Bitcoin (BTC) Below $30,000, What Comes Next
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Bitcoin (BTC) broke down its support levels, and is yet to bounce again above the $30,000 mark. BTC trading showed potential to dip under $30,000 in the past few days, once again raising the question whether a rebounce is possible. For some, the chart may be a sign of a bearish market.
BTC traded at $29,739.69 on Tuesday, dipping down to the $29,500 range. The slide also put pressure on ETH pricesf, while most altcoins shed value even faster.
The recent price slide happens on relatively low volumes of $23B in 24 hours, as interest in trading has dried out in the past weeks. The prevailing fear sentiment led to a series of price drops as BTC abandoned higher tiers.
Will BTC Unravel Further
BTC prices have dropped for about two months, triggered by a series of events that caused investors to be more wary. The stream of new corporate buyers has dwindled, and even MicroStrategy has not announced new purchases.
At the same time, the minting of USDT has stalled and the supply of stablecoins has been sinking lower, as well as their daily turnover through crypto exchanges. Based on this sentiment, some analysts expect at least short-term bearish moves, with a revisit of the $28,000 range.
Scenarios include a dip to $21,000, with some expecting a bear market to continue until BTC revisits ranges under $10,000 in cases of worsened demand and increasing fear.
At the current price range, BTC continues to trade with relatively lower futures trading volumes. At the same time, spot trading is also shifting from BTC accumulation to potential selling as coins move to exchanges.
Will Grayscale’s Holdings Affect BTC
One of the price pressures this week comes from the scheduled unlocking of some of Grayscale’s BTC holdings. The GBTC shares to be unlocked hold the equivalent of 40,000 BTC.
However, the unlocking of shares does not mean the BTC will be sold on the open market. Grayscale still holds about 650,000 BTC in total, as well as other digital assets.
The unlocking means buyers of GBTC shares from six months ago may be able to sell them on the open market. The sale will be a measure of mainstream sentiment for BTC.
Grayscale shares for GBTC trade at a slight discount, equivalent to a BTC price of $29,170. However, Grayscale also seems confident of the promise of digital assets. The fund recently announced the launch of DeFi based shares, tracking the Coinbase DeFi index.
Is the Long-Term BTC Trend Intact
Every time BTC makes a more dramatic correction, there is renewed interest in the potential for long-term gains. The stock-to-flow model allows for significant short-term fluctuations. Similar models of growth usually treat breakdowns as buying opportunities for accumulation before long-term gains take the price higher.
The S2F model can still potentially break, although it has so far survived with bounces from outlier low prices.
BTC has performed at prices below those predicted by the model. However, the past cycles happened at much lower market prices. The current highs above $64,000 suggest the model may take BTC to prices above $1M in the next decade.
At the higher price range, BTC may need a much higher scale of investments, including significant corporate interest.
ETH Also Faces Weakened Interest
The price of ETH is also an important measure, since the token affects multiple projects and investments as a hub to DeFi collateralization. ETH is down to $1,763.30, breaking down to levels that will make it difficult to regain previous prices.
The loss of momentum and enthusiasm may weigh heavily on ETH prices, potentially pushing the coin through more selling to the $1,600-$1,400 range.
In the past, ETH price drops have extended throughout the crypto ecosystem, as they create calls for more collateral. A move in ETH prices can potentially trigger multiple smart contracts to liquidate DeFi lending positions.
Is the Altcoin Bull Market Over
Altcoins, including large-cap assets, are unraveling faster than BTC. Altcoins managed to break some of the all-time highs not seen since the bull market of 2017, and some trade above their previous levels.
But for altcoin traders, it is possible to see new lows happening even faster than the BTC drop. One of the new developments in 2021 is the appearance of multiple new tokens. This includes a series of meme coins based on the hype of Dogecoin (DOGE).
DOGE has continued to unravel, currently standing at $0.17. In the past years, the reawakening of DOGE was viewed as a sign of renewed inflows into altcoins. In 2021, DOGE saw outsized attention from both crypto traders and mainstream newcomers, who also bought near the top of $0.70.
Now, altcoins face the question of whether they will recover relatively fast to new highs, or go through another prolonged bear market and sideways trading as they did in 2018 and 2019.
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