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Bitcoin (
$99,824.00 ) (BTC) sees a 16% drop in value on Monday, taking the market leader below $23,000 for the first time since December 2020.
Although bulls successfully defended $25,000 in the early hours of Monday, a continuation of sell pressure led to a break of that price level at around 08:00 GMT.
Source: BTCUSDT on TradingView.com
Meanwhile, panic selling sunk the total crypto market cap as low as $925 billion, marking a year-to-date loss of 58%. The dip was bought up to trigger an immediate spike to $1.041 trillion.
But further sell pressure has resulted in a protracted drawdown in the time since the spike. The current total market cap is hovering close to the previous local bottom, at $947 billion.
Weekend price action saw a gradual downtrend in Bitcoin ( $99,824.00 ) . But Monday morning Asian trading triggered a rapid decline, falling from $28,000 to $22,600 at its lowest point.
Bitcoin ( $99,824.00 ) sinks as inflationary fears rise
On Friday, the U.S Labour Department released May’s Consumer Price Index figure, showing an increase of 0.3% from the previous month, marking a 40-year high at 8.6%.
The news triggered an immediate sell-off in Bitcoin ( $99,824.00 ) , and the wider crypto markets, as investors looked to adopt more defensive positions amid the likelihood of further quantitative tightening by the Fed.
Commenting on this, Alex Kuptsikevich, a Senior Market Analyst at FxPro, said the CPI figure puts more pressure on the Fed to accelerate its hawkish position.
“A renewal of inflation to 40-year highs will surely attract the public’s attention at the weekend and will pressure the Fed. Potentially, such high reading could trigger a tougher [Fed] stance in the accompanying commentary.”
All of which spells trouble ahead for Bitcoin ( $99,824.00 ) and other risk-on correlated assets. But the question is, how low could BTC drop.
Technical analysis
Trader without_worries shared his analysis using a 2-week Bitcoin ( $99,824.00 ) chart, saying the market bottom is “a lot closer than you think.”
Supporting his opinion is the imminent “2-week death cross,” scheduled to occur on June 20. At this point, the 21-week exponential moving average line will cross below the 50-week simple moving average.
He adds that previous instances of this happening have “called the market bottoms perfectly.”
Source: TradingView.com
“what you have here is the 2-week death cross. That is the 2-week/21-week EMA (yellow line) crossing down the 2-week/50-week SMA (blue line). A death will print on June 20th.”
Meanwhile, Burning-Theta uses “a simple Fibonacci projection” to call a $12,200 bottom, which he expects to play out according to past major wave cycles.
Source: TradingView.com
“When the first leg of the correction is projected from the peak of the bear rally high, a target of 12,173 is the point at which both major waves of the correction have equality / proportionality—a common, but not guaranteed, spot for a correction to end.”
It’s important to note that a common criticism of technical analysis is that it does not take into account the macroeconomic landscape.
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