The Daily Breakdown looks at the pullback in crypto, with Bitcoin, Bitcoin Cash and Ethereum all tipping lower.
Tuesday’s TLDR
- Stocks and crypto fall
- BTC looks for support
- Berkshire hits record highs
What’s happening?
As yesterday’s action was unfolding in the stock market — where the S&P 500 ultimately dipped 0.5% and the Nasdaq 100 fell 1.2% — I was thinking that Bitcoin was holding up pretty well, all things considered.
By Tuesday morning though, that argument lost some steam.
Bitcoin fell almost 5% by the end of Monday and at this morning’s low, it was down about 5.7%. Ethereum ended up falling more than 10% on Monday, while Bitcoin Cash tumbled 11%.
In that regard, Bitcoin actually held up pretty well to its peers, which has become the norm in recent months. We’ll look at the chart for Bitcoin in a moment, but it’s a reminder for investors that quality plays a large role in the crypto space — particularly as the industry is becoming awash in memecoins.
Not surprisingly, the dip has weighed on other crypto-focused areas of the market, like IBIT and other Bitcoin-oriented ETFs, as well as equities related to crypto, such as MicroStrategy.
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The setup — Bitcoin
We have looked at these levels before with Bitcoin, but as a reminder, the $87,000 to $90,000 zone has been support over the last few months.
BTC flirted with a break below this zone overnight, but has since bounced from the lows to hold above it — for now.
If the selling pressure continues and Bitcoin breaks below this support zone, it increases the odds that it may move lower, potentially testing down into the 200-day moving average.
However, if this current support area holds, bulls will look for a bounce, potentially up into the mid-$90,000s. If BTC is able to clear current downtrend resistance, then a move back toward $100,000 or higher could be possible.
The recent action has a lot of investors asking themselves, “where to from here?”
What Bitcoin does in the short term depends on what kind of investor you are. Short-term, active investors may want to keep an eye on some of these support and resistance levels as clues for finding opportunities.
However, long-term investors should remember that BTC is still up about 50% over the last six months and historically, has been prone to wide trading ranges. That doesn’t mean investors can’t alter their allocations, but volatility is part has been part of the game for BTC.
What Wall Street is watching
BRK.B – Shares of Berkshire Hathaway hit record highs on Monday, hitting $503.96. The move comes after Warren Buffett’s firm reported earnings and raised its cash stake even higher, which now stands at more than $330 billion. The firm now commands a market cap in excess of $1 trillion.
HIMS – Shares of Hims & Hers remain incredibly volatile, as is the case after the firm reported earnings on Monday. Down over 20% in pre-market trading, the company’s report is not being met with enthusiasm despite a top- and bottom-line beat. Check out the chart.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.