Billionaire investor Ray Dalio recently made waves when he said that “the money was still rubbishWhile acknowledging that it has little bitcoin exposure. Although co-founder of the hedge fund Bridgewater – which has still risen more than 1.4 percent this year, although the broader S&P 500 fell nearly 20 percent – does not believe ARK Invest’s Katie Wood is right in calling for for a 10-fold increase in the price of bitcoin, the billionaire still believes that the world’s largest cryptocurrency retains its usefulness in the larger scheme of things. Dalio therefore continues to urge investors to spend about 2 percent of their savings on bitcoin, given its function as a digital version of metallic gold.

Against this background, it is quite appropriate to put the current weakness of bitcoin in the right context.

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Evidence of a bitcoin price below $ 20,000 continues to grow

Last week, we noted that the world’s leading cryptocurrency is approaching a key level of support for the price of gold. Given the identification of bitcoin digital gold, many analysts attach great importance to the dynamics of the price of cryptocurrency relative to its metal counterpart.

BTCUSD against gold

If you zoom in, you can see that the important level of support at 16.15 has already been broken, with the latest candle closing at 16.01. However, we will wait for a more decisive violation to materialize in the next few days. As we found out last week, this level of support is quite important, given the shortage of material intervention levels of support to levels of 9 to 11. If bitcoin subsequently reaches a ratio of 9.0 to the price of gold, this would correspond to BTC price of about $ 16,000, based on the current gold price of $ 1,857.

BTCUSD

The chart above describes the key technical levels to watch for bitcoin. Here again, readers can see that the price of the world’s largest cryptocurrency has landed in a critical support zone. Any crucial breach from now on will lead to bitcoin testing relatively quickly on its 200-week moving average (MA). This MA (marked in purple above) is extremely important, given that bitcoin has historically reached bottom after being touched.

As explained by @rektcapitalBitcoin tends to penetrate the 200-week MA by between 14% and 28% before reaching the bottom and resuming its upward trend. The 200-week MA is currently at $ 21,962. If we accept a maximum penetration of 28 percent beyond this level, this will be at the bottom of the cryptocurrency at $ 15,812.64.

The number of Ethereum addresses containing more than 100 coins has just reached a 6-month high, as the long-awaited Merger event is already scheduled for August 2022.

Last week, we also pointed out that bitcoin usually falls 80 percent relative to its highest ever in bearish cycles. This connection has been maintained during the last three bearish phases and it is very likely that the current phase of weakness will also lead to similar losses. An adjustment of 80 percent of the highest value of bitcoin of all time would result in a price of about $ 13,000.

All of these figures point to a price below $ 20,000 for bitcoin. Still, there is more evidence of further weakness. Morgan Stanley’s Michael Wilson now sees the S&P 500 bottoming out Price level of $ 3,400, which equates to a further decline of about 13.7% from its current price of $ 3,941. Given the prevailing bitcoins correlation (measured by Coin Metrics) of 0.69 against the S&P 500 index, which shows that about 69 percent of cryptocurrency movements follow those of the reference index, the price of bitcoin will have to fall by at least 9.4 percent from the current level to maintain this correlation mode, thus equaling a price of at least $ 26,000. Readers should note that the volatility of bitcoin is much higher than that of the S&P 500. Therefore, if the reference index falls by another 13.7 percent, this will lead to a massacre in the price of bitcoin, which will probably be much steeper, strengthening our belief in a price below 20,000 BTC.

Putting it all together

Bitcoin is currently in oversold territory, as calculated by Consider the risk of bitcoin reserveswhich measures the confidence of long-term bitcoin holders in the current price of cryptocurrency.

Bitcoin reserve risk

Therefore, we will not be surprised if bitcoin witnesses a relatively slight short-term rebound. However, in light of the factors described in detail above, we can confidently predict that the path of least resistance to the world’s largest cryptocurrency currently remains in favor of bears.

Do you think that bitcoin will be able to recover if its price falls below the level of 20,000 dollars? Tell us your thoughts in the comments section below.


Conviction Around a Sub-$20,000 Bitcoin Price Keeps Growing

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