Bitcoin prices have suffered some serious losses lately, dropping to their lowest level in roughly 18 months as risk assets face difficult market conditions.
The highly visible digital currency fell below $21,500 today, TradingView figures show.
At this point, it was trading at its most depressed value since early December, additional TradingView data reveals.
The cryptocurrency is down sharply since reaching an all-time high of close to $69,000 late last year.
[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.]
Following these latest price movements, several analysts weighed in on where they think bitcoin will go next.
Impact Of Inflation
Several market observers highlighted the latest US inflation figures, as well as how they expect them to affect risk assets going forward.
Government data shown that in the 12 months through May, the The Consumer Price Index for All Urban Consumers (CPI-U) increased by 8.6% before seasonal adjustment.
Richard Usher, head of OTC Trading at BCB Group, spoke to these developments.
“Bitcoin has suffered over the last 48 hours of trading post the huge inflation number in the USA,” he stated.
“This number lead to a sustained sell off in all risk assets and has been exacerbated in Crypto with ETH breaking its long term support and various rumors of crypto companies under pressure,” Usher added.
He predicted that going forward, this situation will cause inevitable turbulence.
“From here BTC is entering a period where two worlds collide. Short term sellers on the back of the negative tone to risk are running into medium term investors who view levels approaching 20,000 as good long term value.”
“This will lead to volatile and choppy trading in my opinion.”
Anthony Denier, CEO of trading platform Webull Financial, also weighed in on the impact of the latest US CPI data.
“Inflation numbers were released last week, which was its highest in 40 years, and more rate hikes are expected in the near term which is bad for risk assets,” he noted.
“When interest rates rise, savings and bonds pay higher yields on investments,” Denier emphasized.
“These rising yields on less risky assets means investors don’t take as much risk to get a decent return, resulting in fewer buyers of risk assets. In today’s market, this includes growth stocks and cryptos, so we can continue to expect declines in the near term.”
Several market observers offered technical analysis, highlighting key levels of support and resistance.
“The recent decline has now caused BTC to convincingly break below its important support level near 30k,” said Julius de Kempenaer, senior technical analyst at StockCharts.com.
“This means that that level will now start to act as resistance on the way up, limiting upside potential,” he stated.
“But at the same time the break has opened up the way for, much, lower prices,” said Kempenaer.
“There is a bit of support to be found in the 16.5-19.5 area but major support is only coming in around 12-13-k”
Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All Streets Podcast, also chimed in.
“There are some obvious levels, although it should be noted that lines on a chart are simply guesses in this macro environment,” he stated.
“Traders are watching the weekly 200 MA, just above $22,000 as a likely area of support, considering this has been the bottom of every previous bear market. Two consecutive candles have never closed below this line,” Melker specified.
“The next obvious support is around $20,000, the top of the 2017 bull run,” he noted.
When speaking to what bitcoin prices will do going forward, Melker offered a measured response.
“It is difficult to predict what comes next, as it will largely be determined by contagion from potential platform collapses, inflation numbers, Fed tightening and other factors.”
“Now is not a time to make guesses, but rather to batten the hatches and ride the storm.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.