Bitcoin Price Could Drop to $40,000, If Falls Below Key Level: Analyst

Jafrin  |  May 12, 2021

Bitcoin falls below a key technical level which indicates that the leading cryptocurrency could fall to as low as $40,000, according to Pankaj Balani, the CEO of crypto derivatives exchange Delta Exchange. Bitcoin stood at $57,328 at the time of writing, around 3.6% higher in the past 24 hours.

Bitcoin Could Face Significant Losses Due to its Fall

Speaking to Bloomberg on May 11, Pankaj Balani, the CEO of digital asset derivatives exchange Delta Exchange said that Bitcoin could result in a price drop if higher support levels fail to hold.

The leading cryptocurrency could drop to as low as $40,000 after falling below a key technical level, indicating significant losses for the BTC/USD trading pairs.

Balani says that Bitcoin's fall below its 50-day moving average, around $56,000 could trigger a further decline, and all crypto assets including Ether “should move lower.”

He explains that the 50-day moving average is a key psychological level that is closely watched by investors, and also used by some algorithmic traders as a point at which to sell.

Chasing Quick Gains Not Good for the Crypto Market

Balani believes that the cryptocurrency's fall to $40,000 is another important psychological level where investors should start buying back in, adding:

"The short-term momentum has been lost. So it wouldn't be surprising to revisit the $40-$42,000 kind of zone. That is where we might find very strong support."

He said this was the level where Tesla added Bitcoin to its balance sheet:

"That is the level where Elon Musk came into bitcoin. And that's kind of become a base level."

The CEO of Delta Exchange said that investors chasing quick gains for tokens such as Ether and Dogecoin was a worrying sign for Bitcoin and the cryptocurrency market as a whole.

"This is not sticky capital. This is people coming in and chasing quick gains." adding that a similar dynamic was seen during Bitcoin's last peak in early 2018:
"It's a blow-off top. And that typically happens at the short-term top of the market."

Related News