Is the digital currency heading towards the $13,000 range?
After breaking below support near the $18,000 level, Morgan Stanley strategists warned that high-profile cryptocurrency bitcoin could suffer further losses, possibly falling to prices it reached in 2019 and 2020.
“From a technical perspective, bitcoin has now broken below $18,000, which was an area of support in recent weeks. The next levels to watch are $13,500, the 2019 high, and $12,500 (the 3Q20 high),” the market watchers wrote in a note published Friday, according to CoinDesk.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
When asked for technical analysis, experts who provided input for this story pointed out several levels that traders should look for, including those mentioned by Morgan Stanley.
While the digital currency could fall to the price levels pointed out by the major investment bank, it will first encounter key support in the low $16,000s and mid-$15,000s, according to independent cryptocurrency analyst Armando Aguilar.
Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, also chimed in, specifically highlighting the importance of the $12,500 and $13,000 levels, as “the 2019 high and 3Q20 high could act as a support level going forward.”
He noted that if bitcoin falls below the aforementioned price points, “the $10,000 level will be a major support level.”
“Not only is $10,000 a round number that psychologically attracts investors, but it also served as support before the last major breakout back in late 2020,” Sifling said.
While many cryptocurrencies suffered losses due to the recent FTX saga, “the market currently seems to have priced in most of the predictable default/contagion” regarding the exchange’s failure, Aguilar argued.
“Despite a volatile week, based on data from Coinglass, investor open interest in CME BTC futures increased slightly during the week, with volume north of $25B with $1.5B in CME open interest,” he said, citing figures collected on 15 November.
The diagram below illustrates this activity:
“Despite a selloff, investors are still showing appetite for Bitcoin,” he stressed.
The analyst further referenced CME bitcoin futures settlement data, which showed that market participants trading these derivative contracts expect the digital currency to hover between roughly $16,000 and $17,000 for the rest of 2022 and early 2023.
The chart below shows these expectations:
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.