Bitcoin, the leading cryptocurrency, has lost more than two-thirds of its value since late 2021. Even in the face of that apparent catastrophe, the mid-2022 prices are managing to maintain healthy and robust levels as recently as late 2020. That was before the massive boom in prices sent bitcoin (BTC) and most other members of the crypto segment soaring. In one sense, the latest drop is nothing more than an alignment with the traditional securities markets, which have posted their worst year in a half-century.
Though stocks didn’t fall nearly as much as crypto did, it’s easy to assign collective blame to a terrible economy. The big question on investors’ and traders’ minds as of mid-year 2022 is will the crypto market continue its dive, or will it turn around sooner than other markets? While it’s nearly impossible to offer a definitive answer to such a far-reaching question, there are some clues that many can look at to decipher the near-term future.
What’s Happening Right Now?
The big news for summer is that several of the major holders of BTC and other leading cryptos, have decided to pull their account capital from the various exchanges. This kind of event can have the same effect as account holders in traditional banks yanking their cash out and storing it in a home safe and mattress. It’s not a healthy development for the industry or sector. Even in weak economies, many crypto traders at major online brokers like Easymarkets might stay in the action and go short. That way, they can potentially do well no matter which direction prices move.
The silver lining in the dark cloud is that crypto markets are showing solidity. While the $20,000 support level for BTC has been thoroughly tested by the recent economic woes and pullouts, it looks like enough long-term holders are content to leave their bitcoin, ethereum, litecoin, and others in the exchanges. Whether the $20k general support level holds throughout the summer and remaining months of the year will reveal more about the long-term fate of the crypto segment.
Bitcoin (BTC) Support and Resistance
The two numbers investors and traders should watch are BTC’s current S&R (support and resistance) figures, which can be indicative of what all the other important crypto do between now and early 2023. Those numbers are $18,900 and $21,500, the mid-summer S&R levels for the sector’s key player, bitcoin. Should the current slide continue and find enough force to push below support, the development could spell huge trouble for the entire sector.
If prices stay between those amounts well into late 2022, the support will be judged as strong. What about a breakout? Few consider it likely, but even a tiny punch-through of the $21,500 ceiling might bring whales and countless new investors back home. Prices could begin to do their crypto dance again by rising quickly. Whether 2022 is the ideal time to short the cryptocurrency sector is an open question. Many who have experience shorting will wait for the BTC support level to fail before speculating in the downward direction.