Bitcoin continued to trade in a tight range around $20,000, seemingly as investors were less willing to take bigger risks after Federal Reserve Chairman Jerome Powell reiterated the central bank’s determination to raise interest rates to fight inflation.
Bitcoin rose as much as 3.5% to $20,503 today (30), recovering from falling below the $20,000 barrier during the weekend. Other cryptocurrencies were mixed. U.S. stocks extended losses on Monday after tumbling on Friday, with the Nasdaq closing down 1 percent.
“Funds are flowing out of risky assets,” said Cici Lu, chief executive of consultancy Venn Link Partners.
The $20,000 level has acted as support in recent months when Bitcoin hit lows. However, Bitcoin has continued to move higher in the past few weeks, never falling below the July 14 lows until last Saturday, and even rising above $25,000 in early August. The small gains mentioned above have subsided, with bitcoin down about 17% since Aug.
Riskier assets have struggled over the past few days as investors are still digesting Ball’s remarks. Powell reiterated that even in the face of the risk of an economic downturn, the Fed will continue to tighten monetary policy.
Still, with digital assets closer to 2022 lows than stocks, “the stock market’s current downside potential is actually higher than that of cryptocurrencies,” said Matt Maley, chief market strategist at Miller Taba.
Many strategists see $20,000 as a key level for Bitcoin, although support levels could also get lower.
Katie Stockton of Fairlead Strategies sees long-term support for Bitcoin in the $18,300 to $19,500 range. Fundstrat strategist Mark Newton marked some key areas in the $19,000 range, saying the area that really matters is around $17,500, near the June lows.
DailyFX analyst Tammy Da Costa said this week will be another pivotal week for cryptocurrencies as U.S. manufacturing and employment data will likely influence the Federal Reserve’s decision. He says:
From a technical analysis perspective, if Bitcoin sustains below $21,000 and below the bearish flag downside support around $20,300, it could lead to a return to July lows at $18,905, as for June’s The low of 17,592 acts as a (support level).
In cryptocurrency markets, the past two Fridays have been rough, the most recent of which liquidated $288 million in cryptocurrency longs, according to Coinglass data. On August 19, $562 million of long positions were liquidated, the largest liquidation wave since June 13.
As for ether, it rose 8.8% to $1,582 today, but was still well below the roughly $2,000 it was two weeks ago. The price of ether has remained volatile as the merger upgrade is looming in mid-September. Bitfinex analysts said in the report:
Before the consolidation escalation arrives, also keep an eye out for Ether’s decline, as bearish sentiment appears to be gaining ground in the so-called risk asset. Volatility has become so typical in the digital currency space that it shows no signs of abating.
