Technology

Could the price of bitcoin go even lower? See what the specialists say

Key facts:
  • Bitcoin is holding the support line above $40,000 currently.

  • Cryptocurrency market investors are in extreme fear, according to the Fear & Greed Index.

The bitcoin (BTC) price has been hovering above $40,000 for the past week, which appears to be its current support line. However, its recent drop from $47,800 almost three weeks ago to that amount has left the market uncertain as to whether it could go further down.

Although the price of bitcoin has found momentary stability these days at USD 40,000, the current market sentiment is one of “extreme fear”, according to index Fear & Greed. This means that fearing that its value will drop, investors could sell the funds they have of the cryptocurrency, causing more supply than demand and, therefore, a decrease in the value of the currency.

This has already begun to be seen in the behavior of the whales, that is, of the investors who own large volumes of bitcoin. This was specified by the analyst Ali Martínez, who reported that on-chain data shows that, in four days, the number of addresses on the network with more than $10,000 worth of BTC has decreased by 4.6%.

“Such a significant increase in downward pressure could push bitcoin lower in price,” he said of the selling whales are doing. It was also validated by cryptocurrency and finance specialist Jack Denton, who said that the data suggests that major bitcoin investors are racing to sell.

If the pressure continues to the downside, we could be seeing bitcoin back at $37,000, the support amount it held for part of the first quarter of the year. Nevertheless, It is worth clarifying that currently the supply and demand for bitcoin is momentarily equal, which means that its price has been established these days in the line of USD 40,000. Even with the cryptocurrency sales the whales are doing.

The price of bitcoin was relatively stable at $40,000 last week, the same amount as
I had a month ago. Source: CoinGecko.

The current price goes back to what the cryptocurrency was trading for a month ago; disassembling a recent rally which managed to reach its 2022 high three weeks ago when it was trading at $47,800.

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Bitcoin sales by large investors could cause its price to fall

Bitcoin’s support at $40,000 signals that there is not enough buying power to push its price higher, while also showing that there is not enough selling to push it lower. But specialists believe that this could soon turn lower given the selling action the whales are doing and the general fear the market is showing.

Also, the movement of bitcoin shows a similar correlation to stocks of technology companies listed on Nasdaq. Something that is not favorable for the cryptocurrency, according to analysts who believe that these markets will not perform well due to the economic crisis that the United States is going through due to the increase in inflation and taxes.

Although it is worth clarifying that not all the current panorama is black for bitcoin. Although there are large investors who are selling their BTC pushing down, there are others who are doing the opposite. The Terra and MicroStrategy companies made multi-million dollar purchases of the cryptocurrency when it was trading close to 46,000.

Added to this, investor and mathematician Matt Rowe he pointed what bitcoin holders from six months ago have so far bought in values ​​higher than $40,000. This indicates that if they sell, they would be doing so downwards, so they may hold their funds until the cryptocurrency reaches higher prices. In this way, they could compensate for the sales force of others.

Holders from the past six months bought at higher prices, Matt Rowe showed. Source: Matt Rowe

Even if the price were to drop drastically, it is estimated that the value would not drop below USD 30,000. This is because the institutional whales have a volume of bitcoin that on average was bought for more than that amount, as we reported in CriptoNoticias. This is also believed by market analyst Bill Noble of Token Metrics, who stated that it would be difficult for bitcoin to fall below the 2021 low of USD 28,000.

In the worst case scenario, imagine that $20,000 would be your limit. Although he clarifies that this would only happen in the face of a terrible catastrophic event, which is very unlikely considering that almost 100% of the time from 2021 until now it was trading above USD 30,000. It even remained strong, above $37,000, after Russia’s attack on Ukraine destabilized world stock markets.

Unlike the specialists who fear a price drop, the data analysis account Plan C believes that the holders could get a bullish movement for the cryptocurrency. This is because he estimates that it is the fourth time in history that BTC has managed to overcome a key metric, which calculates the awareness of those who hold it in the long term over those who do it for a short period. In the past, the capitalization of this data led to a price increase, a behavior that could happen again.

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