Bitcoin fell again on Tuesday, this time breaking below the critical $30,000 level.
That price has been highlighted by institutional investors as a key level of support.
Despite the market rebounding slightly on Tuesday, this move in bitcoin comes as investors look to mitigate risk with the spread of the delta Covid variant putting additional pressure on the broader market.
In an interview with CNBC’s “Trading Nation,” Delano Saporu, founder of New Street Advisors, said he sees more pain ahead for bitcoin.
“I think you probably have more downside, maybe to around the $22,000 range [to] the $17,000 range for bitcoin going back to Dec. 20 of last year,” he said Tuesday. However, “from there, I do think there’ll be upside,” he said.
While short-term traders who invested in bitcoin at its highs are feeling the pain now, Saporu sees the cryptocurrency paying off for long-term investors.
“A lot of people that were speculating when the price was really at its highs and they were jumping in at that time were really looking for a quick profit,” he said. “They were wrong at that time.”
In the same interview, Fairlead Strategies founder Katie Stockton said bitcoin investors may feel the squeeze for a little longer.
“It marks the bottom boundary of a consolidation phase,” she said of the move below $30,000. “With that, it becomes what I call ‘ripe for a shakeout.’”
According to Stockton, a shakeout is a “false breakdown” where the price of an investment dips below a support level. Following this dip, the price might quickly snap back once the market “shakes out those weak holders of bitcoin,” she said.
If bitcoin bounces back this week, she said, that would be a sign that this sell-off was temporary.
In addition, her model indicates that bitcoin is headed higher. She pointed to a secondary support level at around $27,000, which would be important to define its long-term uptrend.
Stockton added that she needs to see momentum turn for proof that this consolidation phase is bottoming. She predicts this would happen when bitcoin breaks out above the 50-day moving average, which is approximately $34,500 at current levels.
“That would be a convincing turnaround for bitcoin,” she added.
Disclosure:DelanoSaporu holds bitcoin.