Bitcoin has been trading like tech stocks this year, so it’s no surprise that with bond yields surging to their highest levels in years, the cryptocurrency is hurting — and it’s in for more pain, according to Wolfe Research. On Wednesday, the yield on the 10-year U.S. Treasury yield briefly rose above 4% for the first time since 2008. Meanwhile, the Nasdaq Composite remains deeply in a bear market and is off about 31% in 2022. “As liquidity dries up globally and yields extend higher, the once fervent enthusiasm we witnessed for Crypto seems to be drying out,” Rob Ginsberg, senior analyst at Wolfe, said in a note Wednesday. “With supply and demand across the space dancing on a precipitous ledge, we offer our commentary on recent price movement along with likely downside price targets should support break, which we believe is likely.” This week bitcoin briefly topped $20,000 but has been struggling to find a more meaningful rebound from its June low of $17,567.45, per Coin Metrics. It’s currently more than 70% off from its November all-time high of $68,789.63. While many holders of bitcoin maintain a long-term outlook, institutions have dominated bitcoin and ether transactions as of late and are trading it like a macro asset . Analysts have shared Wolfe’s view that it has further to fall, especially if it fails to hold $19,000. They’d be wise to sit out a bit longer while bitcoin finds its bottom, Ginsberg said. “Bitcoin’s trading range continues to hold tight,” Ginsberg said. “Resiliency below 19k has held it afloat as of late. However, as it’s demonstrated a tendency to move lower with the broader market, a convincing breakdown beneath this level still seems imminent.” “Zooming out gives us a better picture of where this sturdy support level originates from,” he added. “The prior cycle highs of ’17 and ’20. When you factor in that the next significant level of support sits below 13k, it’s no surprise that we’re seeing it put up such a strong fight at current levels.” Meanwhile, ether has continued to float within a range of $1,000 to $2,000. Wolfe is looking to a “likely” test of support at $1,000 “in the coming weeks.” Next stop: $600, according to the firm. On top of cryptocurrency prices, Ginsberg said the firm is cautious of a bear flag in Coinbase’s share movement, adding that a “breakdown through channel support seems more than likely.” Although the crypto services firm has been diversifying its services and revenue streams, trading still accounts for the majority of its revenue, and trading activity tends to stall when prices are low. — CNBC’s Michael Bloom contributed to this report.
