Crypto analyst Jason Pizzino has issued a cautionary note to investors in alternative cryptocurrencies (altcoins), emphasizing that the future of these digital assets is closely tied to Bitcoin’s performance. In a YouTube video (titled “Caution: Bitcoin & SP500 Diverging, Crypto Verging on Collapse”) released on October 11, Pizzino informed his audience of 290K subscribers that the extent of Bitcoin’s downturn would directly influence the magnitude of a correction in the altcoin market.
Pizzino pointed out that Bitcoin seems to be retesting the $26,700 mark. He elaborated that if Bitcoin’s price were to go below this level, it could further decline to test the $26,000 and possibly even the $24,900 levels. He also mentioned that if Bitcoin were to reach the monthly 50% level of $23,600, it would almost certainly have a severe negative impact on the altcoin market. Ethereum (ETH), he noted, is a different entity altogether but is also facing challenges.
The analyst further explained that a dip in altcoin values would likely lead to a considerable number of traders reallocating some of their altcoin holdings into Bitcoin. This shift would serve to mitigate the decline in Bitcoin’s value. Pizzino stated that if Bitcoin’s price were to fall below the 50% mark of $26,700, altcoins would continue to face difficulties. He noted that these digital assets would experience declines not only in their USD values but also in their Bitcoin values.
Pizzino went on to say that if Bitcoin’s price were to drop to around $25,000, the situation for altcoins would deteriorate even further. He explained that these are critical market levels that traders and possibly even trading algorithms pay attention to. When these levels are breached, traders often seek safer options, either by moving their investments back into Bitcoin or into stablecoins. This is one reason why Bitcoin may experience a decline but not as steep as that of altcoins.
At the time of writing, Bitcoin is trading at around $26,810, down 0.94% in the past 24-hour period.
Nicholas Merten, founder of the popular YouTube channel DataDash, warns that Bitcoin could face a significant decline if the U.S. economy enters a recession. Merten, who has over 512,000 subscribers, attributes this potential drop to the Federal Reserve’s hawkish policies, which could lead to a prolonged economic downturn. He suggests that if commodities like oil, natural gas, and uranium stabilize or decrease in value, it could signal an impending short-term recession. In such a scenario, Merten anticipates that Bitcoin’s price could fall to a range between $15,000 and $17,000, similar to the 33% correction in equities seen in October 2022. He views this as a relatively favorable outcome, setting the stage for a double bottom in most asset classes. Merten advises investors to be cautious and wait for signs of increased liquidity, crucial for risk-on assets like Bitcoin.
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