Bitcoin drops below $60,000

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For the fifth consecutive session, bitcoin traded in the red zone. On Thursday, the price dipped below $57,000 per coin, nearing the critical boundary. What’s next for the major cryptocurrency?


BTC/USD

BTCUSD

The October and November highs for the major cryptocurrency ended with the formation of bearish absorption candlestick patterns. The reversal signal came immediately. The only question is how deep the correction will be this time.
The very fact of bitcoin’s decline under the psychological mark of $60,000 is already alarming. However, technically, the daily chart clearly shows a mirror support level in the area of $57,000 per coin.
The key indicator of the main cryptocurrency’s direction now will be its behaviour relative to the current support. If it fails to consolidate below $57,000, there is a chance of a recovery to historical levels. And if the level fails to hold, the next benchmark for a deeper correction will be the area near $53,000.
Meanwhile, from a fundamental perspective, the backdrop for bitcoin remains favourable. Rising inflation is setting the stage for increased interest from both large capital and private investors. And launched futures ETFs give institutional investors a tool to invest in.
Nevertheless, BTC’s role as a hedging tool is still questionable. It is difficult to call it a full-fledged hedge asset because it, too, periodically declines during stock market downturns amid risk aversion. And it does not react immediately to news on inflation.
However, it could be argued that the cryptocurrency market is maturing, becoming less speculative thanks to the arrival of institutional capital. It also takes time for bitcoin to finally establish itself as a safe haven.
In the coming months, a new catalyst for growth could be the approval of spot bitcoin ETFs. While there are no significant developments on this issue yet, the market could see the first funds in 2022.
Against this background, it is worth focusing on the technical picture in the short term to assess the near-term prospects for BTC/USD in the still current bullish trend.

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