Bitcoin is on a downward trend How low will it go

Bitcoin is plummeting, but how far can it go?
The leading cryptocurrency has dropped by 5.7% in the past week. Today, the price fell below $57,000 as several wallets associated with the now-defunct cryptocurrency exchange Mt.Gox conducted small transactions. The German government’s ongoing sell-off, which transferred $75 million worth of Bitcoin to exchanges today, also appears to have spooked investors.
Basile Maire, co-founder of decentralized exchange D8X and former banking finance expert, told Decrypt, “The short-term outlook is a bit pessimistic, but not overly so.”
Macroeconomic conditions and the uncertainty surrounding the US elections may also play a role in the current pessimistic sentiment. The Federal Reserve stated yesterday that while inflation in the US market may be easing, it is still far above the target rate, which could impact the possibility of a rate cut by the Federal Reserve this year.
An extension of rate cuts by the Federal Reserve is seen as bearish for risk assets like Bitcoin, as investors are less likely to move dollars into the market under high-interest rate conditions. However, some analysts believe that this pain may be temporary.
Maire stated that based on the Bitcoin options market expiring in July, few market participants believe that the price of Bitcoin will drop below $50,000 this month. Maire explained, “Options are concentrated between $50,000 and $60,000, with more trading volume closer to $60,000.”
This means that open option contracts, which are used to bet on the future price of Bitcoin, suggest that there is a greater likelihood of Bitcoin reaching close to $60,000 by the end of this month compared to anywhere else. Other analysts hold a different view.
Alex Kuptsikevich, senior market analyst at FxPro, told Decrypt, “Bitcoin is more likely to fall to $51,500 than rise to $65,800.” Kuptsikevich identified the $50,000 market as the “February consolidation zone,” indicating that most Bitcoin purchases were made in February. He believes this could be the next stop for Bitcoin.
Digital asset company 10x Research responded to this view, stating that $60,000 is a key level for Bitcoin miners and Bitcoin spot ETF buyers. A company report stated, “Only uninformed traders would be willing to buy here. Breaking this support could lead to a significant drop to the low of $50,000.”
Justin d’Anethan, Head of Business Development for the Asia Pacific region at market maker Keyrock, told Decrypt, “How far BTC can go largely depends on the continued selling by large entities.” He added, “We could see some support around the lower $50,000s, as Bitcoin stalled between $50,000 and $52,000 in February.”
Some of Bitcoin’s biggest investments now come from ETFs, following approvals in January. But in the world of traditional finance, Bitcoin stands out like a sore thumb.
Maire stated, “Cryptocurrency ETFs are the most volatile investments in a traditional portfolio, otherwise comprising bonds, diversified stocks, and commodities.” He added, “Therefore, whenever portfolio managers need to sell the riskiest assets, cryptocurrencies are likely candidates.”
While the short-term outlook may be bleak, analysts are more optimistic about the medium-term outlook.
Kuptsikevich said, “Despite the correction, the options market still heavily favors BTC’s growth, with strong interest in long-term options at $100,000 to $120,000.” He added, “According to QCP Capital, this suggests a potential recovery by the end of the year.”
In other words, just hold on for a while longer. While this is undoubtedly a successful strategy for the earliest Bitcoin buyers, anyone who bought Bitcoin during the peak period in March last year has surely felt the pain.