The loss of $40,000 puts bitcoin investors on alert. Analysts set new support levels, while beginning to see “signs of bottoming” in its declines.
The $40,000 had been an anti-fall barrier practically since the beginning of the year. Analysts noted the importance of this support, and the price of bitcoin remained anchored just above this level.
The loss of this support plunges the price of the cryptocurrency into a new scenario that has accelerated its falls. Analysts now set their new key levels. From the point of view of technical analysis, experts envision a possible support at $35,000, but they stand out as the most important level of all $30,000.
Bitcoin is margined above this support. Alejandro Zala, country manager of Bitpanda Spain, points out that while the shorter-term charts “remain volatile”, in the longer term they appreciate “signs that prices are bottoming out“, in a broader range that oscillates between 35,000 and 45,000 dollars.
In the short term, eToro analysts warn of downward pressure affecting the market, with Russia as an aggravating factor of the alerts. the possible prohibition of use and mining of cryptocurrencies in Russian territory would mean a setback for the entire crypto market, which already accused the veto decreed in China in its day.
Precisely the ban in China triggered the weight of Russia in the ranking of the countries with the highest activity in cryptocurrency mining. The possible veto, as Simon Peters, expert crypto asset analyst at eToro, acknowledges, “may have an impact on your hash rate and in its price short term“. Computational power will suffer, given that Russia “is responsible for approximately 11% of the hash rate world”.
The China precedent leads the eToro analyst to predict an impact from Russia limited to the short term only. “When China banned bitcoin mining in May 2021, mining operations based there accounted for 60%-70% of the hash rate global bitcoin network. By going offline these China-based miners due to the ban, the hash rate dropped significantly along with the price. But when those miners settled in other countries/jurisdictions, the hash rate it recovered and is now at an all time high.” So, he concludes, “if Russia bans bitcoin mining, we may see a similar pattern, but to a lesser extent.”
While awaiting a final decision on the possible veto in Russia, the magnitude of the accumulated falls from their records two months ago, with a 45% crash in this period, they substantially reduce the pressures on the valuation of bitcoin.
From eToro they already warned that this collapse “improves the risk/benefit ratio” in the price of the largest cryptocurrency. This improvement deserves a special mention today by Alejandro Zala. The Bitpanda expert underlines that the Cryptocurrency Fear and Greed Index it is at 22 points out of 100, “close to its historic bottom.
This situation, he adds, reflects that “the extreme fear remains the dominant sentiment, with a level of potential price action bottoming out. The Fear and Greed Index has historically been a great indicator of the reversal signals, as it shows that many sellers have already left the market, which means that buyers will soon take over. However, it does not provide timing information or clearly predict highs or lows.”