Bitcoin fell back below US$20,000 on Tuesday after enjoying its strongest week in more than three months last week, as a surge in the greenback rippled through global markets.
The largest cryptocurrency dropped as much as 2.6% to US$19,870, declining for a fourth straight day ahead of US consumer-price data Tuesday. It hit US$22,472 on Friday as risk appetite returned to broader assets. Second-largest Ether slid as much as 4.1% to US$1,090.94. The MVIS CryptoCompare Digital Assets 100 index dropped as much as 2.6%.
“Expect apathetic back-end vol and basis flows in another summer trading week with CPI likely to be the main event on July 13,” Genesis’s Noelle Acheson and Gordon Grant said in a note Monday. “Notwithstanding a modicum of fireworks around last Friday’s weekly options expiry that saw Bitcoin blow through US$22,000 and touch the 200-week moving average, with Ether pushing toward US$1,300 in sympathy, the weekend session saw a resumption of choppy, downwardly oriented price action that has characterized recent months.”
The dollar jumped on Monday ahead of the CPI, which could offer insight into the Federal Reserve’s potential rate-hike path. Bitcoin and other cryptocurrencies have struggled as the central bank works to combat high inflation readings, and have tended to trade along with risk assets for the past couple of years.
Bitcoin is more likely to tumble to US$10,000, cutting its value roughly in half, than it is to rally back to US$30,000, according to 60% of the 950 investors who responded to an MLIV Pulse survey that ran July 5-8. Forty percent saw it going the other way.
The latest Bitcoin chart pattern suggests cryptocurrency speculators should brace for more losses.
The largest digital token has traced a so-called rising wedge, which technical analysts view as a kind of calm before the storm — a temporary hiatus in episodes of often intense downward pressure on an asset’s price.
A rising wedge also formed between May and June, snapping an earlier sharp retreat in Bitcoin, only to give way to a 42% slump that took the virtual coin to US$17,600 from more than US$30,000.
Opinion is split on whether the token has found a floor around US$20,000 after a 57% plunge this year sparked by tightening monetary policy, the implosion of leveraged crypto outfits and a glum mood in global markets.
The latest MLIV Pulse survey sides with the bears: most respondents said the token is more likely to tumble to US$10,000 than to hit US$30,000. It shed about 2.4% to reach US$19,927 as of 12:10 p.m. in Singapore on Tuesday.
“Not only is the broader market environment not in its favour, even if the occasional bear-market rally inspires some hope, but the crypto community isn’t exactly buzzing either,” Craig Erlam, a senior market analyst at Oanda, wrote in a note. –BLOOMBERG