- Bitcoin's skid spurs analysts to search for floor price.
- James Check described impact of 'air pocket' in the market.
- Trump's protectionist trade policies are rattling investors.
Buckle up, Bitcoiners.
As the top crypto hovers around $88,000, Alex Thorn, the head of research at Galaxy Research said “there’s mostly air” between $75,000 and $85,000.
This means that barely any Bitcoin was transacted in that range and the market “may want to test that range,” Thorn said on X on Tuesday.
Translation: Bitcoin dropping to its previous all-time high of $74,000 is a plausible scenario.
Sudden plunge
Thorn isn’t alone in hitting the fasten seatbelt sign.
James Check, a former Glassnode analyst, called the gap an “air pocket” in his newsletter Checkonchain on Tuesday.
“The market wants to go and find out how much demand is there,” he said.
Bitcoin’s sudden plunge after hitting new heights above $100,000 appears to be largely driven by President Donald Trump’s world-rattling trade policies.
When the protectionist-minded president threatened a tariff war against Canada and Mexico in January, the crypto market tumbled 5% as investors dialled back risk and piled into gold and cash.
On Monday, the Bitcoin price nosedived again and over the last seven days it’s down almost 9%. Ethereum also declined 10% over that period and to $2,400 in mid-afternoon trading UK time.
Solana nosedives
Solana, which has been buffeted by mounting concerns over the many memecoins on its platform, has shed a fifth of its value in the last week.
The bout of bearishness has been strikingly sharp, even for an asset as volatile as Bitcoin.
Check, for one, said there’s a 30% chance that Bitcoin could tag the “chopsolidation” range, market-speak for a period when investors “chop wood” and trade sideways after a powerful bull run.
‘These types of losses rarely end well.’
— Geoffrey Kendrick, Standard Chartered
For eight months between March and October 2024, for instance, Bitcoin traded between $55,000 and $75,000.
“Bitcoin goblin town incoming,” said Maelstrom CIO Arthur Hayes on Monday , referring to crypto slang for rough times ahead.
Five other analysts added that down is the probable trajectory for Bitcoin.
Geoffrey Kendrick, head of research for Standard Chartered pointed out that Bitcoin exchange-traded fund purchases since the US election are running at a loss of around $1.3 billion.
This means the value of ETF buys are underwater in a big way.
The average buying price is $97,000, said Kendrick in a note to investors on Wednesday.
“These types of losses rarely end well and I still think the big capitulation is yet to come.”
This suggests that investors are dealing with a bout of buyer’s remorse, and could be preparing to offload their Bitcoin in a bid to soften their losses.
Healthy pullback
The capital injected into Bitcoin over the past months has been breathtaking, said Check.
More than half of all dollars invested have a cost above the $90,000 level, an amount that the market “has to digest.”
Even so, he tried to comfort jittery investors: “This is a really healthy pullback.”
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.