“We argued before that bitcoin’s failure to break higher that $60k would see more bearish trend and create more position unwinds, and that was possibly a large factor in the correction in the past week in pushing commodity trading advisors and others to lower their positions. The long-term data is an issue, as it has not yet turned short. It would still take declines to $26k before long-term momentum would mean capitulation,” said Panigirtzoglou in a new message to clients.
Bitcoin had another difficult weekend. Prices went into Saturday at around $36,311, and fell be as low as $33,633. By Monday night, bitcoin went back to $36,833. And Tuesday cryptocurrencies were keeping their volatility.
Crypto was crushed in May due to many reasons. From negative tweets from Elon Musk to fears of incoming government regulation from China and possibly the U.S.. Bitcoin prices lost around 37% in May, and are lower by 43% from their mid-April high of $64,829.
Panigirtzoglou predicts medium-term fair value for the digital currency between $24,000 to $36,000.
The analyst believes that the May free-fall has hurt institutional demand, which might keep prices suppressed for now.
“There is not much doubt that the boom and bust cycle of the previous weeks mean a setback to institutional investment in crypto and especially in Bitcoin and Ethereum. The mere increase in volatility, certainly relative to gold, is a roadblock to greater institutional adoption as it lowers the attractiveness of cryptocurrencies vs. gold in institutional portfolios,” Panigirtzoglou said.
Coinbase CFO Alesia Haas stated that the pressure on prices should remind investors of the risk in the volatile sector.
“I believe new investors have underestimated the risks in cryptocurrencies. This market is volatile, and we must remember this is a very young sector. So while we have witnessed high volatility, we have been seeing this since the very start,” Haas said.
Author: Scott Dowdy