Bitcoin could fall 13% to 2019 levels after confirmed breakdown amid the FTX fallout, Fairlead's Katie Stockton says
- Bitcoin has confirmed its breakdown below a key support level that suggests more pain ahead, according to Fairlead's Katie Stockton.
- The technical analyst said the cryptocurrency could fall 13% to 2019 level at about $13,900.
- "The breakdown dictates a bearish intermediate�term bearish bias, noting also a loss in upside
momentum," Stockton said.
In a Monday note, Stockton noted that amid the crypto selloff, bitcoin confirmed its breakdown below a key support level near $18,300. That sets the popular cryptocurrency up for more downside ahead to levels not seen since 2019.
Specifically, Stockton is eyeing the $13,900 as the next support level for bitcoin, which represents downside potential of 13% from current levels.
"The breakdown dictates a bearish intermediate-term bias, noting also a loss in upside momentum in the weekly [moving average convergence divergence] and a stochastic downturn increase the risk to the downside," Stockton explained. In other words, the momentum indicators often followed by technical analysts are starting to sour.
That's not a good sign for crypto investors. If $13,900 doesn't hold as support, then Stockton is eyeing secondary support near $10,000, which represents the February 2020 high. A decline to that price represents potential downside of 38% from current levels, and would be a blow to crypto investors who are hoping that the FTX bankruptcy contagion could be contained.
"The breakdown reaffirms bitcoin's long-term downtrend, with our monthly gauges supporting a continued bearish bias," Stockton said.
But if bitcoin manages to stage a recovery, traders should keep an eye on resistance levels at $17,600, which represents its June low, and $18,900, which represents its falling 50-day moving average.
For ether, the outlook is just as bad, according to Stockton. The technical analyst expects the world's second largest cryptocurrency to retest the "psychologically significant" $1,000 level. "A breakdown below would put next support near $500 in a bearish development," Stockton said.
As the crypto industry emerges from a tough downturn that has shaken investor trust in the emerging asset class to its core, a further decline in bitcoin and ether prices will only compound the issues.
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