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, 30% margin call, 0.01 lot minimum transaction size with no maximum — 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

Economic Calendar: US Labour Market and ISM Manufacturing PMI Data, RBA and OPEC+ Meetings Weekly Market Wrap With Gary Thomson: Inflation, EUR/USD, S&P 500, OIL US Government Shutdown: Assessing Economic Impact and Recession Risks Inflation Still Dogs the Economy: What Are the Central Banks Doing About It? Economic calendar: NASDAQ 100 May Keep Falling, High Volatility in Oil Markets, Potential Appreciation of the US Dollar

Latest articles


Top 5 Stocks to Watch in October: Bank on the Backfoot, No Thirst for Coca-Cola, Tech Giant Takes Dip and Electric Vehicle Volatility

October is here, and as the markets enter a new month, we take a closer look at five stocks that could be of significant interest to investors. 1) Bank of AmericaBank of America stock has taken a dive over the

Forex Analysis

Market Analysis: The American Currency Resumes Growth

The beginning of October turned out to be favourable for continued growth in the US dollar. From the data published yesterday, it follows that in September, the US manufacturing business activity index (PMI) rose to 49.0 against the forecast

Forex Analysis

EUR/USD Analysis: The Rate Updates Its Multi-month Low

Never in its history has the euro fallen for 11 weeks in a row against the dollar, but it happened. The minimum has been set for 2023. The reason seems to be that in an environment where central banks are

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. 60% 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.