As the Bitcoin-to-gold ratio reaches the lowest level since mid-2021, most analysts and experts suggest that the further decline of BTC price is extremely likely. The expected support level is $30,000.
Causes of Bitcoin’s Decline
Despite Bitcoin’s high rates of growth within the past two years, the last several months are characterized by the slowing dynamics of the main cryptocurrency as compared with gold and fiat currencies. At the moment, gold outcompetes Bitcoin both in terms of price stability and long-term dynamics.
The current trends also indicate the high likelihood of the further price decline of the Bitcoin-to-gold ratio in the following weeks. Bitcoin demonstrates the negative dynamics for the sixth straight day. Most analysts attribute such problems to the prevailing geopolitical factors such as the growing tensions around Ukraine.
In particular, President Putin has officially recognized the two self-proclaimed quasi-states in Eastern Ukraine and announced the military support of these territories. Such decisions have already caused the announcement of new sanctions against Russia by Western countries.
The escalation of international relations between Russia on the one hand and the European Union and the US, on the other hand, implies the higher risks incurred by investors specialized in the stock and crypto capital markets. Under such conditions, many investors have to reduce their crypto holdings and reorient to more stable assets.
The previous belief of Bitcoin and other cryptocurrencies being a secure haven during periods of geopolitical instability is seriously undermined. At the same time, gold is still positively perceived by most investors.
Targets of BTC Price Decline
Although the current situation remains highly uncertain with several plausible scenarios being considered by experts and analysts, most investors and traders expect the further decline of the BTC price. As the current price level of $36,000-$37,000 does not appear to be stable, the next important support level is $30,000, the prices not observed since July of 2021.
In particular, there is still a considerable buying interest at the level of $30,000, and most investors expect that the bearish concerns would be insufficient for overcoming such support. At the same time, the current dynamics of “buy the dip” calls remains unsatisfactory with the growing number of traders capitulating in the face of the rapid BTC depreciation.
Many analysts in Bitcoin media expect a further price decline and also prefer abstaining from purchasing BTC at the current prices. The expectations of the coming “crypto winter” contribute to additional concerns in terms of making trades against the negative trend.
Moreover, some analysts even consider the most pessimistic scenario of the BTC price declining below $30,000. Such a scenario may cause a large-scale crypto crisis with the further price dynamics becoming almost unpredictable and uncontrollable. For this reason, most risk-averse investors may reorient to gold and similar assets that do not create additional risks of significant losses in the following months.
Implications of Technical Analysis
The technical analyst Katie Stockton confirms the correctness of the existing negative expectations expressed by most crypto analysts and traders. In particular, she expects the price to decline further due to the fact that BTC has proved to be unable to remain above the critical support level of $37,200.
According to her, the next important level is $27,200 that will indicate the lowest level of the entire period of 2021-2022. Thus, on the basis of the available information, it is highly unlikely that the BTC price will decline below $27,200. However, there are also no indicators of its trend reversal before reaching this level.
Such considerations may be relevant for many investors and traders who may prefer to abstain from purchases until Bitcoin reaches the channel of $27,200-$30,000.
Moreover, some of them may even prefer to receive additional signals of the trend reversal before entering the market and expecting a further price increase. The technical analysis also indicates that the BTC price decline below the critical level of $27,200 could lead to catastrophic implications for the crypto industry with the possibility of a further price fall up to $20,000.
Therefore, one of the most important practical implications for investors is creating a portfolio that will include various crypto assets and selecting the optimal time horizon for investments. Despite the high likelihood of short-term problems for the entire crypto market, the likelihood of its rapid restoration in the following years (especially around the next halving) is considerable.