Home » Bitcoin could fall another 22% unless it holds this key support level, Fairlead's Katie Stockton says

Bitcoin could fall another 22% unless it holds this key support level, Fairlead's Katie Stockton says

Bitcoin could fall another 22% unless it holds this key support level, Fairlead's Katie Stockton says
Bitcoin

  • Even after bitcoin's decline below $40,000, the cryptocurrency could see more downside ahead.
  • Fairlead Strategies' Katie Stockton highlights $37,361 as a key support level that needs to hold.
  • A break below that level would indicate a broader move to $30,000, representing 22% downside.
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Bitcoin's 8% decline to below $40,000 on Thursday sets the stage for more downside ahead, according to technical analyst Katie Stockton of Fairlead Strategies.

She doesn't yet view bitcoin's drop below $40,000 as a breakdown, but said in an e-mail to Insider that it does bring the cryptocurrency out of a three-week consolidation phase and represents a bearish shift in short-term momentum.

Stockton is now eyeing $37,361 as a key support level for bitcoin, which is about 3% lower from current levels. "This level defines the long-term uptrend and is far more important than any interim levels on the way down. $40,000 was not a key level for us."

Any breakdown in bitcoin requires a consecutive weekly close below support for confirmation, according to Stockton's work, so it's too early to tell if the recent sell-off in bitcoin will hold or if a quick bounce back will materialize. But continued weakness "would suggest that the correction is the start of a long-term bearish reversal," she said.

A confirmed breakdown below Stockton's key bitcoin support level of around $37,361 would set the stage for the cryptocurrency to test secondary support around $30,000, representing potential downside of an additional 22% from current levels.

With oversold conditions in place, a bounce seems more likely than a confirmed breakdown below support, according to Stockton. "However, we expect a 'hard' test of support given room to short-term oversold territory, meaning bitcoin is likely to spend some time below support before recovering."

Whatever happens to bitcoin will likely spill over into the broader cryptocurrency market, as it has been the undoubted leader given its market size. Ether prices fell 10% to below $3,000 on Thursday, while most altcoins plummeted even more.

"Many altcoins are into support at their summertime 2021 lows, making it critical that bitcoin holds support as it sets the tone for the cryptocurrency space," Stockton concluded.

Read the original article on Business Insider