Bitcoin's failed breakout means it could fall an additional 12% if it drops below key $58,000 support level, technical analyst says
- Bitcoin has staged a failed break-out since it fell sharply from its recent high of $69,000.
- The cryptocurrency could fall an additional 12% if it breaks below the $58,000 support level, according to Fairlead Strategies' Katie Stockton.
- "Short-term oversold conditions are within reach for bitcoin ... so we would look for [the] pullback to mature later this week," Stockton said.
A failed breakout in bitcoin could spell more downside ahead for bitcoin as it looks to consolidate a recent 15% decline, according to Fairlead Strategies' Katie Stockton.
Bitcoin hit record highs in early November, eclipsing its prior April record of $65,000 and reaching about $69,000 before it tumbled to as low as $58,400. According to Stockton, the price action in bitcoin represents a failed breakout, and more downside could be imminent.
That's if bitcoin fails to hold key support near $58,000, Stockton told Insider. Bitcoin successfully tested this important support level on Tuesday and early Wednesday, which is a good sign for bullish crypto investors.
And while the recent pullback was sharp, it "has not impacted our positive intermediate-term gauges," Stockton said, adding that short-term oversold conditions are within reach for bitcoin and other cryptocurrencies, suggesting that "their collective pullback [could] mature later this week."
But if bitcoin decisively breaks below $58,000, the cryptocurrency may not find strong support until it trades near $52,900, representing a lower boundary of the technical ichimoku indicator, Stockton highlighted.
A decline to $53,000 would represent downside potential of 12% from current levels, and would put bitcoin in bear market territory.
But given that ether is nearing its initial support level of $4,000, Stockton thinks $58,000 may serve as reliable support for bitcoin. "There are already signs of intraday downside exhaustion per the DeMARK Indicators that suggest the worst of the pullback may be over," Stockton said.
