Amidst the fallout from Silvergate this week, negative momentum and sentiment towards cryptocurrency “strongly suggest(s) a breakdown could be on the cards” in the price of Bitcoin, according to some crypto watchers.
Forex.com analyst Fawad Razaqzada anticipates prices could head towards $20,000 in the next little while, below the $21,400 mark it was trading at as of Thursday morning.
Source: FOREX.com
“Sentiment towards crypto assets have been negative and that hasn’t changed after Powell ramped up the Fed’s hawkish rhetoric earlier this week. The dollar and bond yields have risen sharply, weighing on all non-interest-bearing assets, including cryptos and gold,” Razaqzada wrote Thursday.
Crypto prices fell across the board after Silvergate, a bank that has been at the centre of the industry’s growth, decided to shut down.
Razaqzada noted that there could be a “sharp” follow-up technical sell-off in the event of a breakdown, if support gives way around $21,400.
“(T)here is not much prior reference points for the buyers to use as an area of interest,” the analyst wrote.
“Should the bearish scenario play out, $20,000 could be the obvious target, while the 200-day average comes in about $300 below that level around $19,700.”
Higher highs or lower lows?
Crypto bulls will either want to see a false breakdown below the current $21,400 level, which would point to the bears getting trapped, or an eventual move above one of its local highs to create a higher high and thus break the downtrend, Razaqzada noted.
According to Razaqzada, the “line in the sand” for bears is around Bitcoin’s latest highs of around $22,655. As long as price holds below this level, the bears would remain in control, he wrote.
Crypto suffers from Silvergate fallout
Crypto stocks across the board are down following Silvergate’s voluntary liquidation.
Silvergate itself lost over half its value after revealing it plans to wind down its operations and enter voluntary liquidation.
The bank is considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets, it said in a statement.
That is having a contagion effect on other crypto-related stocks, with Riot Platforms down 3.7% and MicroStrategy trading 2.9% lower.
Coinbase is also feeling the heat from the Silvergate fallout and is down 3.7% today, FOREX.com’s Josh Warner said.
“The company cut ties with Silvergate, which was a banking partner for Pro clients, last week and the cryptocurrency trading platform said today in a tweet that it has ‘no client or corporate cash at Silvergate’, adding that ‘client funds continue to be safe, accessible and available’.”
Contact Angela at angela@proactiveinvestors.com
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