Cryptocurrencies Under Pressure as Bitcoin’s Slide Continues


Bitcoin is the most important cryptocurrency, and its price fluctuations influence the entire cryptocurrency market. When the price of bitcoin advances or declines, all other coins do the same.

In other words, the thousands of other coins literally depend on what bitcoin does.

So far this year, bitcoin has been under pressure: it opened the year around $50,000, and now threatens to drop through the $30,000 level. Only this time around, the decline in bitcoin’s price is more relevant than in the past. Nowadays, bitcoin has been adopted by market players other than retail traders.

For years, retail traders and believers in the cryptocurrency space have hoped that institutional investors would adopt bitcoin. They have, but with increased adoption came increased risks. For example, now that bitcoin is part of numerous portfolios, it acts like the general market does. As such, the dollar’s strength in 2022 is seen in the price of bitcoin too.

Head-and-Shoulders Pattern Points To $20,000

One of the most powerful reversal patterns is called “head-and-shoulders”. It is formed by two shoulders and one head, resembling the human body, and it has a measured move, calculated by measuring the distance from the highest point in the pattern to the neckline, and projecting it to the downside. This is the minimum distance that the market needs to travel in order to confirm the reversal.

In bitcoin’s case, the measured move points to a decline towards $20,000. Such a move alone is enough to put further pressure on bitcoin hodlers, but also on the financial system.

Last week, MicroStrategy, a US-based publicly listed company that had invested heavily in bitcoin, revealed that it would receive a margin call should the price of bitcoin drop to $21,000.

To buy its  bitcoins, the company borrowed money, and now it needs to serve $2.5 billion in debt with $500 million in revenues. As such, a decline in the price of bitcoin is not a risk only for retail hodlers, but also for other financial market participants.

To sum up, the price of bitcoin remains bearish while trading below the head-and-shoulders’ neckline. With every day that passes, the pressure mounts, and retail hodlers may be forced to liquidate just as big players are too.

It would also be interesting to see what other big investors, such as Tesla, would do with their bitcoin holdings when the price declines below their buying price. A move below $30,000 would put pressure on Tesla, and when and if big investors flee, it might be the end of the cryptocurrency market as we know it.

FXOpen offers the world's most popular cryptocurrency CFDs*, including Bitcoin and Ethereum. Floating spreads, 1:2 leverage — at your service. Open your trading account now or learn more about crypto CFD trading with FXOpen.

*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules respectively. They are not available for trading by Retail clients.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

Weekly Market Wrap With Gary Thomson: CAC 40, AUD, OIL, AMAZON The US Continues to Trump the Euro Economy on Key Metrics, But What Is Next? Is the UK really in a recession? Perhaps 2024 data will be different Weekly Market Wrap With Gary Thomson: US INFLATION, GBP/USD, GOLD, BITCOIN EURGBP continues to be suppressed during February. Will it rise again?

Latest articles

Forex Analysis

The Market Focusing on Speech of Federal Reserve Head

Despite the abundance of fundamental data of the past trading week, the main currency pairs continue to trade in rather narrow flat corridors. Thus, the US dollar/yen currency pair is trading above 150.00, from time to time testing

Forex Analysis

Swiss Franc Weakens after Inflation News

Inflation in the country fell in February to its lowest level in nearly two-and-a-half years, data from Switzerland's Federal Statistical Office showed on Monday. Although consumer prices rose 1.2% compared to a year earlier, there is reason to believe


5 Stocks To Consider in March 2024

Here we are, beginning the last month of the first quarter of 2024, which has passed by in somewhat of a flash. Perhaps the apparent speed at which the spring is approaching can be attributed to what appears to be

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65.68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.