Founder of Fairlead Strategies announces important support level for Bitcoin to monitor
Some technical experts, such as Katie Stockton, the creator of Fairlead Strategies, foresee a relief bounce, but one that will be limited owing to the market’s overall downward trajectory.
On June 21, Stockton, whose business specialises in technical analysis, addressed the prognosis for Bitcoin (BTC) and other cryptocurrencies with Vonni Quinn and Haidi Stroud-Watts of Australia’s Bloomberg Daybreak.
According to her, the size of Bitcoin’s drop has been surprising in terms of its downward speed, and it has “infected the whole sector.” However, stabilisation is anticipated. As she emphasised:
“With this kind of fall, support levels are being broken, and our last support level was broken so forcefully that we’ve already reached the next support level, and these are long-term levels. For Bitcoin, we are monitoring the range between $18,300 and $19,500 (…), so this is the major level in play. It is an ideal location for a stabilising and kind of relief rally.”
However, given the present trend to the negative, Stockton said, “we do believe that the relief rally will be modest.”
She explained that the correlation between cryptocurrencies and equities will remain extremely high: “maybe not as high as they have been (…), but very high, and that’s very normal when you have a down-trending tape and a general risk of fear in the market, so investors are treating Bitcoin, Ether, and equities as risk assets.”
Moreover, she emphasised that the present crisis will alter how crypto investors see the market in the future, “but I don’t believe it will shake them out permanently.” As she explained:
“I believe it’s a question of waiting for momentum to change in order to establish a grounding phase, and only then can trust be restored. So I believe this is a bit of a shakeup (…).”
In this shakeout, Stockton thinks that “the weaker firms just won’t survive, but once we emerge, there will be some excellent possibilities with maybe a little more endurance and a bit less volatility, which is inevitable as an asset class evolves.”
Additionally, the creator of Fairlead Strategies anticipates a rise in institutional interest over time, but not until volatility subsides and “businesses that fail the basic test are shaken out of the sector.”