Bitcoin (BTC) and Ethereum (ETH), the two largest cryptocurrencies by market cap, have both crashed below key support levels in recent days.
BTC has fallen and is staying below the psychological level of $40.000. At last check, the coin was changing hands at $38.600, down about 3% in the last 24 hours.
Ethereum, is also on a downward trend, currently trading below its own key support level of $3.000 and changing hands at $2.824, about 21% lower from its April 3, $3.550 print.
This suggests that the overall sentiment around these digital assets, and by extension the crypto market, continues turning negative. In fact, bulls have faded away in the high sell pressure since BTC’s March 28, $47.938 print- a pullback that resulted in a significant price drop for cryptos on a technical front. However, there are several positive fundamental indicators that suggest these assets could rebound in the near future.
Recently, there has been an increased correlation between crypto and the equity markets, in particular, the Nasdaq 100 Index (NDX), a tech heavy segment of the stock market. According to recent Dow Jones market data, this trend, which appears to be driven by a number of factors, including the growing institutional interest in digital assets, is continuing.
Another reason is the high number of companies listing their shares on crypto exchanges. This is giving investors more options when it comes to investing in digital assets and is also helping to boost the liquidity of the market.
This trend is likely to continue in the future, as more and more investors and institutional firms recognize the potential of cryptocurrencies and start to allocate a portion of their portfolios to these assets.
According to crypto expert and AvaTrade’s chief market analyst, Naeem Aslam, Bitcoin’s break below $40,000 has “set a negative tone for cryptos.”
Arguing from a technical standpoint, Aslam suggests that BTC’s $40K level is an important one and that traders do not want to see price volatility that leads to no identifiable trend in either direction “again and again.”
Aslam does add, however, that from a fundamental and regulatory perspective there is “no doubt that [cryptocurrencies] are moving in the right direction.”
In short, it would appear that while the bulls are losing steam and a further slide in prices could be on the cards, there are some positive signs on the horizon that suggest that the fundamentals of the world’s largest digital assets may be moving in the right direction. As such, it may not be time to write off crypto just yet.