The crypto bear market will continue if bitcoin confirms its recent breakdown below $20,000, Fairlead’s Katie Stockton says
According to a Tuesday note by Fairlead Strategies, the crypto bear market will continue until bitcoin confirms that it has fallen below $20,000
According to the technical analysis-focused research company, bitcoin is currently testing support levels of $18,300 and $19,000. This was in response to last week’s CPI-induced selloff.
Fairlead’s Katie Stockton says that a confirmed break below this support range (two consecutive weekly closes below $18,300) increases the downside risk for bitcoin to secondary resistance near $13,900. This represents a potential downside of 29% compared to current levels and would likely spread bitcoin’s weakness to other cryptocurrencies.
According to the monthly MACD histogram, negative long-term momentum is increasing which allows for long-term oversold conditions. As it stands, it could take months for a meaningful shift,’ Stockton said, referring to the Moving Average Convergence-Divergence indicator. “Short-term momentum has changed to negative per a new daily MACD signal’sell’, increasing risk when long-term support tests are tested.
Stockton says that Bitcoin’s long-, medium-, and short-term momentum signals are all bearish amid ongoing decline. The rollover of its 50 day moving average suggests that momentum could continue to the downside.
A negative sign for crypto markets as a whole is that bitcoin has outperformed ether relative to ether since September.
Ether was in sell-off mode after its successful merger, which made the Ethereum blockchain a proof-of–stake system instead of proof-of–work. Stockton believes that ether will fall to $1,000 support and could be a downside of 27%.
Stockton stated that the shift in favor of bitcoin was a bearish indicator for cryptocurrency markets generally, reflecting defensive rotation as altcoins and bitcoin get into support retest’ mode.
She said that bitcoin could alter its bearish trend if it avoids a confirmed break below support and reclaims resistance around $22,000. The crypto bear market will continue until then.