Bitcoin could fall an additional 27% to its 2019 high as the crypto tests a big support level, according to Fairlead's Katie Stockton

• Bitcoin's negative momentum points to more downside ahead, according to Fairlead Strategies' Katie Stockton.
• The world's most valuable cryptocurrency fell below $19,000 on Thursday to test a key support level.
• Bitcoin's secondary support level sits at $13,900, representing potential downside of about 27%.

Bitcoin could be on the verge of another big downturn as the world's most valuable cryptocurrency tests a key support level.

That's according to Fairlead Strategies' founder Katie Stockton, who highlighted in a note earlier this week that bitcoin's support range of between $18,300 and $19,500 needs to be decisively held to prevent a further decline.

"Bitcoin has stabilized after a reaction to short-term oversold indications last week, supporting a short-term neutral bias within a bearish long-term trend," Stockton said.

While short-term momentum readings for bitcoin have turned to "Neutral" from "Negative", according to Stockton, intermediate- and long-term momentum readings are still in "strongly negative" territory.

That means risks remain elevated for bitcoin after it broke below its prior support of $27,200 in early June, and those risks were on full display Thursday, when bitcoin tumbled about 5% to fall below $19,000.

If bitcoin's downtrend continues and the $18,300 support level is decisively broken, Stockton said the next support level to watch is bitcoin's 2019 highs around $13,900. That represents downside potential of 27% from current levels.

Bitcoin has already declined more than 70% from its November high, and a decline to Stockton's secondary support level of almost $14,000 would represent a peak-to-trough decline of 80%, which historically isn't out of the ordinary for the cryptocurrency.

Bitcoin experienced similar declines of 80% or more from its prior all-time-high in 2011, 2015, and 2018. Meanwhile, the cryptocurrency saw declines of about 70% in 2013 and 2019.

The bitcoin decline has helped the cryptocurrency market erase more than $2 trillion in value, and it's been driven by deleveraging and a lack of confidence following the implosion of stablecoin TerraUSD and more recently, crypto hedge fund Three Arrows Capital.

And investors shouldn't expect a swift recovery in bitcoin prices akin to what happened during the COVID-19 pandemic in 2020. Instead, the crypto decline could last several months, at least until technical momentum indicators show signs of improvement.

"Bitcoin is newly long-term oversold per the monthly stochastics, but it will likely take several months for a long-term oversold 'buy' signal to register," Stockton said.