Bitcoin and other digital assets remain vulnerable to additional falls after the startling bankruptcy of cryptocurrency exchange FTX last week, with cryptos already having broken through important technical price levels.
Over the last day, the price of Bitcoin increased marginally to $16,800. The largest cryptocurrency was trading about $21,000 just over a week ago, before worries over FTX started to take hold, but it has since rebounded from the lows of roughly $15,500 hit during last week’s panic selling.
“Cryptos remain very vulnerable,” said Craig Erlam, an analyst at broker Oanda. “Not only to the consequences from FTX—the full magnitude of which remains a cloud of mystery over the industry—but also to what else may be uncovered as the situation becomes ever more tough.” Although Bitcoin is making a comeback this morning, it is still very much in danger.
As part of Sam Bankman-crypto Fried’s empire, which included Alameda Research, one of the biggest crypto market makers, and more than a hundred other businesses, FTX, previously one of the biggest trading platforms in the sector, filed for bankruptcy last Friday.
Bitcoin has dropped to two-year lows as a result of FTX’s insolvency, which has left company with probably more than a million creditors. The sector is also concerned that the event may lead to intense new regulatory scrutiny.
More recently, the strain on the cryptocurrency market has driven digital assets below crucial levels. Cryptocurrencies have struggled recently even as the Dow Jones Industrial Average and S&P 500 have recently risen, indicating that a correlation with stocks—which has formed this year amid a challenging macroeconomic outlook of high inflation and rising interest rates—hasn’t helped much.
The managing partner of technical research firm Fairlead Strategies, Katie Stockton, stated that “long-term momentum [for Bitcoin] remains extremely negative.”
According to Stockton, the top cryptocurrency closed below a long-term support level of $18,300 last week. If Bitcoin is unable to rise above this price point, a breakdown has been verified, leaving it open to considerably worse losses.
According to Stockton, “a verified breakdown would reduce the counter-trend signs and encourage a bearish bias over the medium term.” “Secondary support would be at a downside risk of about $13,900.”
A quick look at the chart below shows that breakdown of 18,000 support zone with no much support on the way to 13,000-10,000. Crypto market will need some positive news to turn this around.
