Bitcoin has been on quite the ride lately, and strategists say it could fall far lower if it drops below this level.
Bitcoin has had another wild week.
On Tuesday, the world’s largest cryptocurrency fell as low as $31,035 for the first time since the beginning of the year. It then rebounded 15% to $36,233 later in the day.
Since then, the coin has bounced from around $35,000 to $38,000, and is sitting at $36,492 at the time of writing.
But the bounce over the last 24 hours hasn’t yet dispelled doubts about Bitcoin’s vulnerability since its rout in May.
“We’re still sellers of Bitcoin,” said Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors. “The broader market and the economy, quite frankly, are showing a lot of money shifting back into the economy through consumption and through investment, and it’s hurting all speculative assets. Bitcoin lands solidly in that space as a speculative asset.”
JPMorgan noted in a report out today that backwardation in a corner of the futures market is another reason for caution with the cryptocurrency.
“We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market,” JPMorgan strategists led by Nikolaos Panigirtzoglou said, adding that Bitcoin’s relatively depressed share of the total crypto market is another worrying trend.
And the JPMorgan strategists aren’t the only ones who are anticipating further pain for the cryptocurrency.
Oanda senior market analyst Edward Moya said this week that should the weakness in the coin continue and it falls back towards $30,000, “a break of $30,000 could see a tremendous amount of momentum selling.”
And where could that selling take Bitcoin to? Evercore technical strategist Rich Ross and Tallbacken Capital Advisors’ Michael Purves said the crypto could hit $20,000.
“How much lower can it go?” Purves said in a note. “The most obvious answer continues to be a complete retracement of the breakout from $20,000 – in other words, back to $20,000.”