Key points:
- Riot Blockchain and Marathon Digital shares fell along with Bitcoin prices.
- Bitcoin broke below the crucial $40K level and could be headed lower.
- The next crucial level is $31K, which could act as support.
Riot Blockchain Inc (NASDAQ: RIOT) and Marathon Digital Holdings Inc (NASDAQ: MARA) were down 8.64% and 7.45%, respectively, after Bitcoin fell through a crucial level that has held for the past few months.
The falling bitcoin prices drove the entire crypto market lower, with some websites claiming that the entire crypto market capitalisation had fallen by about 10% earlier today.
Today, Bitcoin prices broke below the $40,000 shown in the daily chart below, held since September 2021. As a result, many expect the leading cryptocurrency by market value to drop and test the support level at $31,000.
Also Read: Expert Predicts the Cryptos That Could Give the Greatest Returns in 2022.
In the past, Bitcoin was regarded as an alternative asset class that was immune to the performance of the stock markets, but its performance in recent years has cast doubt on this initial assumption.
For example, crypto prices are now falling in line with the selloff witnessed across tech stocks that rely on cheap finding rates to maintain their high growth numbers.
Nobody expected that the tightening of monetary policies by the Fed and other leading central banks would trigger some adverse movements in the crypto sector. Yet, Bitcoin prices have been falling since hitting a high of $69,000 in early November 2021, when the Fed turned hawkish on its monetary policy.
While stocks have had a more volatile path falling initially then rallying back to their previous highs before falling again, Bitcoin has been steadily declining with slight pauses marked by sideways trading and further declines.
Today’s break below the crucial $40K level brings the $31K level into sight, which is another significant support level, but as we now know, it will not be a straight path lower.
The shares of Bitcoin miners fell along with Bitcoin because lower Bitcoin prices negatively affect their revenues as Bitcoin producers and sellers.
Bitcoin seems oversold on the daily chart below based on the RSI indicator; hence we should expect a pullback to restest the $40K level before the leading crypto heads lower.
However, we cannot ignore the likelihood that the price could reverse course and head higher once above the $40K level. So long as Bitcoin prices remain below $40K, we can expect further declines.
*This is not investment advice. Always do your due diligence before making investment decisions.
Bitcoin/USD price chart.
BTCUSD daily price chart shows today’s break below the crucial $40,000 level.