How low can Bitcoin go? Views vary.

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Artwork by Elias Stein

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Tighter monetary policies weigh on speculative assets like crypto, Bitcoin fell from $43,000 to $33,000 in four days and lost 23% of its value. On January 28, the cryptocurrency was at $37,700, down almost 50% from its all-time high reached in November.

Has the plunge gone too far? Bitcoin’s Relative Strength Index implies that the token is oversold, indicating that it is ripe for a rebound. Key support levels, such as its 200- and 50-day moving averages, have long since been broken, indicating further declines to come. Some analysts see a bottom at $33,000, although $29,800 is also credible; Bitcoin fell that low in July and then rallied back to nearly $70,000. “A lot of investors would backtrack and open their checkbooks at prices around $29,000,” says Sean Farrell, head of digital asset strategy at Fundstrat Global.

Mike McGlone, senior commodities strategist at Bloomberg, says Bitcoin is not far off the 50% discount to its 200-day moving average that hit lows in 2018 and 2020. He notes that $30,000 is a “key support” and that institutional holders rushed to this price. “I would see the tide rise to that level,” he says, expecting Bitcoin to eventually rally to $100,000.

Wilfred Daye, head of Securitize Capital, a digital asset marketplace, also predicts support at $30,000. But if Bitcoin falls further, its next stop could be $27,000. This is usually the equilibrium price for Bitcoin miners, who receive new coins for processing transactions. What happens if Bitcoin falls this far? “That’s a very scary thought,” he says, as it could usher in another “crypto winter,” a long period of deeply depressed prices.

Last week

Stocks fell at the start of the week, but soared at lunchtime, with indices posting gains at the close. But a rising VIX dominated the markets. Bitcoin fell below $33,000 and then rallied. Buyers eager to dive were crushed as stocks plunged, sending indices into corrective territory. Stocks rose at the Federal Reserve meeting, then sold, then rebounded furiously on Friday. Over the week, Dow Jones Industrialists miraculously gained 1.3% to 34,725.47; the S&P 500 rose 0.8% to 4,431.85; and even the Nasdaq Composite gained 0.01% to 13,770.57.

fed day

Fed Chairman Jerome Powell took a hawkish stance after the rate-setting meeting, saying it was possible to raise rates ‘without threatening labor markets’ and that rates could rise at the meeting Of March. US growth in 2021 was 5.7%, inflation at 5.8%.

The Parade of Gains

IBM posted its best sales growth in a decade on its cloud business, Boeing suffered a write-off but saw its first positive cash flow since 2019, and General Electric had a decent quarter with some supply chain bumps. . Johnson & Johnson’s profits rose on its Covid-19 vaccine, 3M on its N-95 masks and American Express on optimistic revenue projections. Tesla had a record quarter, but warned of supply constraints. Apple kept rolling despite the chip issues.

Breyer out, the battle begins

Supreme Court Justice Stephen Breyer, 83, said he was retiring, ushering in another confirmation war. President Joe Biden has said he will appoint the first black woman to court.

Tightening for Russia

The UK has claimed Russia has brought in a pro-Russian Ukrainian to lead a puppet government, the US has placed 8,500 troops on ‘high alert’ and both countries have told families in embassies to get out . The United States and Europe have spoken of sanctions, including the expulsion from Russia of Swift, the Society for Worldwide Interbank Financial Telecommunication. The United States has asked Qatar, a major exporter of liquefied natural gas, to help if Russia cut off European power. At the end of the week, Russia thawed slightly.

Annals of Deal Making

Nelson Peltz’s Trian Partners has taken a stake in Unilever, after its bid to buy the consumer healthcare businesses of GlaxoSmithKline and Pfizer failed. Unilever then announced that 1,500 managers would be cut and the company would be restructured into five units…Blackwells Capital took a stake in Peloton Interactive and demanded the ousting of CEO John Foley and the sale of the once-hot pandemic stock…Engine Capital backed a $9 billion bid on Starboard Value to buy Kohl’s… Bill Ackman’s Pershing Square bought a $1.1 billion stake in Netflix… The Wall Street Journal reported that Meta Platforms is ending its Diem project crypto…Bloomberg reported that Nvidia is quietly preparing to drop its regulatory-challenged acquisition of SoftBank Group’s Arm…Marcelo Claure, SoftBank’s chief operating officer and former Sprint CEO, has apparently left the company in a wage dispute.

Write to Daren Fonda at [email protected]

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