Bitcoin Price Drops for a Fourth Day; Falls Back Below $20,000 Level

Bitcoin fell back below $20,000 on Tuesday after enjoying its strongest run in more than three months last week, as a surge in the greenback rippled through global markets.

The largest cryptocurrency dropped as much as 4.2% to $19,546, declining for a fourth straight session. It hit $22,472 on Friday as risk appetite returned to broader assets. Second-largest Ether slid as much as 7.4% to $1,053. The MVIS CryptoCompare Digital Assets 100 index dropped 4.2% at one point.

“Expect apathetic back-end vol and basis flows in another summer trading week with CPI likely to be the main event on July 13,” Genesis’s Noelle Acheson and Gordon Grant said in a note Monday. “Notwithstanding a modicum of fireworks around last Friday’s weekly options expiry that saw Bitcoin blow through $22,000 and touch the 200-week moving average, with Ether pushing toward $1,300 in sympathy, the weekend session saw a resumption of choppy, downwardly oriented price action that has characterized recent months.”

The dollar jumped on Monday ahead of the CPI, which could offer insight into the Federal Reserve’s potential rate-hike path. Bitcoin and other cryptocurrencies have struggled as the central bank works to combat high inflation readings, and have tended to trade along with risk assets for the past couple of years.

Bitcoin has been trading range-bound since its steep drop in June, hovering just around $19,500, its 2017 peak. If the coin breaks below this level, $16,000 to $17,000 may act as the next level of support, the range Bitcoin saw as resistance during the relief rally in early 2018. Or it could move toward $14,000, the coin’s peak in 2019, according to Arcane Research.

If, however, Bitcoin breaks higher, $28,000 may serve as the nearest resistance area, which is the coin’s bottom in 2021, Arcane added.

Still, many investors watching the space aren’t feeling so bullish. Bitcoin is more likely to tumble to $10,000, cutting its value roughly in half, than it is to rally back to $30,000, according to 60% of the 950 investors who responded to a Bloomberg MLIV Pulse survey that ran July 5-8. Forty percent saw it going the other way.

“I’m not surprised to see prices going down with commodity prices and the overall sense of weakening growth -- money being tighter and there’s less money to slosh into crypto,” Brian Nick, chief investment strategist at Nuveen, said in an interview. “That’s not a shock. There’s a lot of volatility.”

Meanwhile, there’s a sense of hodling -- or holding onto investments even during tough times -- among the crypto faithful. On-chain data suggests that such investors have been undeterred by recent market dynamics, according to Strahinja Savic at FRNT Financial. The percentage of Bitcoin that hasn’t moved for more than a year reached an all-time high of 66% in June, and has remained steady at around 65% now.

“The ‘hodl’ mantra has been an important part of Bitcoin culture, and the data suggests that this dedication to the asset has remained intact, despite the asset being,” roughly 70% below its peak, he said.