Bitcoin’s slump worsened on Tuesday, when the leading cryptocurrency fell below the critical $30,000 level and turned negative for 2021.
According to Coin Metrics, Bitcoin fell more than 11% on the day to around $28,911, well below the $29,026 level where it ended 2020. According to Coin Metrics, the cryptocurrency was last down more than 9% to $29,410.30.
After the cryptocurrency fell to near that low during its May crash, technical analysts had been watching the $30,000 level as a key support level on the charts. Analysts who use charts to make buying and selling decisions believe the next level to watch for support is now as low as $20,000.
With the price of bitcoin approaching $29,000, it is threatening to turn negative for the year.
Galaxy Digital CEO Mike Novogratz stated on CNBC’s “Squawk Box” that bitcoin could still recover from Tuesday’s move, but that the next support level was significantly lower.
“$30,000, we’ll see if it holds on the day; we might drop below it for a while and then close above it; if it’s really broken, $25,000 is the next big level of support,” Novogratz said. “Listen, I’m not as happy as I was at $60,000, but I’m not worried.”
Bitcoin has been struggling to reclaim its earlier-in-the-quarter highs. It fell precipitously in May as a result of Elon Musk’s market-moving tweets about bitcoin-related environmental concerns, and then even more precipitously in early June as a result of concerns about the cryptocurrency’s use in the Colonial Pipeline ransomware attack.
Since then, it’s been on a rollercoaster ride, battered by a slew of headlines from China, where regulators have imposed new restrictions on energy-intensive mining and ordered financial institutions like Alipay to stop doing business with cryptocurrency companies. Last week, the price briefly reached $40,000 before falling again on Monday.
With Tuesday’s losses, bitcoin has fallen roughly 54% from its all-time high of more than $64,000 in mid-April, dragging down other cryptocurrencies with it. Ether has dropped by 8%, while Dogecoin has dropped by more than 16%.
The cryptocurrency market has seen significant pullbacks in the past, with bitcoin falling nearly 80% from its late-2017 highs at one point. Professional cryptocurrency investors have warned that the market will remain volatile in the coming years.
“The only guarantee in the cryptocurrency space is volatility, which we obviously have right now,” Fairlead Strategies founder Katie Stockton told CNBC. “This isn’t a new thing; we’ve had days like this before; it’s just a matter of navigating through the noise.”
According to CoinShares, crypto investment product providers such as CoinShares, Grayscale, and Bitwise are experiencing their sixth consecutive week of outflows, though some providers are seeing inflows. Bearish sentiment is more focused on bitcoin, with outflows totaling $89 million for the week and $487 million for the year, accounting for 1.6 percent of assets under management. In contrast, ether outflows are $1.9 million for the week and $14.6 million for the year, or 0.14 percent of AUM.
Novogratz also stated that, despite previous setbacks, the crypto market infrastructure is only becoming more mature, which has helped usher in more institutional support over the last year, with major hedge fund managers, pension funds, and banks jumping into crypto, while registered investment advisors seek ways to get clients exposure to cryptocurrencies in ways that are compatible with their current investment strategies.
Between mid-September of last year and its peak in April of this year, the price of bitcoin increased by nearly 500 percent. Despite the recent drop, the cryptocurrency is still up more than 200 percent in the last year.