U.S. stocks on Tuesday were roaring back from the previous day’s plunge, but crypto assets continued to struggle, with bitcoin falling below a long-watched line in the virtual sand at $30,000.
The world’s most popular crypto asset BTCUSD, -3.03% was down $1,192.15, or 3.9%, at 29,688.20, according to FactSet, for a weekly fall of more than 5%. Moreover, the drop below $30,000 was ringing alarm bells.
“The digital asset has broken through its key support level of $30,000, it is critical that the digital coin regains ground above the $30,000 level, as a significant breach could result in a massive technical selloff,” said Naeem Aslam, chief analyst at Ava Trade, in a Tuesday note.
At the same time, Aslam said, crypto traders remain “well aware” that crypto price action is notoriously volatile. Bitcoin briefly dipped below $30,000 on June 23. Bitcoin traded at an all-time high above $60,000 in April.
Analysts have blamed the broader slide in crypto assets in part on efforts by China to crack down on mining and trading activity. The People’s Republic has placed a ban on trading in bitcoin and the government also has banned popular apps from trading in crypto.
Aslam said there may be scope for a bounce, noting that bitcoin’s two-week relative strength index, a technical tool that measures an asset’s price momentum, was approaching oversold territory, which has tended to precede strong price rebounds.
Assets perceived as risky plunged Monday, with the Dow Jones Industrial Average DJIA, +1.73% suffering its biggest one-day drop since October. Stocks were in rebound mode on Tuesday, with the Dow rising more than 600 points, or 1.8%, to reclaim much of the previous session’s drop, while the S&P 500 SPX, +1.69% rallied 1.7% to turn marginally positive for the week.
Mark DeCambre contributed reporting.