also spoke to resistance.
“Breaking those support levels means that they will now come back as resistance and block BTC advances in the near term. The former aforementioned support level in the 33-34k area is now the first resistance level to watch.”
Usher also singled out some key areas of resistance.
“Resistance levels are stacking up at 33,000, 34,700 and ultimately 40,000 which needs to be regained to call a longer term low in place,” he stated.
Potential Market Turbulence
Bitcoin prices could experience significant volatility in the coming months, as the uncertainty surrounding Federal Reserve policy decision making impacts cryptocurrency markets, said Collin Plume, CEO and founder of My Digital Money.
“There’s a possibility Bitcoin could bounce around wildly in the next couple of months,” said Plume.
“In fact, I wouldn’t be surprised if another selloff happens to push it down.”
“Investors are seeing the Fed interest rate hike, and all the uncertainties that come with it, as a buy opportunity. The next Fed meeting won’t be for another month, and we are certain another interest rate increase is coming,” he stated.
“Only then will investors have confidence in where prices are headed, where assets are headed, and where their investments are headed.”
Keeping The Faith
Regardless of what the digital currency markets do in the near-term, investors should keep the faith, said Konstantin Boyko-Romanovsky, founder and CEO of Allnodes Inc.
“Whether you invest in Bitcoin or other blockchains that will rise in the next bull run, the sentiment remains the same,” he stated.
“We are past the point where blockchain and cryptocurrencies can become obsolete suddenly.”
“So a sharp swing downwards in cryptocurrency prices might be a chance to enter or re-enter the market,” said Boyko-Romanovsky.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.