(Kitco News) – Bitcoin (BTC) retested the lower bound of the trading range it’s been trapped in since late February on Wednesday, prompting some analysts to warn about the potential for declines into the $40,000 range as momentum appears to be turning in the bears’ favor.
It was the opposite story for stocks, as the shortened trading day ahead of the Fourth of July holiday saw the S&P and Nasdaq close at new record highs for the second consecutive day, while the Dow saw a minimal loss.
At the closing bell, the S&P and Nasdaq finished up 0.51% and 0.88%, respectively, while the Dow lost 0.06%.
Data provided by TradingView shows that Bitcoin lost support at $62,000 in the early hours on Wednesday, hitting a low of $59,515 before dip buyers pushed it back above $60,000.
BTC/USD Chart by TradingView
Bears have continued to exert downward pressure, however, and look determined to take out $60,000 support and smash Bitcoin to its next support level at $59,000. At the time of writing, BTC trades at $59,735, a decrease of 3.5% on the 24-hour chart.
Buy when there’s blood on the streets
While Wednesday’s pullback has elicited calls for a sub-$50,000 Bitcoin, most analysts see those fears as overblown and simply feeding into the normal FUD cycle.
“$BTC calls for $44k, etc are cool if clout's your goal, but in terms of actionable trading plans in the event of a breakdown here, no need to skip over levels and potential scenarios that could occur well before then,” tweeted market analyst HornHairs.
In one scenario, HornHairs said he “[doesn’t] see us taking out $58k without taking $56k as collateral damage,” adding that “A long wick below $56k and a significant bounce back above $60k would be a scenario I'd feel safe to get long after again.”
Alternatively, he said “A front running of $50k aligns with the demand pocket that sent us up into the current consolidation. A significant bounce off that seems likely before any move into the lower $40ks.”
“Fully focused on those two potential scenarios for now,” he concluded.
Market analyst Rekt Capital said Monday’s breakout has been “postponed due to a failed retest of the June Downtrend as new support.” He posted the following chart, saying, “This is still the trendline to watch for a shift in the trend going forward nonetheless.”
Benjamin Cowen provided additional macro context to the pullback, telling his YouTube followers that Bitcoin may be heading lower based on its historical correlation with the rate for 10-year yields (US10Y).
“One of the reasons why you often see Bitcoin sort of fade can be when the longer yield curve is starting to rise… but if you look at the 10-year yield what you’ll notice is that when the 10-year yield is really spiking like it was back over here really starting in July [2023] and going into October [2023], that was when Bitcoin was fading.”
“And if you look at the year before [in 2022] when it was spiking into October, that was when Bitcoin was fading,” he added. “And so if the 10-year yield is starting to spike here again into October, that could correspond with Bitcoin just showing some of that seasonal weakness.”
Market analyst Moustache said that in his opinion, the Bitcoin bottom is in and BTC is simply backtesting the recent downtrend line before moving higher.
#Bitcoin
Bottom for $BTC is in imo.
-I think a lot of people have overlooked the fact that Bitcoin has recently broken the downtrend and is now backtesting this trendline✅
-CME Gap is now also filled✅ pic.twitter.com/PUv1HnJvp1— ???????ⓗ? ? (@el_crypto_prof) July 3, 2024
And market intelligence firm Santiment highlighted that while retail traders have been dumping their tokens amid the FUD-induced weakness, whales are more bullish than ever and have accumulated a record high of 16.17 million BTC.
? Bitcoin's key stakeholders project a long-term bullish picture, as 10+ coin wallets have now accumulated an all-time high 16.17M BTC.
Ideally, we see buying power (dry powder) increase from Tether and USD Coin holders to really open the floodgates for crypto's next bull run. pic.twitter.com/TgRUpaDVYt— Santiment (@santimentfeed) July 2, 2024
Altcoins sell off
The downtrend for altcoins intensified as Bitcoin slipped below $60,000, with all but five tokens in the top 200 recording losses on Wednesday.
Daily cryptocurrency market performance. Source: Coin360
BinaryX (BNX) found itself in lonely territory with an increase of 9% to lead the gainers, while Worldcoin (WLD) climbed 3.5%, and aelf (ELF) gained 1.6%. Blast (BLAST) was hardest hit by the downturn, losing 20.3%, followed by declines of 16.2% and 15.8% for Ethereum Name Service (ENS) and dogwifhat (WIF), respectively.
The overall cryptocurrency market cap now stands at $2.21 trillion, and Bitcoin’s dominance rate is 53.4%.
