FX.co ★ Bitcoin trading near bottom and may fall deeper

Bitcoin managed to break through the 5-month sideways channel and resume the downtrend. The price pierced $18,500. It has been trading steadily below it for more than a week. There was not a single attempt to go back above this level. At the moment, the price is $16,700. Even at such low values, no investor is in a hurry to buy BTC. Everyone is waiting for a deeper fall. Now there are real grounds for it.

We have already talked about the bankruptcy of FTX, one of the largest crypto exchanges in the world. However, Changpeng Zhao, the head of Binance, a major exchange, said that FTX's bankruptcy could have long-term consequences. What can happen in the near future? Many investors are trying to withdraw their assets from exchanges, expecting new drops and crashes. They are trying to move their cryptocurrencies to cold wallets to keep them safe. Some of them withdraw their capital in US dollars or euros and some of them are in no hurry to get rid of bitcoins. Such behavior of the latter is explained by the fact that many bought BTC when they were much more expensive than $16,500, so selling it now would mean a loss of 60-70%. We have already said that even at the rate of $20,000, most cryptocurrency wallets are unprofitable. Not everyone is willing to lose a significant amount of equity, so not everyone is selling bitcoin right now.

Nevertheless, there are enough sellers to keep bitcoin from continuing its downtrend. Investors fear that the SEC will tighten oversight of cryptocurrency exchanges, increasing demands on their reserves, which will cause the collapse of dozens or hundreds of small and medium exchanges, which are essentially doing the same thing as the FTX exchange. That is, simply using investor money for their own purposes. If this is true, then we are really going to see more than one crash, especially since there have been 4 already this year. That is why the fundamental background for bitcoin is still negative for now and we are counting on its further fall. Interestingly, this situation might have a domino effect: the worse the situation is getting, the harder bitcoin will fall. If we expected a drop to $10,000-12,000, now we can expect a bigger drop.

On the daily chart, bitcoin managed to pierce the level of $18,500. Now, the fall may continue with the target of $12,426. As we warned, the bearish trend does not end when the price breaks through the descending trendline. The price was trading in the sideways channel. The lower boundary of this channel has been pierced, so the quotations may continue falling.