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Bitcoin’s Price is Hovering Above “Last Ditch” Support Following Recent Selloff

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  • Bitcoin is currently teetering above its crucial support at $11,300
  • This level has been holding strong over the past day, but an influx of selling pressure has put it at risk of being broken below in the near-term
  • This level also happens to coincide with the benchmark crypto’s 200-day ema, which is a crucial technical level that must be defended
  • If this technical and horizontal support is lost in the days ahead, BTC could be prone to seeing massive downside

Bitcoin is seeing heightened weakness as a result of its recent downtrend. This weakness has now put it at risk of breaking below a critical support level that has been guiding its uptrend throughout the past few weeks.

If buyers are unable to hold BTC above $11,300 over the coming few days, it may reel towards its next major support level around $10,000 before being able to find any meaningful support.

One analyst is specifically setting his sights on a movement towards $9,500 if it breaks down from here.

That being said, a continued defense of the crucial support that sits just below Bitcoin’s current price level could be all that is needed to spark the crypto’s next leg higher.

Bitcoin Taps Crucial Support Level as Selling Pressure Mounts

At the time of writing, Bitcoin is trading down marginally at its current price of $11,330.

This is around the price at which the cryptocurrency has been trading for the past day, with buyers ardently trying to absorb the heavy selling pressure that it has been facing around this price level.

It is important to note that this horizontal support also coincides with the cryptocurrency’s 200-day ema – a key technical level that has been helping to guide BTC’s uptrend.

One analyst pointed to this level in a recent tweet, noting that bulls are in a good position as long as Bitcoin holds above this level.

“Price still hanging on the 200ema. As long as price is above it, bulls can relax and they are still holding the trend….”

Image Courtesy of Teddy. Chart via TradingView.

Here’s How Low BTC May Plunge if It Losses This Level

If this critical support is lost in the days ahead as BTC faces heightened selling pressure, one analyst is noting that his bear-case suggests a move to $9,500 could ensue.

“The bull & bear scenario for BTC. Neither has confirmed yet for me – not taking any extra exposure to either side for now, neither am I reducing any exposure. Sitting on my hands,” he explained.

Image Courtesy of Bitcoin Jack. Chart via TradingView.

The coming few hours and days will be vital for understanding the validity of Bitcoin’s mid-term uptrend.

Featured image from Unsplash.
Charts from TradingView.





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Just HODL! Bitcoin and Ethereum outperform ‘lower risk’ crypto index funds

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In the past two decades, index and exchange-traded funds (ETF) have become some of the most popular forms of investing because they offer investors a passive way to gain exposure to a basket of stocks as opposed to investing in individual stocks which increases risk of loss. 

Since 2018, this trend has extended to the crypto sector and products like the Bitwise 10 Large Cap Crypto Index (BITX) tracks the total return of Bitcoin (BTC), Ether (ETH), Cardano (ADA), Bitcoin Cash (BCH), Litecoin (LTC), Solana (SOL), Chainlink (LINK), Polygon (MATIC), Stellar (XLM) and Uniswap (UNI).

The ability to access multiple top projects through one weighted average market cap index sounds like a great way to spread out risk and gain exposure to a wider range of assets, but do these products offer investors a better return in terms of profit and protection against volatility when compared to the top-ranking cryptocurrencies?

Hodling versus crypto baskets

Delphi Digital took a closer look at the performance of the Bitwise 10 and compared it to the performance of Bitcoin following the December 2018 market bottom. The results show that investing in BTC was a more profitable strategy even though BITX was slightly less volatile.

Bitcoin price vs. Bitwise 10. Source: Delphi Digital

According to the report, “indices aren’t meant to outperform individual assets, they’re meant to be lower-risk portfolios compared to holding an individual asset,” so it’s not surprising to see BTC outperform BITX on a purely cost basis.

The index did offer less downside risk to investors as the market sold-off in May but the difference was “trivial” as “BTC’s max drawdown was 53% and Bitwise’s was 50%.”

Overall, the benefits of investing in an index versus Bitcoin are not that great because the volatile nature of the crypto market and frequent large drawdowns often have a larger effect on altcoins.

Delphi Digital said:

“Crypto indices continue to be a work-in-progress. Choosing assets, allocations, and re-balancing thresholds is a difficult task for an emerging asset class like crypto. But as the industry matures, we expect more efficient indices to pop up and gain traction.”

Ethereum also outperforms DeFi baskets

Decentralized finance (DeFi) has been one of the hottest crypto sectors in 2021 led by decentralized exchanges like Uniswap (UNI) and SushiSwap (SUSHI) and lending platforms like AAVE and Compound (COMP).

The DeFi Pulse Index (DPI) aims to tap into this rapid growth and the DPI token has allocations to 14 of the top DeFi tokens, including UNI, SUSHI, AAVE, COMP, Maker (MKR), Synthetic (SNX) and Yearn.finance (YFI).

When comparing the performance of DPI to Ether since the inception of the index, Ether significantly outperformed in terms of profitability and volatility, as evidenced by a 57% drawdown on Ether versus 65% for DPI.

Ether price vs. DeFi Pulse Index price. Source: Delphi Digital

While this is an “imperfect comparison” according to Delphi Digital due to the fact that “the risk and volatility of DeFi tokens are higher than Ether’s,” it still highlights the point that the traditional benefits seen from indices are not mirrored by crypto-based baskets.

Delphi Digital said:

“You could’ve just HODL-ed ETH for a superior risk-return profile.”

For the time being, Bitcoin and Ether have proven to be two of the lower-risk cryptocurrency plays available when compared to crypto index funds that offer exposure to a larger number of assets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.