KEY POINTS

  • An analyst said the price could go down to $26,000 if the $30,000 range is not sustained
  • Financial institutions are reportedly investing in Bitcoin
  • The potential future stimulus package could be a catalyst for future price action

With the price of Bitcoin hovering around $33,000, analysts think a drop to $26,000 is likely if it fails to get sustained at $30,000.

Bitcoin closed Wednesday at $35,503 on Coinbase while traversing the $35,000 range in the past four days. However, at the time of this writing, the dominant cryptocurrency has retreated to $33,000 with a possibility to touch the $30,000 level.

Constantin Kogan, a partner at Wave Financial, a cryptocurrency investment firm, said $30,000 was the likely target because that's the level where the bulls will be actively buying. Still, he advised caution. "If we pass this mark, it might drop to almost $26,000," he told Coindesk.

Because of the price action, the number of liquidations has already totaled $121 million. Liquidation happens when a trader's leveraged position is wiped out.

The comments made by incoming Treasury Secretary Janet Yellen about cryptocurrencies might have affected the market. During her Senate confirmation hearing, she said cryptocurrencies are of "particular concern" when it comes to terrorist financing. 

While the short-term signs appear bearish, the long-term still looks bullish for Bitcoin. Michael Stark, a market analyst at Exness, an FX broker, said he expects more financial institutions to invest in Bitcoin because they see the dominant cryptocurrency as a "risk-on" instrument just like equities.

The new U.S. administration could pave the way for more fiscal stimulus, which means more money could get injected into the cryptocurrency market. President Joe Biden earlier said he wanted stimulus payments for U.S. citizens to be increased to  $2,000. Cointelegraph reported that the trend is still bullish, considering that the price of bitcoin 30 days ago was $25,000. 

As Bitcoin moves downward, the entire cryptocurrency market appears to be following suit. Ethereum has not yet declined below $1,000 after breaking a new all-time high. Kogan said the expected rollback on ETH price did not happen, so he's bullish on it in the short-term. "In a couple of days, the growth will resume and very soon we might see the $1,800 mark," he concluded.

The first 50 bitcoins were born on January 3, 2009 The first 50 bitcoins were born on January 3, 2009 Photo: AFP / INA FASSBENDER