Following another unsuccessful attempt to breach the $28,000 resistance level over the weekend, Bitcoin has retreated to its lowest point since late September.
As of October 11th (per CoinDesk), Bitcoin (BTC) experienced a significant drop below $27,000, marking its first dip below this threshold since the beginning of the month. This price decline occurred despite a four-day uptrend in traditional stocks and three consecutive days of decreasing bond yields, failing to stimulate buying interest in the cryptocurrency.
On Wednesday afternoon, Bitcoin saw a 2.5% decrease over the previous 24 hours, underperforming the CoinDesk Market Index (CMI), which declined by 1.75%. Among other major cryptocurrencies, Ripple Labs’ XRP, Litecoin (LTC), and Polkadot’s native token (DOT) experienced drops ranging from 2% to 3%. Ether (ETH) outperformed BTC and the CMI, declining by 0.7% to approximately $1,550.
During the day, cryptocurrency derivatives traders who had placed long positions betting on higher prices faced liquidations totaling $50 million, according to CoinGlass data. Bitcoin accounted for $22.5 million of these liquidations, marking the second-highest figure for the month.
While cryptocurrencies were experiencing a decline in prices, traditional financial markets continued to post gains. The Nasdaq advanced by 0.7%, and the S&P 500 added 0.4%, both on a four-day winning streak.
Bonds also saw a winning streak, with the 10-year U.S. Treasury yield dropping by 10 basis points to 4.56%, down from its 4.80% closing point the previous Friday.
In economic news, the U.S. Producer Price Index (PPI) for September exceeded expectations slightly. The minutes from the most recent meeting of the Federal Reserve’s Federal Open Market Committee (FOMC) indicated that most members anticipated one more rate hike before the completion of the monetary tightening cycle.
Looking ahead to Bitcoin’s price, some analysts observed the cryptocurrency’s notable stability in recent weeks despite the decline in U.S. stocks and a turbulent bond market. However, this trend began to dissipate when Bitcoin struggled to break through strong resistance at approximately $28,000, a convergence of the 200-day and 200-week moving averages.
Prominent trader XO, in a recent post, suggested that bearish narratives might gain prominence for Bitcoin as spot holders become apprehensive about lower prices, hinting at the potential for a drop below $25,000. Caleb Franzen, the founder of Cubic Analytics, noted in another post that Bitcoin had broken its upward trend that began with its rally from $25,000 and might retest lower levels.
Caleb indicated that BTC could potentially find support at the upper bound of its downtrend from the summer; otherwise, it could fall further to the $24,000-$25,000 range.
Despite the possibility of short-term declines, Bitcoin may be poised for higher prices in the long run. Billionaire investor Paul Tudor Jones expressed his preference for gold and Bitcoin, citing extensive geopolitical risks, rising U.S. debt levels, and interest payments as driving factors for his bullish sentiment.