Analyst warns that further downside for Bitcoin could put the $30,000 support level at risk.
Bitcoin fell to $34,800 on Friday and now faces the risk of sliding further toward $30,000.
Currently, the BTC/USD pair is trading around $34,825, down nearly 12% over the last 24 hours and more than 20% for the week.
The broader crypto market is on track for its worst weekly performance since mid-December. At the time of writing, total cryptocurrency market capitalization stands at $1.7 trillion after a 14% drop in 24 hours.
All of the top 10 cryptocurrencies by market cap recorded double-digit losses during the day.
Technical analyst Katie Stockton of Fairlead Strategies told Insider on Friday that a break below $40,000 could push bulls to look for support around $37,361. She said a breach of this “secondary support level” would result in the flagship cryptocurrency falling about 22% from recent highs, putting $30,000 in play.
In a note to Insider, Stockton highlighted the area around $37,000 as a meaningful buffer zone. She pointed out that this level also aligns with Bitcoin’s long-term uptrend line, and a slide beneath it could bring further pain.
However, she also noted that a retracement that leads to a weekly close above $37,361 would likely invalidate the bearish outlook. The analyst referenced the technical picture and factors that could support a short-term rebound.
Things would become difficult for bulls if the decline continues and turns the highlighted level into a supply wall. Stockton — who made her projection before BTC dropped to $35,262 — said another leg down would signal the start of a new bearish reversal.
The crypto downturn coincides with losses in the stock market, driven by heightened risk aversion among investors. Market participants are fleeing risky assets as they brace for what could be the first of multiple interest-rate hikes from the Federal Reserve.
On Friday, crypto billionaire and Galaxy Digital CEO Mike Novogratz said that crypto is entering a challenging period and might only rally once equities “find a base.” Investors should therefore watch the stock market closely next week as the Fed holds its January meeting.
Nasdaq closed down 2.2% on Friday, while the S&P 500 and Dow also fell more than 1% after another negative week.