Bitcoin Is Holding $30,000. Why That’s Important. – Barron’s

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Bitcoins recent tumble, which has seen it lose more than half its value, took it briefly below $30,000.

Bitcoin has been tumbling for more than three months now, and the move has started to intensify. The cryptocurrency, which is down 54% from its all-time high of $63,237 hit in mid-April, has fallen as much as 24% in the past 5 days. Bitcoin is now up 9.1% in 2021.

Bitcoin was off just over 1% at $32,243 at 1:25 p.m. after trading as low as $28,600

A decline below $30,000 a dangerous sign according to market technicians. Thats where Bitcoin found support in January before quickly racing to its record high. That $30,000 level is particularly important for Bitcoin, as Barrons recently noted, and if it breaks, Bitcoin has a lot more room to drop.

The question is how much. [If] for any reason Bitcoins critical $30,000 support were breached, it would be vulnerable to decline back to $20,000, The Institutional Views Andrew Addison wrote in Barrons back in May. Instinets Frank Cappelleri, notes that the 61.8% retracement of the entire 2020-21 movean important level when using Fibonacci sequences to determine support and resistance, is near 27,200. ICAP Technical Analysis puts the next important support level at $25,000.

And after that? Look out below. If the price falls to $25,000, the price could sink to $6,000, according to ICAP, an almost 80% drop from its current level. That might seem extreme, but history suggests its realistic. After hitting a high in December 2017, Bitcoin fell 83% before beginning the rally that took it to above $60,000 this year.

Still, with Bitcoin bouncing back, maybe history doesnt have to repeat.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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Bitcoin Is Holding $30,000. Why That's Important. - Barron's