$30,000 or $25,000 next for Bitcoin?

Round numbers fascinate and beguile those in markets as they can act as key psychological levels which frequently form support or resistance. They work because humans value simplicity and what could be easier than huge round figures to attract buyers or lure in sellers who think prices are either too cheap or too expensive. Rounded levels can change the way market participants react as they may bring about shifts in trends or possible reversals.

The psychology around $30,000 in the Bitcoin has displayed all these characteristics after the world’s most popular cryptocurrency hit its highest level since June 2022 just over a month ago. At the time, crypto traders moved funds away from banks and warmed to rapidly shifting interest rate expectations. Buyers emerged after a week of acute turbulence for the banking sector on both sides of the Atlantic as investors fret over smaller bank’s bond portfolios and business models. The stability of the system, along with falling interest rates generally creates a positive environment for cryptos because they are seen by some investors as a hedge against systemic risks.

Fast forward a few weeks and the dollar-denominated price of the original and biggest crypto has not been able to sustain the bullish surge of that mid-March rally and stay above $30,000. Turbulence in the banking sector has casts doubt over the crypto industry’s long-term footprint in the US. Three major crypto-currency friendly banks have folded in recent weeks. This has sparked fears among industry supporters that the US is “de-banking” the crypto industry.

That said this week, one investment bank has been talking of hitting $100k by the end of next year. The fact we are close to the end of the Fed tightening cycle should help all risk assets, while regulation of cryptocurrencies could provide another tailwind by improving volatility and interest. Ultimately, the recent banking stress has re-established cryptos core use as a “decentralised, trustless, and scarce digital asset.”

Of course, we need to first of all decisively break and close above the rally point of $30,000. That means rebounding off current support around $27,000 after the largest crypto hit four-week lows but printed a “doji” candle yesterday. This area is where prices stabilised after the mid-March breakout. The 50-day simple moving average also sits near here at $27,222. Otherwise, $25,000 could come fairly quickly if we lose this support zone.