For the second day in a row, bitcoin has fluctuated around the $30,000 mark, forcing the rest of the crypto market to balance between decline and growth. Ethereum has lost 2.4% in the last 24 hours, but remains above $2,000. Altcoins from the top ten also have losses from 0.4% to 3%, but their rate has not changed much since the end of last week.
The total capitalization of the crypto market, according to CoinGecko, decreased by 1.7% overnight to $ 1.35 trillion. The Bitcoin Dominance Index remained unchanged at 44.3%.
The Cryptocurrency Fear and Greed Index rose 4 points to 12 by Wednesday and remains in “extreme fear.” The index’s recovery from 2019 lows is due to a shrinking sell-off rather than a market reversal to growth.
Bitcoin stopped at the psychologically important $30,000 level and also lost momentum of the rebound at the 76.4% Fibonacci line from the downtrend since late March. This is a typical shallow counter-trend correction.
The market’s failure to build offensive momentum from current levels will raise the question that the ultimate target for the downtrend will be the 161.8% area of that move, which is about $11,300. Such a setback would negate all of the upward momentum from October 2020. So far, this scenario looks extremely pessimistic and should combine the disappointment of cryptoneophytes with the actual collapse of the world economy and the stock market.
Such a drop would leave the price of bitcoin only 16% of its peak value, which has happened several times in its history. However, a significant drop below previous cyclical highs of $20,000 would be unusual, como, bitcoin has previously been bought back at similar drawdowns.
Perhaps a more cautious scenario would be a drop into the $20-23k area, closing at the end of 2020 or back to the 2017 highs.
A realistically optimistic scenario points to the possibility of cautious buying by long-term investors at current levels. However, it does not suggest a new wave of explosive growth, as financial conditions differ from early 2021 for the worse. Moreover, inflation has reduced the purchasing power of the dollar by 10% over this period.