Another bad week for Bitcoin could be a precursor of more pain to come, according to strategists watching the sell-off in cryptocurrencies.
Further weakness in its price may bring the $20,000 zone into view as a downside target, according to Oanda, Evercore ISI and Tallbacken Capital Advisors. Bitcoin fell about 2 per cent to $33,000 as of 11.23am in Hong Kong and is down some 10 per cent so far in June.
The largest cryptocurrency is “dangerously approaching the $30,000 level” amid growing regulatory fears in the US, and “a break of $30,000 could see a tremendous amount of momentum selling”, said Edward Moya, senior market analyst with Oanda.
Bitcoin has dropped about $32,000 from its April record, roiled by a rebuke from billionaire Elon Musk over the energy it requires as well as a renewed regulatory pressure in China. The ability of US authorities to recover a high-profile Bitcoin ransom also dented the idea that it’s beyond government control, which has been an article of faith for some of the coin’s supporters.
Evercore technical strategist Rich Ross and Tallbacken Capital Advisors’ Michael Purves have both flagged the $20,000 area as a potential key level if Bitcoin breaks much lower than where it is now.
Others, however, remain confident about the longer term outlook. For instance, Michael Saylor’s MicroStrategy boosted a junk-bond sale to $500 million from $400m to fund the purchase of more Bitcoin. MicroStrategy has emerged as one of the most bullish public companies on cryptocurrencies.
About a week after Bitcoin’s mid-April all-time high, Mr Purves had argued the bullish case looked “highly challenged”.
“How much lower can it go?” Mr Purves asked in his note on Tuesday. “The most obvious answer continues to be a complete retracement of the breakout from $20,000 – in other words, back to $20,000.”