Higher prices dampen crypto enthusiasm, next stop for bitcoin is $13,000, Wolfe says
by James · October 12, 2022
Bitcoin has traded like tech stocks this year, so it’s no surprise that with bond yields rising to their highest levels in years, the cryptocurrency is hurting — and there’s more pain, according to Wolfe Research. On Wednesday, the 10-year US Treasury yield rose briefly above 4% for the first time since 2008. Meanwhile, the Nasdaq Composite remains deep in a bear market, down about 31% in 2022. “When liquidity dries up. globally and yields are rising, the once fervent enthusiasm we saw for Crypto appears to be drying up,” Rob Ginsberg, senior analyst at Wolfe, said in a note Wednesday. “With supply and demand across the universe dancing on a precipice, we offer our commentary on whether recent price movements along with likely downside price targets should support a breakout, which we think is likely.” This week, bitcoin briefly topped $20,000, but has struggled to find a more meaningful pullback from the June low of $17,567.45 per coin measurement. It is currently more than 70% off its November high of $68,789.63. While many bitcoin owners have a long-term perspective, institutions have dominated bitcoin and ether transactions recently and trade it as a macro asset . Analysts have shared Wolfe’s view that it must fall further, especially if it fails to hold $19,000. They would be wise to sit out a little longer while bitcoin bottoms out, Ginsberg said. “Bitcoins trade committee continues to remain tight-lipped,” Ginsberg said. “Resilience below 19k has kept it afloat of late. However, as it has shown a tendency to move lower with the broader market, a convincing break below this level still seems imminent.” “Zooming out gives us a better picture of where this solid level of support is coming from,” he added. “The previous cycle highs of ’17 and ’20. When you factor in that the next significant level of support is below 13k, it’s no surprise we’re seeing it struggle so hard at current levels.” Meanwhile, ether has continued to float within a range of $1,000 to $2,000. Wolfe is looking for a “likely” test of support at $1,000 “in the coming weeks.” Next stop: $600, according to the firm. On top of cryptocurrency prices, Ginsberg said the firm is wary of a bear flag in Coinbase’s stock movement, adding that a “breakdown through channel support seems more than likely.” Although the crypto services firm has diversified its services and revenue streams, trading still accounts for the majority of revenue, and trading activity tends to grind to a halt when prices are low. — CNBC’s Michael Bloom contributed to this report.
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