Bitcoin drops to $19K

With everything falling, Bitcoin has not wanted to be left out this week. The world’s most popular cryptocurrency fell on Thursday to $19K, extending its losses for 5 consecutive days. It has fallen along with stocks and gold, as investors’ appetite for risk continues to diminish. The reason behind the latest sell-off of risk is the same factors that have been prevalent all year round: Surging inflation, interest rate hikes and worries about an economic slowdown. Month- and quarter-end portfolio rebalancing is also adding to the pressure today.

The big news for Bitcoin earlier this week was from MicroStrategy, purchasing an additional 480 bitcoins for about $10.0 million at an average price of $20,817 per coin. So far, the news hasn't impacted the price of Bitcoin as it has now fallen below the $20K handle. Of course, $10m is a relatively small purchase, but it is not nothing.

We will need to see a big reversal stick around current levels to give hope that we have seen at least a short-term low. But for now, the path of least resistance remains to the downside.

While Bitcoin remains in danger of further falls, the big correction has increased the probability of a recovery in the not-too-distant future. So, I would be on the lookout for signs of a bullish reversal at these levels. If we go back above $20K handle, and stay there, that could be the signal I am looking for.

Crypto enthusiasts just cannot wait until that happens. Patience is the name of the game.

Meanwhile the focus will remain on MicroStrategy and how it can cope with such a severe sell-off in the crypto space. The company now holds around 129,699 bitcoins, acquired for about $3.98 billion. That gives it an average price of $30,664 per bitcoin, more than 11K below the current market price of $19K.

From an investing point of view, this is what you are supposed to do – buy more at lower levels. The company’s Chief Executive Officer Michael Saylor must believe that the downturn for bitcoin is nearing an end and that a recovery is nigh. To some degree, I agree with that viewpoint. It is just that it feels a bit like a gamble though as prices haven’t stabilised to give you confidence that a low is in just yet. I hope that doesn’t scare investors who are holding the company’s stock.

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.