Round numbers tend to be a fixation for Bitcoin chart watchers, with many keeping their eyes peeled for $20,000 amid the latest swoon. But veterans know to keep an eye out for a more notable one: $19,511.
That is the maximum that the coin reached during its last bull cycle in 2017, which it reached at the end of that year. Throughout its roughly 12-year trading history, Bitcoin has never dipped below previous cycle highs, according to Vetle Lunde and Jaran Mellerud of Arcane Research, so a break below would be momentous.
“A potential visit below this level could lead to many hodlers capitulating and a reduction in leverage, making this a very important support level to watch going forward,” the pair wrote in a note, making long-term reference, firm. Headlines
Also, aside from the psychological significance of the level, most of the open interest in Bitcoin options is based on the $20,000 strike price, according to Arcane, “which may contribute to selling pressure in the spot market.” if the price falls below.
Cryptocurrencies have tanked this year, with prices of some digital assets falling as much as 90% as the Federal Reserve raises interest rates to combat runaway inflation. Tokens have hit a rough patch this week, in particular, as market prices get even more aggressive from the central bank. Bitcoin is down roughly 30% since Friday, one of its worst six-day stretches on record. He hasn’t seen a single day in the last nine sessions.
The coin’s slide this year took it to around $20,700 on Wednesday, its lowest point since December 2020, meaning no one who has bought over the past year and a half has made a profit. Many analysts are now watching the indicators to see who else might be under pressure to sell.
Anyone can guess if cryptocurrency prices continue to fall in the future, but market watchers say a lot will depend on the Federal Reserve. The US central bank raised its main interest rate by three-quarters of a percentage point on Wednesday, the biggest increase since 1994, signaling it will continue to hike aggressively this year. A higher rate environment has been detrimental to riskier assets like cryptocurrencies.
Katie Stockton, founder of Fairlead Strategies, a research firm focused on technical analysis, is seeing a “decidedly 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 continue to be out of favor in this environment,” she wrote in a note this week.