- Bitcoin is set for its third consecutive red week for the first time since May 2022
- Bitcoin dipped under $20,000 for the first time since the FTX collapse
- Regulatory crackdowns and other fears have helped drive the price down from $25,000
Bitcoin is set for the third consecutive red week for the first time since May last year as the crypto crackdown and fears over the length and severity of U.S. interest rate rises grow. Bitcoin dropped through $20,000 last night for the first time since the collapse of FTX last November following a bear market rally to $25,000, a drop that may now usher in the next phase of the bear market – accumulation. But what are the key levels to look for as we go into the weekend?
Writing on the Wall
The writing has been on the wall for Bitcoin ever since it failed three times to beat the key resistance level of $25,500 in the middle of last month, and the reaction has been swift and brutal – a $5,200 drop that put it back to 2017’s all time high again. However, it has been aided by a huge crackdown on the crypto industry, with everything from exchanges to protocols such as staking coming under scrutiny from regulators.
This was exacerbated last night when the New York State Attorney General Letitia James filed a lawsuit against KuCoin, alleging that the Seychelles-based crypto exchange is violating securities laws by offering tokens that she classifies as securities without a license. This news came after chair of the Federal Reserve, Jerome Powell, warned that interest rates may continue to rise as conditions are not yet favorable enough to consider cutting them back. Naturally, this spooked legacy markets as well as the crypto market, and led to a $70 billion selloff in the market.
$20,850 is Crucial
So where does all this leave the crypto market? Brave buyers have been stepping in to buy the blood in the streets, believing that a 21% drop in the Bitcoin price represents a decent discount, but there are some crucial levels to watch over the next few days. The first is at $20,850, which formed the bottom of the range in recent weeks and which has significance going back to the November 2018 capitulation. No bullish momentum can be continued until it closes above this level on a weekly timeframe:
Achieving this would not be an automatic right to higher prices, but would suggest that the worst is now over and accumulation can begin, likely lasting the rest of the year. However, if it can’t reclaim this level then lower prices, or at least a continuation sub-$20,000, could be in the offing:
Of course, we won’t know whether the bleeding has finished for this drop until today is over, but a good first step for Bitcoin would be holding around the $20,000 mark and consolidation over the weekend.
There may be some more bumps on the road, but at least Bitcoin has clearly carved out its bottoming range for this bear market.