InstaForex

September 22, 2021

Bitcoin plunged to $ 40,000 per coin

 Bitcoin fell to $ 40,000. It can be recalled that it was mentioned in the previous articles that the new decline is very likely. The chart below shows that traders failed to break through the Ichimoku cloud, and a downward trend line was formed. As a result, Bitcoin broke through the level of $ 46,600 again, and then the level of $ 43,852 on its third attempt. After that, it further fell to the level of $ 40,746, where the decline has ended. However, this is not all. Bitcoin may continue its decline and there are several reasons for this. First, the fundamental background, which remains at least neutral for the world's first cryptocurrency. Earlier, it was mentioned that there was no compelling reason for Bitcoin's growth by $ 20,000 in the last few months. Therefore, it is likely that it will return to its original position in the near future. Second, the bullish trend is still considered complete. It can be recalled that the quotes fell from $ 66,000 to $ 29,000, which may serve as a signal for the completion of the bullish trend. If so, Bitcoin will now consolidate for a year or two, and during this time, the price may decline much below the level of $ 29,000.


Meanwhile, cryptocurrency experts said that a new collapse in the cryptocurrency market could happen due to the threat of bankruptcy of one of China's largest construction companies, Evergrande. The developer has accumulated $ 309 billion in debt. More than half of construction projects are currently on pause, but the company's management promises to cope with all the problems and restructure debts. The same opinion is shared by the analytical company Glassnode, which published a similar statement. According to them, holders began to get rid of risky assets amid the possible bankruptcy of Evergrande. If this is true, then Bitcoin has once again shown its volatility, instability, and purely investment nature. If Bitcoin declines by 20% at the slightest risk of bankruptcy of one of the companies, then what confidence can there be in it? That is why many investors still avoid cryptocurrencies and do not want to deal with them.


As soon as a new collapse occurred, which could lead to new massive cryptocurrency sales, investors' sentiment immediately changed. For example, long-time bitcoin critic Peter Schiff predicted the imminent collapse of the cryptocurrency market with the words "the bubble will burst". "There is nothing special about Bitcoin. The supply of altcoins will grow until the cryptocurrency "bubble" bursts. He wrote that supply will exceed demand, and prices will collapse down instantly. He also once again stated that gold is better than cryptocurrencies since it has "utility". Thus, it is now important for traders to understand what values the new collapse of quotes will continue. We believe that the option of falling to the next support level of $ 31,100 is very likely.


It is clear that the trend in the four-hour time frame is descending. Bitcoin fell to the support level of $ 40,746 and broke through it even twice. However, it failed to consolidate below, so a small upward pullback may follow. However, it should be noted that the level of $ 43 852 was also broken on the third attempt, so nothing prevents Bitcoin from returning to the level of $ 40 746 again to break through it also on the third attempt. As long as the price is below the trend line, the downward trend remains.