Bitcoin Stabilizing But Could Still Crash By 24%, Says Analyst

Bitcoin prices are beginning to stabilize after falling 30% in a month, according to Katie Stockton of Fairlead Strategies, but warned the cryptocurrency could see further price declines if key support around $44,200 fails, Matthew Fox reported for BusinessInsider.

Photo Insert: The short-term momentum for bitcoin having neutralized after being bearish for a number of weeks is a good sign for crypto bulls as bitcoin consolidates above its initial support level of $44,200.

"If initial support is broken, important long-term support will likely be tested, near $37.0K," Stockton said. Bitcoin's 30% price decline over the past month has brought a swift bear market for the cryptocurrency, but prices are beginning to stabilize, according to Stockton.

Stockton said in a Monday note that short-term momentum for bitcoin has neutralized after being bearish for a number of weeks. That's a good sign for crypto bulls as bitcoin consolidates above its initial support level of $44,200, which represents a 61.8% Fibonacci retracement level.

"An improved daily [moving average convergence divergence] and short-term oversold conditions suggest bitcoin could see stabilization around initial support in the days ahead," Stockton explained.

But intermediate momentum remains bearish, meaning the potential for more downside in bitcoin prices remains, according to Stockton.

"The weekly stochastics are not yet oversold, suggesting the correction will resume. If initial support is broken, important long-term support at the bottom boundary of the weekly cloud will likely be tested, near $37,000," Stockton said.

A decline to $37,000 would represent potential downside of 24% from current levels. Still, long-term momentum remains bullish, so any decline could be temporary if the monthly MACD doesn't flash a sell signal, according to the note.

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