Bitcoin could slide to $40,000 after falling below a key technical level, crypto exchange boss says
- 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
Bitcoin's 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 Coinbase's direct listing; investors chasing quick gains by piling into tokens such as dogecoin and a broader sell-off in risky assets.
He said bitcoin's fall below its 50-day moving average - which is around $56,000 - could trigger a further decline. Bitcoin stood at $55,870 on Tuesday, around 14% off an all-time high of near $65,000 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 Tesla's purchase. "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 ether and dogecoin 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 made a similar point on Monday. "When the rally started to look tired in November , 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."
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