California: Bitcoin fell back below $20,000 on Tuesday after enjoying its strongest week in more than three months as a surge in the greenback rippled through global markets. The largest cryptocurrency dropped as much as 2.6 per cent to $19,870, declining for a fourth straight day ahead of US consumer-price data Tuesday. It hit $22,472 on Friday as risk appetite returned to broader assets.
The second-largest crypto Ether slid as much as 4.1 per cent to $1,090.94. The MVIS CryptoCompare Digital Assets 100 index dropped as much as 2.6 per cent.
“Expect apathetic back-end vol and basis flows in another summer trading week with CPI likely to be the main event on July 13,” Genesis’s Noelle Acheson and Gordon Grant said in a note Monday. “Notwithstanding a modicum of fireworks around last Friday’s weekly options expiry that saw Bitcoin blow through $22,000 and touch the 200-week moving average - with Ether pushing toward $1,300 in sympathy - the weekend session saw a resumption of choppy, downwardly oriented price action that has characterized recent months.”
The dollar jumped on Monday ahead of the CPI, which could offer insight into the Federal Reserve’s potential rate-hike path. Bitcoin and other cryptocurrencies have struggled as the central bank works to combat high inflation readings, and have tended to trade along with risk assets for the past couple of years.
Bitcoin is more likely to tumble to $10,000, cutting its value roughly in half, than it is to rally back to $30,000, according to 60 per cent of the 950 investors who responded to an MLIV Pulse survey that ran July 5-8. About 40 per cent saw it going the other way.
The latest Bitcoin chart pattern suggests cryptocurrency speculators should brace for more losses. The largest digital token has traced a so-called rising wedge, which technical analysts view as a kind of calm before the storm - a temporary hiatus in episodes of often intense downward pressure on an asset’s price. A rising wedge also formed between May and June, snapping an earlier sharp retreat in Bitcoin, only to give way to a 42 per cent slump that took the virtual coin to $17,600 from more than $30,000.
Opinion is split on whether the token has found a floor around $20,000 after a 57 per cent plunge this year sparked by tightening monetary policy, the implosion of leveraged crypto outfits and a glum mood in global markets.
“Not only is the broader market environment not in its favour, even if the occasional bear-market rally inspires some hope, but the crypto community isn’t exactly buzzing either,” Craig Erlam, a senior market analyst at Oanda, wrote in a note.