Bitcoin continues to decline and the worst may be yet to come

The crypto market is being hit hard by inflation and poor economic conditions. Already close to its lowest level of the year, Bitcoin could lose value further.

It has already been more than 6 months that the value of bitcoin has been in free fall. While the cryptocurrency hit its all-time high in November 2021, trading at over $67,000, nearly a year later a bitcoin is worth less than $20,000.

It’s a terrible downfall for the queen of crypto-currencies, a victim like all other digital assets of the ” bear market and the sharp fall in stock market prices. But the worst could still be to come: after two brief passages above the $20,000 mark during the month of September, some indicators show that bitcoin could go – much – lower.

The crypto market and the stock market are not doing well. // Source: Canva

A threshold story

The fluctuations of stock exchanges and cryptocurrencies are still largely unpredictable, but there are, however, certain benchmarks and indices that specialists use to predict whether prices will rise or fall.

Among these, we find in particular the notions of support thresholds and resistance thresholds, which refer to levels around which prices tend to stabilize. These are generally symbolic thresholds, like an old record: the closer you get to the highest price ever reached, the more bearers will want to sell, convinced that the price will not be able to rise any higher.

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Not sure that the bitcoin is maintained at its floor level. // Source: Canva

The mechanism is the same for a low threshold: potential buyers wait for the moment when an asset will reach its former lowest price to invest at advantageous prices before prices rise again. By doing this, buyers regularly raise values ​​mechanically, since demand is strong.

The bitcoin threshold is only going down

The low price threshold for bitcoin has long been around $30,000. In 2021, it briefly fell to $29,800, before rising very quickly, and setting a new price record. But, since May 2022, bitcoin has fallen back below $30,000, and still hasn’t rebounded — an indicator of poor financial market health. And, after two very short rises in the value of bitcoin during the month of September, we see more and more specialists in the sector worrying, and wondering how far bitcoin could go.

For analyst Vincent Boy, it is certain: bitcoin should soon return to its lowest level of 2022, reached in June. The value of one bitcoin at that time was $17,700. ” There are signs that we can expect a significant drop “, he says.

Among these signs, the most significant is certainly the behavior of the big bitcoin owners, who are called “ whales (whales, editor’s note) in the sector. ” Blockchain analysis shows that many big players are sending their bitcoins or ethers to trading platforms, and that means they want to sell their cryptos “, explains Vincent Boy. This is a bad signal sent to all bitcoin owners which has a good chance of driving the price down further.

The new low of $17,700 may therefore not hold. This is already bad news in itself, but it would above all be a devastating symbol: it would mean that in one year, two thresholds supposed to maintain the price of bitcoin would not have worked.

An ‘inevitable’ bitcoin price drop

In addition, US market indices are down “, adds Vincent Boy. ” Inflation may be easing, but the recession is here. For me, all it takes is a spark for the bitcoin supports to drop. »

not stonks 2 cg
Not Stones. // Source: Knowyourmeme

This spark could well occur in the days to come, with the publication of the US household consumer price index. ” If the numbers are worse than expected, there is going to be a huge drop “. For him, sooner or later, the fall of bitcoin is inevitable. »

And from then on, bitcoin’s next holding threshold is located around $14,000. A significant fall, and from which bitcoin could not necessarily recover quickly. ” For there to be a rally in the crypto market, there would have to be a rally in the traditional markets — and that, with the recession coming, could take a long time. »

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