A false bullish breakout for Bitcoin?

Market overview

The crypto market capitalisation fell by 2.7% to $2.16T amid growing nervousness in traditional financial markets, where concerns over AI spending have intensified. The crypto market has returned to the levels seen at the start of the week, while the Nasdaq 100 is testing the region of its June lows. Furthermore, the crypto market capitalisation is trading near its 50-day moving average as the Nasdaq 100 is being sold off with alarming determination after dipping below it. At present, the situation appears to be a short-term sign of strength for cryptocurrencies following several months of pressure; however, sustained declines in shares and bonds have repeatedly forced investors to rebalance their portfolios, leading to painful selloffs in cryptocurrencies. Among the top coins, the biggest fallers include Zcash (-6.4%), Near Protocol (-5.3%) and Tezos (-5%). Polkadot (+1.1%), Litecoin (-0.2%) and Bitcoin Cash (-0.8%) are temporarily outperforming the market.

Bitcoin has lost 2.9% over the past 24 hours, falling back to $62.8K. Due to external pressure, the leading cryptocurrency has failed to confirm a reversal of the downtrend, as higher highs were not formed, and the price quickly fell back below the 50-day MA, returning to the downtrend channel in place since June. The lower boundary of this range is currently near $56K, but support should also be expected near $61K and $59K, at previous local lows.  

News background

The proportion of long-term investors selling Bitcoin at a loss has stopped rising, which may be an early sign that the sell-off is coming to an end. The market is forming a bottom, but has not yet received signals for sustained growth, according to Glassnode. To confirm a recovery, BTC needs to consolidate above $65K and break through the key $69K level (the average price of short-term holders).

Strategy has no intention of abandoning its long-term holding strategy for the leading cryptocurrency. Still, it will only resume buying BTC once its preferred shares (STRC) have recovered to their par value of $100, having refrained from buying Bitcoin for the past three weeks. The company will only consider debt-related risks should BTC fall to $8K–$10K, the company stated.

Bitcoin appears ‘stable’ at this stage, largely due to a reduction in market participants’ leverage, said Larry Fink, CEO of BlackRock, the world’s largest asset management firm. In his view, the next 12 months look “very optimistic” for global markets as a whole.

Peter Schiff, head of Euro Pacific Capital and a crypto-sceptic, has urged investors to sell off all their bitcoins before the leading cryptocurrency breaks through the $58K support level. It could then fall below $50K, before plummeting to $30K or even $20K if the market fails to find new drivers for growth.  

Summary: The crypto market has declined under pressure from external markets. BTC has fallen back below the 50-day MA and could slide to $59–61K.