Economy

Bitcoin plunges below $89,000 as analysts forecast deeper declines

11:40

By: Dakir Madiha

Bitcoin plunges below $89,000 as analysts forecast deeper declines

Bitcoin tumbled below $89,000 on January 23, with seasoned traders issuing stark warnings of steeper losses ahead. The cryptocurrency traded at around $88,959 according to CoinStats data, reflecting a weekly drop of nearly 7 percent. This downturn unfolded even as precious metals like gold and silver surged to historic highs, while crypto derivative markets saw over $1.5 billion in liquidations over the past 48 hours.

Veteran trader Peter Brandt cautioned that Bitcoin could slide to between $58,000 and $62,000, implying a correction of 33 to 37 percent from recent levels. He pointed to a breakdown from a broader topping pattern after the asset failed to sustain momentum near $100,000. Technical analysts highlighted a weekly "death cross," where the 21-week exponential moving average dipped below the 50-week average a bearish signal that last appeared in April 2022, preceding a 60 percent plunge from $40,000 to $16,000 over seven months. Some projections even suggest a potential fall to $36,000 if history repeats.

Keith Alan, co-founder of Material Indicators, attributed the decline to chart patterns brewing for over a month, dismissing narrative-driven explanations. Meanwhile, economist Peter Schiff blamed Wall Street's embrace of Bitcoin for its woes, noting it shifted from top performer when few held it to one of the weakest assets post-institutional adoption. He observed Bitcoin's more than 50 percent drop against gold since its November 2021 peak, a gap widened as silver breached $100 per ounce for the first time and gold hit a record $4,967.

Cascading liquidations amplified the rout, with massive forced closures hitting leveraged long positions betting on price gains. CoinGlass data showed over $1.5 billion wiped out in 48 hours, driving the crypto Fear & Greed Index to an "extreme fear" reading of 20. Analyst Victor Olanrewaju of CCN noted Bitcoin testing support at $88,000 to $89,000, where holding could stabilize prices; a daily close below might propel it toward $80,401. Yet some experts downplay 2022 parallels, citing improved U.S. liquidity conditions as a potential floor.