Bitcoin Eyes $8,000 'Max Pain' Price Level As 3-Day Chart Hints At March 2020 Crash Repeat
- Bitcoin dropped below $25,000 for the first time in 18 months, cementing the markets firmly in a crypto winter.
- The dip in prices sees the market capitalization fall below $1 trillion from previous highs of $3 trillion.
- Experts have warned investors to brace for even darker days as there are little to no indicators for a reversal.
Bitcoin (BTC) is wallowing in the pangs of rapidly declining prices that have taken it to previously unseen levels for over a year. Altcoins and companies with BTC on their balance sheets have taken their fair share of the hit.
Bitcoin, the largest crypto asset in the world fell to a staggering low of $22,818 at the start of the week. The new price meant BTC lost 17.34% in less than a day, shedding over $5,000 from its value.
One of the reasons for the asset plunging to new lows has been linked to Celsius pausing all withdrawals, transfers, and swaps between accounts. Crypto reacted negatively to the news coupled with the shock of US inflation data released on Friday. On the broader scale, Terra’s implosion in the middle of May unnerved investors, making them tread cautiously.
“The fundamentals to support stabilization and recovery just aren’t there,” said Steven McClurg, co-founder at Valkyrie Investments. “Things can and likely will get worse before they get better.”
“If you do get long, perhaps think about doing so with either a long call spread or short put spread to limit risk,” advised Rick Bensignor of Bensignor Investment Strategies. He warned that “if this dives, there’s no reliable support nearby.”
Altcoins did not fare any better in the space as they also lost a substantial part of their values as the carnage continued to spread. Ethereum fell by 17.69% to trade at $1,256 while BNB, ADA, and SOL fell by 13.11%, 10.57%, and 15.64% respectively. The double-digit losses could be seen across the wider markets with Dogecoin, Polkadot, Wrapped Bitcoin, and Polygon suffering the same fate.
Companies with Bitcoin on their balance sheets felt the heat as well. MicroStrategy with well over 120,000 BTC in its holdings saw its shares decline by 28% while mining firms like Marathon Digital Holdings Inc and Riot Blockchain Inc plunged by 19% and 16% respectively.
The dipping dip
Amid declining prices, it is normal for investors to buy the dip but analysts are warning against such a move. Peter Schiff, a financial commentator warned his over 700 thousand followers not to buy the dip.
“This could be a rough weekend for crypto. Bitcoin looks poised to crash to $20K and Ethereum to $1K. If so, the entire market cap of nearly 20K digital tokens would sink below 800 billion, from nearly $3 trillion at its peak. Do not buy this dip. You’ll lose a lot more money,” said Schiff.
Regular dip buyers like MicroStrategy and even El Salvador have held back from adding to their balance as they scan the horizon for a sign. He predicted that job losses in Web 3 and rising energy costs would force crypto hodlers to sell their crypto assets to cover the bills.
At the World Economic Forum in Davos, Guggenheim’s Scott Minerd predicted that the cryptocurrency winter could last for a long time with Bitcoin’s price falling to $8,000. BlockFi, Coinbase, and Gemini have announced that they will be reducing the size of their workforce to deal with the current market conditions in the space.
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