Bitcoin and Ethereum keep losing ground and making investors nervous. Trading instruments are approaching important levels where many would like to see big players get active. Otherwise, there is a threat of a larger move downwards, with yearly lows updated and the worst-case scenarios materializing, with Bitcoin trading at $10,000 and Ethereum at $500.
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% of the 950 investors who responded to the latest MLIV Pulse survey. About 40% saw it going the other way, expecting the cryptocurrency to rise to $30,000 in the near future. The forecast highlights the bearish mood of investors. The crypto industry has been rocked by troubled lenders, whose collapse triggered a major correction. Some $2 trillion has vanished from the market value of cryptocurrencies since late last year, according to data compiled by CoinGecko.
At the same time, while some 28% of the overall respondents expressed strong confidence that cryptocurrencies are the future of finance, 20% said they're worthless.
Bank of England governor Andrew Bailey also mentioned the subject of cryptocurrencies yesterday, saying they may have some external value due to people's willingness to buy tokens and coins. However, Bailey believes crypto assets lack intrinsic worth. Bailey has previously been a vocal critic of crypto, but speaking to UK lawmakers, he made some more positive statements while reiterating his view that unsecured crypto assets pose a very high risk.
The Governor of the Bank of England also discussed the recent Financial Stability Report. It highlighted the dangers posed by the recent $2 trillion fall in crypto-asset capitalization, stressing the vulnerability of the market and the need for tighter regulation.
Regulators in the UK and Europe have recently tightened their rhetoric on cryptocurrencies, complaining that the cryptocurrency market could damage the financial system. Despite this, the Bank of England said in the report that recent volatility in cryptocurrency markets does not yet pose a risk to the system. However, systemic risks could arise if inaction continues. This underlines the need for a stronger regulatory framework to respond to changes in these markets, says the Bank of England.
As for Bitcoin's technical outlook, there were no buyers willing to invest around large resistance levels and the coin started its next downturn, rebounding from a major resistance around $21,900. It is unlikely that the bulls will take the initiative. I recommend not to add long positions yet and wait for the trading instrument to stabilize. Breaking the nearest support at $19 630 and fixing below this range will push the trading instrument back to the lows of $18,860 and $18,240, and then it will be close to $17,580. In case of an upward correction, the bears will start to act around the nearest resistance of $20,400. Only a consolidation above this range would bring the trading instrument back to $21,150, allowing investors to calm down. A further target would be the $21,900 area.
There is no willingness to buy Ethereum around the major resistance of $1,270 either. This led to profit taking and another decline in the trading instrument. Buyers now should focus on how to get back to $1,095. Only after the growth above this level we can expect a sharper surge with the renewal of the high of $1 155. Even if the bulls break through to $1,220, we can hardly expect a bullish market to start. Only a consolidation above will allow the trading instrument to return to $1,270. In case the pressure on ETH remains, buying around the nearest support at $1,040 is possible. However, this will only be a temporary phenomenon. It is better to expect larger lows around $985 and $935.