Bitcoin Price Could Slip to $20,000 Amid Macro Conditions and Weak Technicals
Last Thursday, August 17, the world’s largest cryptocurrency Bitcoin (BTC) came under a strong selling pressure crashing down all the way to $26,000 following Elon Musk’s SpaceX selling $373 million worth of BTC Holdings.
As of press time, Bitcoin is finding it difficult to stay above $26,000 amid the strong selling pressure. However, the dust remains far from settled as all of Bitcoin’s on-chain indicators have turned completely bearish.
On-chain indicators suggest that there have been several Bitcoin transactions worth over $1 million indicating that whales have been very active on the dump.
Also, on the technical chart, Bitcoin is showing weakness as the BTC price moves under the 200-day moving average (DMA). This risks of bitcoin further dropping to its realized price which is now at $20,350 levels.
Bitcoin's current trading position is beneath all the moving averages that analysts, including Rekt Capital, view as essential for a bull market. The specific indicators in focus are the 21-week Exponential Moving Average (EMA), the 50-week EMA, and the 200-week EMA.
On the downside, the immediate support range for the Bitcoin is in the $25,200-$24,800 zone. Now, if the BTC price breaches this, it could face a further downside to $20,000.
Apart from the Elon Musk news, other macros factors have also been casting a shadow on Bitcoin. The vulnerabilities in the global markets puts risky investments such as Bitcoin under major stress. Also, the Federal Reserve has hinted at keeping the interest rates higher for a prolonged period of time considering the stick inflation data.
Bitcoin has faced difficulties in gaining significant upward momentum in the past month. Its trading has been confined within a narrow range of $29,000 to $30,000, and the absence of substantial positive developments to boost the asset's value has only intensified this downward trend.
In an interesting comparison with Gold, Bloomberg’s senior macro strategist Mike McGlone said that Bitcoin’s volatility has more room to decline than traditional assets like Gold and thus, the crypto price can continue to fall from here. Also, the 90-day volatility for Bitcoin continues to remain elevated vs the traditional yellow metal.
Furthermore, he also talks about Bitcoin’s role as a leading indicator is similar to the stock market situation of 1930s. “Statistician and entrepreneur Roger Babson began warning about elevated equity prices well before economist Irving Fisher proclaimed a "permanently high plateau" in 1929. The Fed tilts our bias toward a stance similar to Babson’s,” he writes.