Text size
Photo illustration by Edward Smith/Getty Images
Bitcoin’s recent tumble, which has seen it lose more than half its value, took it briefly below $30,000.
Bitcoin has been tumbling for more than three months now, and the move has started to intensify. The cryptocurrency, which is down 54% from its all-time high of $63,237 hit in mid-April, has fallen as much as 24% in the past 5 days. Bitcoin is now up 9.1% in 2021.
Bitcoin was off just over 1% at $32,243 at 1:25 p.m. after trading as low as $28,600
A decline below $30,000 a dangerous sign according to market technicians. That’s where Bitcoin found support in January before quickly racing to its record high. That $30,000 level is particularly important for Bitcoin, as Barron’s recently noted, and if it breaks, Bitcoin has a lot more room to drop.
The question is how much. “[If] for any reason Bitcoin’s critical $30,000 support were breached, it would be vulnerable to decline back to $20,000,” The Institutional View’s Andrew Addison wrote in Barron’s back in May. Instinet’s Frank Cappelleri, notes that the 61.8% retracement of the entire 2020-21 move—an important level when using Fibonacci sequences to determine support and resistance, is near 27,200. ICAP Technical Analysis puts the next important support level at $25,000.
And after that? Look out below. If the price falls to $25,000, the price could sink to $6,000, according to ICAP, an almost 80% drop from its current level. That might seem extreme, but history suggests it’s realistic. After hitting a high in December 2017, Bitcoin fell 83% before beginning the rally that took it to above $60,000 this year.
Still, with Bitcoin bouncing back, maybe history doesn’t have to repeat.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com