Bitcoin’s price may soon bottom out after falling about 50% from its record high in November of last year, according to a technical analyst at Fundstrat who revealed key levels to watch to determine whether BTC’s bottom is near or there’s more downside to come.
According to Bloomberg, Fundstrat analyst Mark Newton’s pricing model has revealed there’s a “good likelihood” that bitcoin’s low is coming during the spring months, although the analyst cautioned against getting bullish for now after BTC saw a “minor two-week bounce.” That bounce, Newton said, may not lead to a “new intermediate-term rally.”
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Newton revealed that a key technical level to watch is the $40,000 mark for bulls, while a decline under the $35,511 level would set up a test for the cryptocurrency at $32,950, an intraday low reached on January 24. The analyst wrote:
Until $40,000 is exceeded on a daily close, it remains in a downward sloping pattern, and it’s tough to rule out further weakness technically speaking
Bitcoin’s price has declined over the last few weeks amid a wider sell-off of risk assets based on growing concerns about a contractionary monetary policy from central banks throughout the world who are expected to soon move to curb inflation growth.
CryptoCompare data shows the flagship cryptocurrency is trading at $36,400 at the time of writing after a months-long sell-off that saw it lose nearly half of its value after it hit a new high near $67,000 in November.
The sell-off, according to analysts at Morgan Stanley, was within historical norms. The bank’s head of cryptocurrency research Sheena Shah has pointed out that estimating the fair value of cryptocurrencies is difficult because they trade speculatively and were supported by the large availability of U.S. dollars and central bank liquidity.
In the note, the analysts wrote that if the price of bitcoin drops below the $28,000 mark, the market may expect further weakness. On the upside, the $45,000 mark is the price to watch because it would suggest the current downtrend has turned around.
Notably, analysts at JPMorgan Chase lowered their long-term bitcoin price target of $150,000 to $38,000 after the recent sell-off, as their initial prediction was based on BTC’s volatility dropping.
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