Leading crypto Bitcoin (BTC) has dropped below $20,000 today. Analysts say price targets are currently $16,000, warning investors.
Bitcoin suffers at market bottom
cryptocoin.comAs you follow, the crypto market’s sales haven’t given up. Bitcoin briefly dropped below $20,000 on Saturday. Thus, he extended his weeks-long losing streak. According to data from CoinGecko, it has lost about 3.9% today and 18% in the last 14 days. Bitcoin last broke below the critical $20,000 level in mid-July. But in August it was hit by volatility. It is trading at $20,029 at press time.
BTC price targets below $20,000 remain in place
BTC hit $19,945 on Bitstamp after hawkish comments from the US Federal Reserve. U.S. stocks fell on the inflation policy outlook. Thus, he began to abandon the Fed’s ‘soft landing’ narrative more and more. Fed Chairman Jerome Powell highlighted the following at the annual Jackson Hole economics symposium:
It will take some time to restore price stability. It requires vigorous use of our tools to better balance demand and supply. Lowering inflation will likely require a period of below-trend growth. Also, there will likely be some softening in labor market conditions. Higher interest rates, slower growth and softer labor market conditions will reduce inflation, while bringing some pain to households and businesses. These are the unfortunate costs of reducing inflation. But not being able to restore price stability means much more pain.
Adding that the quantitative tightening, known as the QT, could stay ‘for a while’, Powell led to a massive increase in volatility to the downside in risk assets.
US stocks lost a total of $1.25 trillion in a single session. That’s more than the entire crypto market cap. Bitcoin managed to regain $20,000 within the day. It was hovering around $20,030 at the time of writing.
“First up, then down to liquidate the last shorts”
It’s still close to one-month lows, though. For traders, there was now a surge of relief followed by even heavier losses. Popular Twitter account Il Capo Crypto tells its followers in the first of several updates during the day:
BTC went lower than expected. But the idea is still the same. First up, then down to purge the last shorts.
Continuing, Crypto’s Il Capo is plotting short-term relief targets between $23,000 and $23,500. On the downside, however, $19,000 to $16,000 is still in play.
“$19,400 is a potential bounce zone for Bitcoin”
Others see the potential to increase BTC accumulation if $20,000 is breached as support again. The other account, TraderSZ, considers $19,400 as a potential bounce zone under such a correction. Also, some relief awaits rushing to the weekly open near $23,000 before June’s $17,600 re-enters the picture.
Meanwhile, major trendlines seen in previous bull markets have now turned backload for BTC. These include the price at $21,600 and the 200-week moving average (MA) near $23,000. As part of the summary of the current scenario, Decentrader draws attention to the following levels:
Higher resistance is at $21,100. Support is at $19,850, then $19,200.
DXY wakes up at the last minute to Fed tips
Meanwhile, as stocks fell, the familiar face of the US dollar is back to haunt the crypto markets. The US dollar index (DXY), after seeing a heavy decline initially, has risen again to two-year highs. At the end of August 26, DXY dropped from lows of 107.6 to just under 108.9 in a matter of hours.
Analyst Kevin Svenson said: “Keeping the FED on course means DXY continues its trend. This means that assets show a more downward trend,” he summarizes.
Meanwhile, investor and entrepreneur Danny Baldus-Strauss points his Twitter followers to the inverse correlation between DXY and BTC as an ongoing top and bottom indicator. In this context, the analyst makes the following assessment:
If you are accumulating Bitcoin in this bear market, watch out for DXY. All major bottoms in BTC coincided with local tops in DXY.
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