Bitcoin Veterans Know To Keep Their Eyes At ,511 Level

Bitcoin Veterans Know To Keep Their Eyes At $19,511 Level

Bitcoin Veterans Know To Keep Their Eyes At ,511 Level

(BLOOMBERG) — Round numbers are usually a fixation for Bitcoin chart viewers, with many keeping their eyes on $20,000 amid the latest swoon. But veterans know they’re looking for a more notable one: $19,511.

That is the highest point the coin reached during its last bull cycle in 2017, which it reached at the end of that year. According to Vetle Lunde and Jaran Mellerud of Arcane Research, Bitcoin has never fallen below previous cycle peaks during its roughly 12-year trading history, so a pause below it would be memorable.

“A potential visit below this level could lead to capitulation of many hodlers and a deleveraging, making this a very important support level to watch out for,” the pair wrote in a note, citing long-time, loyal holders.

Furthermore, in addition to the psychological importance of the level, most open interest in Bitcoin options is based on the strike price of $20,000, according to Arcane, “which could add to the selling pressure in the spot market if the price were to fall below it.”

Cryptocurrencies have fallen this year, with the prices of some digital assets falling by as much as 90% as the Federal Reserve raises interest rates to curb rampant inflation. Tokens have taken a hard hit this week, especially as market prices became even more aggressive by the central bank. Bitcoin is down about 30% since Friday, one of the worst six-day stretches on record. It hasn’t seen a single up day in the past nine sessions.

The coin’s drop this year has brought it to about $20,700 this Wednesday, its lowest point since December 2020, meaning no one who bought in the past year and a half has made a profit. Many analysts are now looking at indicators to see who else could be under pressure to sell.

Whether crypto prices continue their declines in the future is anyone’s guess, but market observers say much will depend on the Fed. The US central bank on Wednesday raised its key interest rate by three-quarters of a percentage point — the largest increase since 1994 — and said they will continue to hike aggressively this year. A higher rate environment has been detrimental to riskier assets like crypto.

Katie Stockton, founder of Fairlead Strategies, a research firm focused on technical analysis, sees a “definitely negative shift in short-term momentum” for Bitcoin. A breakdown below $27,200 has increased the risk of the coin falling to around $18,300 – $19,500, another support area. “Bitcoin and most other risky assets remain out of favor in this environment,” she wrote in a note this week.

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