The Crypto Market’s Crag’s Edge: What If Bitcoin Breaks $ 30,000

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The continued downtrend, subdued market activity, declining number of trades and risk aversion following negative events over the past two months have so far failed to ruffle the majority retail cryptocurrency holders clinging to their precious digital coins.

The entire market has been on the edge of the cliff, trading in a narrow range over the past few weeks, in step with bitcoin with a gradual downtrend in play.

For the world’s No.1 cryptocurrency, the US $ 30,000 level was widely regarded as the steepest cliff edge it fell from but managed to rise again.

After falling to US $ 29,080 on June 22 in response to a regulatory action from China, its lowest price and its first breach of the psychologically significant level of $ 30,000 since January.

Although the rally showed strong support on this key line as expected, the bullish momentum quickly faltered as all breakouts sold sharply, particularly above US $ 33,000.

Yes, bitcoin could successfully test $ 30,000 again as support and ricochet higher like it has done before. A successful test of the support level would allow bitcoin to reach its next resistance level at $ 34,000, opening a new potential move upward.

However, market sentiment appears to be heading for further lows. So, if it breaks and does not recover, there would be a significant downside and US $ 30,000 would become an air resistance level, capping any short-term bullish pull.

As of going to press, in the Top 10 Big Cap, Bitcoin (BTC) changes virtual hands at US $ 30,480, Ether (ETH) at US $ 1,804, ripple (XRP) at US $ 0.54, Binance Coin (BNB) US $ 282, cardano (ADA)) at US $ 1.11, Dogecoin (DOGE) at US $ 0.17, ChainLink (Link) at US $ 14.4, UniSwap (UNI) at 15, US $ 5, Polkadot (DOT) at US $ 11.4 and Stellar (XML) at US $ 0.20.

Why are psychological levels important?

Numbers have mattered to humans since the dawn of civilization, although some more than others. Psychological support and resistance levels are usually something “easy to remember”, like a rounded number.

Largely shaped by human emotion and psychology, these rounded numbers are based on sentiment and market anchoring (a cognitive bias whereby an individual’s decisions are influenced by a particular point of reference – for example, you think you will sell and exit the market if it drops below US $ 30,000. You usually don’t get an arbitrary number like $ 29,837. This is especially important if you are using automatic or algorithmic trading).

Over the past few months, analysts have been divided over what would happen next if bitcoin breaks the US $ 30,000 mark. Some believe this would trigger more downside buying and ultimately raise the price to between $ 34,000 and $ 40,000, while others point to the lack of demand due to low participation from institutional investors.

For long-term investors who look at fundamentals rather than techniques, this may not be a big deal. Significant pullbacks have already occurred in the cryptocurrency market, with bitcoin falling about 80% from its highs in late 2017 at one point. Long-term crypto investors are well aware that the space is and will continue to be volatile. This is actually the reason they are there.

Short term

In the short term, traders and speculators are keeping an eye on US $ 30,000 as any bullish momentum is capped just a little above that level. It could simply mean that it is not a question of whether, but when, that level will drop.

A breakout could exacerbate a rapid return to mid-US $ 20,000 as general sentiment appears to sour. Altcoins would experience percentage point drops similar to those they have experienced so far.

So far, the total market value of cryptocurrencies has fallen to less than half of what it was nearly $ 2.5 trillion in April.

Bitcoin’s total market cap plunged below US $ 600 billion on Monday, only half of its once huge US $ 1.2 trillion value.

On the bright side, even with the recent slowdown, the cryptocurrency is still up over 200% over the past 12 months. Maybe it’s not the end of the world?

Risk Warning: Cryptocurrency is a notoriously volatile unregulated virtual asset with a high level of risk. Any news, opinion, research, data or other information contained on this website is provided for reporting purposes as general market commentary and does not constitute investment or trading advice.

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