Bitcoin investors have their eye on the cryptocurrency this week as it tests a key level of $33,000 just days after touching $40,000 last Wednesday.
The price of bitcoin was last down about 4.5% at $33,041.00, according to Coin Metrics. Earlier in the day it fell as low as $32,650.25, its weakest since last July. Bitcoin has been steadily extending its declines since Thursday, when it fell sharply alongside the stock market sell-off, and took another steep fall over the weekend.
Ether‘s moves over the past five days – crypto trading is 24 hours, including weekends – have followed bitcoin’s. It’s down about 5% to $2,402.70 Monday.
“Bitcoin has followed the lead of the equity market, extending lower after a weak April,” said Katie Stockton, founder of Fairlead Strategies. “Short-term momentum has deteriorated … and bitcoin is no longer oversold from a short-term perspective.”
Stockton also said bitcoin currently has no counter-trend signals but that the equity market looks poised to rebound this week, which could carry over to cryptocurrencies. The crypto market, led by bitcoin, has remained highly correlated with the moves in equities, particularly tech stocks, for about a year. April was the worst month since 2008 for the technology-dominated Nasdaq Composite Index.
Stock futures were down across the board on Monday morning.
Key U.S. inflation data for the month of April, due to be released Wednesday, could be a temporary “turning point” for bitcoin, according to Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank.
“If the CPI shows no sign of slowing down, it will add to the fear of faster monetary tightening,” Hasegawa said. “But other inflation metrics are starting to slow down and the April CPI could follow suit, which in turn will likely alleviate the market’s concern and help recover its risk sentiment.”
It wouldn’t be enough to completely reverse market sentiment, however, he said.
Bitcoin needs to maintain the key psychological level of $33,000 to prevent further deterioration of technical sentiment, Hasegawa added. He sees it trading between $30,000 and $38,000 this week.