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(Kitco News) - Cryptocurrency prices continued to face downward pressure on Thursday despite the latest CPI data showing inflation is cooling. The main culprits affecting asset prices across all markets include the ongoing banking crisis, which is now focused on the regional bank PacWest, and the threat of a U.S. default on its debt.
Stocks traded lower for the most part, with the losses exacerbated by the 22% decline in stock price for PacWest following a disclosure by the bank that its deposits fell by 9.5% in the first week of May. At the close of markets, the S&P and Dow finished in the red, down 0.17% and 0.66%, respectively, while the Nasdaq finished up 0.18%.
Data from TradingView shows that Bitcoin (BTC) faced selling pressure throughout the trading day on Thursday, sliding from a daily high of $27,735 to hit a low of $26,850 in the afternoon, with bears now looking to extend the losses to the next lower support level around $25,000.
BTC/USD Chart by TradingView
The struggles for the top crypto have resulted in May Bitcoin futures prices trading weaker on Thursday, according to Kitco senior technical analyst Jim Wyckoff.
“Prices Wednesday fell below key support at around 27,000, hit a three-week low, and prices are now in a gentle downtrend,” Wyckoff said. “The BC bears have gained the slight overall near-term technical advantage.”
Many on crypto Twitter feel the same and are expecting another leg down for Bitcoin in the near future. Legendary trader Peter Brandt highlighted the formation of a head and shoulders pattern on the Bitcoin chart, which portends an extended pullback in price if completed.
A head and shoulders should be taken seriously if it is completed $BTC pic.twitter.com/n5ZiLasmUC
— Peter Brandt (@PeterLBrandt) May 11, 2023
Dr. Jeff Ross, the founder and CEO of Vailshire Capital Management LLC, agreed with Brandt’s tweet, saying, “short-term drawdown to ~$24,500 in the coming days would provide a very healthy reset of short-term momentum indicators as well.”
In a separate tweet, Ross said that in his opinion, “short-term momentum indicators need one more flush lower – ideally to ~$24k – to complete the healthy reset and begin the next leg higher, starting in mid-to-late May.”
And for those looking to short the market in these conditions, market analyst Crypto Tony posted the following Tweet noting that a meaningful break below support at $27,000 may be a signal to open a short position.
$BTC / $USD - Update
— Crypto Tony (@CryptoTony__) May 11, 2023
I remain short personally, but for anyone not in a short yet i would wait until we lose $27,000 then look to short this support zone loss. For now we are holding it so no reason to short just yet ?? pic.twitter.com/BragW6rsEQ
No shelter for altcoins
It was a red day across the board for the altcoin market as the threat of Bitcoin taking another leg down was motivation enough for traders to exit their positions and wait on the sidelines for more opportune market conditions.
Daily cryptocurrency market performance. Source: Coin360
The meme coin Pepe (PEPE) was the hardest-hit token in the top 200, falling by 27.3% to trade at $0.000001337, while Open Campus (EDU) declined by 18.8% and JasmyCoin (JASMY) fell by 16.75%.
The overall cryptocurrency market cap now stands at $1.115 trillion, and Bitcoin’s dominance rate is 46.9%.
