KEY POINTS

  • $40,000 is considered a crucial technical support level for Bitcoin
  • Investors are wary that the crypto's value could plummet further
  • Bill Miller recently invested in Bitcoin

Bitcoin, the number one cryptocurrency in the world in terms of market capitalization, plummeted below $40,000 for the first time since September 2021. With experts predicting that the bleeding could linger on for weeks, investors are concerned as to how low the market value of the cryptocurrency can go.

$40,000 is a crucial technical support level for the digital token, according to Bloomberg Intelligence's Mike McGlone. The senior commodity strategist said cryptocurrencies could gauge the present reduction in risk appetite. 

However, he predicted that Bitcoin will soon come out strong since the world is moving towards the digital age and the number one cryptocurrency becomes the "benchmark collateral." But how low could Bitcoin's market value go?

Bitcoin fell to its lowest level in a month as investors shifted out of the crytocurrency following the release of the Federal Reserve minutes Bitcoin fell to its lowest level in a month as investors shifted out of the crytocurrency following the release of the Federal Reserve minutes Photo: AFP / Ozan KOSE

Last week, Galaxy Digital CEO Mike Novogratz said the sell-off could push the value of Bitcoin down another 8% to a level investors have not seen since August. Meanwhile, Capital Advisors' CEO Jay Hatfield noted that cryptocurrencies are likely to remain under pressure as the Fed reduces its liquidity injections. He predicted, "Bitcoin could end 2022 below $20,000."

Experts believe that the current slump in Bitcoin is affected by the investing behavior of short-term traders than of long-term holders. In November, Bitcoin reached its all-time high value of almost $69,000 following a hot inflation reading, which showed the biggest spike in consumer prices in three decades.

This triggered investors to invest in inflation hedges, which include gold and Bitcoin. Despite the uncertainties in the number one cryptocurrency, American investor, philanthropist and fund manager Bill Miller recently said he had invested his personal wealth in Bitcoin. 

The investor was not supportive of the cryptocurrency in the past, but became one of its advocates very recently.

When asked why he thinks Bitcoin is a valuable tool, Miller reasoned "It can't be touched by the government." He noted that the crypto's decentralized networks keep track of every transaction and that it is immutable.

Bitcoin was created in 2008 during the global financial crisis by Satoshi Nakamoto and first started trading the year after. The COVID-19 pandemic aided the cryptocurrency to break further into the mainstream with various institutions and retail investors getting involved with crypto and its support projects.