Bitcoin struggles as ‘final washout’ possible

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An attendee takes a picture of a replica bitcoin mine at the CoinDesk 2022 Consensus Festival in Austin, Texas, the United States, on June 10, 2022. (Photo: Bloomberg)
An attendee takes a pic­ture of a repli­ca bit­coin mine at the Coin­Desk 2022 Con­sen­sus Fes­ti­val in Austin, Texas, the Unit­ed States, on June 10, 2022. (Pho­to: Bloomberg) 

Bit­coin stayed just over US$20,000 on Wednes­day, with its inabil­i­ty to gain upward trac­tion fuel­ing con­cern among ana­lysts of fur­ther declines.

The largest cryp­tocur­ren­cy was lit­tle changed, bound in a range between about $20,130 and $20,429. The MVIS Cryp­to­Com­pare Dig­i­tal Assets 100 index, which mea­sures 100 of the top tokens, fell 2.1% as of 1.30pm in Singapore.

“Most short-term tech­ni­cals point to an above-aver­age chance of a final ‘washout’-style decline before this bot­tom,” said Mark New­ton, tech­ni­cal strate­gist at Fund­strat, in a note Tues­day. “The ini­tial warn­ing should occur on a dai­ly close under $20,491, while under $19,744 allows for a pull­back to retest $17,592. Tech­ni­cal­ly not much lies under $17,592 before $12,500 to $13,000, which I expect should be an excel­lent place for inter­me­di­ate-term buy­ers to add to longs.”

Bit­coin has been sink­ing along with riski­er assets in recent months, so a slide on a day of tech-stock declines is par for the course. Cryp­to mar­kets have also been blud­geoned by the melt­down of the Terra/Luna ecosys­tem, trou­ble at hedge fund Three Arrows Cap­i­tal and frozen with­drawals at places like Cel­sius, as well as job-cut announce­ments from the likes of Crypto.com, Coin­base and BlockFi. 

The cryp­to indus­try must be relieved that prices have stead­ied out “giv­en the stream of neg­a­tive head­lines over the last cou­ple of months,” said Craig Erlam, senior mar­ket ana­lyst at Oan­da. “I fear more may fol­low in the weeks ahead and I won­der whether the com­mu­ni­ty does too, giv­en its inabil­i­ty to get any trac­tion above $20,000.”

Still, any fur­ther dips might cre­ate a good chance to buy, Fund­strat said.

“Look to buy dips with­in two to three weeks at low­er lev­els,” New­ton said, “and any move down to test or briefly under­cut June lows presents an opportunity.”

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