- Bitcoin could slide to $40,000 after falling below a key level, the CEO of Delta Exchange said.
- The cryptocurrency has dropped below its 50-day moving average of around $56,000.
- Investors are increasingly keen on other tokens such as
ether anddogecoin .
$4 fall below a key technical level as investors pivot towards other
Pankaj Balani told Insider bitcoin's fall was down to lower interest in the wake of crypto exchange $4; investors chasing quick gains by piling into tokens such as $4 and a broader $4 in risky assets.
He said bitcoin's fall below its 50-day moving average - which is $4 - could trigger a further decline. Bitcoin stood at $55,870 on Tuesday, around 14% off an all-time high of $4 touched in April.
The 50-day moving average is a key psychological level that is closely watched by investors, Balani said. He said it is also used by some algorithmic traders as a point at which to sell.
Balani said bitcoin could fall to as low as $40,000, which is another important psychological level at which investors should start buying back in.
"The short-term momentum has been lost. So it wouldn't be surprising to revisit the $40-$42,000 kind of zone. That is where we might find very strong support," Balani said.
"That is the level where Elon Musk came into bitcoin," Balani said, referring to $4. "And that's kind of become a base level." Balani said derivatives contracts - which allow people to bet on price rises without actually owning bitcoin - indicated there was strong support at this price.
The Delta Exchange boss said the rotation into other tokens such as $4 and $4 was a worrying sign for bitcoin and the cryptocurrency market as a whole.
"This is not sticky capital. This is people coming in and chasing quick gains," he said. Balani said a similar dynamic was seen during bitcoin's last peak in early 2018: "It's a blow-off top. And that typically happens at the short-term top of the market."
Analysts at investment research firm Vanda $4 on Monday. "When the rally started to look tired in November [2017], investors rotated to lesser-known altcoins like Ripple and Ethereum," Ben Onatibia, Vanda Research's head of
"In the months that followed, cryptocurrencies cratered as retail investors rushed to the exit."