Analyst Who Predicted the Bitcoin Crash Says Price Could Reach $40,000, Here’s When

Crypto analyst Xanrox, who accurately predicted a previous Bitcoin crash, suggests this latest reversal might just be the beginning of a more prolonged downturn. Their analysis points to concerning technical indicators that signal further bearish pressure.

Specifically, Bitcoin's price has now broken below two critical technical channels: a descending channel and an ascending channel. Both breaches occurred almost simultaneously, with the descending channel violation noted after dropping below the US$71,000 mark.

This 'double breakdown' is considered an extremely bearish signal, often indicating that a crash is only just commencing. For Australian investors watching the AUD-denominated price, this translates to a significant depreciation of their holdings.

Why it matters for Australian investors

For Australian investors, a sustained Bitcoin downturn has several implications. Many have exposure to Bitcoin directly through local exchanges like CoinSpot, Independent Reserve, Swyftx, and BTC Markets, or indirectly via investment vehicles.

Firstly, portfolio values could see further declines. While US$60,000 has acted as a psychological support level in the past, Xanrox believes this may not hold, with price targets potentially dropping to US$48,000, and even as low as US$40,000-$30,000.

Secondly, market volatility often triggers tax considerations. The Australian Taxation Office (ATO) views cryptocurrency as property, meaning capital gains tax (CGT) can be triggered on disposal. Significant price movements, especially downwards, can complicate tax planning for those who enter and exit positions.

Finally, a major market correction can test the resilience of local platforms and the broader Australian crypto ecosystem. While AUSTRAC ensures regulatory oversight for anti-money laundering and counter-terrorism financing, and ASIC provides some consumer protection, investors should always be aware of the inherent risks.

Impact on the AUD market

The global Bitcoin price dictates its value across all fiat markets, including the Australian dollar. When Bitcoin's USD value plunges, its AUD price follows suit, directly impacting the buying power and perceived wealth of Australian crypto holders.

For instance, a predicted drop to US$40,000-$30,000 would see the AUD equivalent fall significantly from current levels. This could prompt a wave of selling by Australian investors looking to cut losses or reallocate capital, potentially putting further pressure on local exchange order books.

Furthermore, sentiment in the Australian market tends to mirror global trends. A pervasive 'risk-off' attitude often leads to a flight to more traditional assets, or cash, as investors seek stability amidst uncertainty. This outflow from crypto could be exacerbated if institutions, such as banks, exert influence over price movements.

Xanrox suggested that institutions could push prices down by as much as 20% in a single day through futures market selling. Such an event would cause severe stress for retail traders, potentially leading to mass liquidations and magnified losses for many Australian investors.

What to watch next

Australian investors should closely monitor the US$60,000 support level for Bitcoin. While the analyst believes it may not hold, a strong defence by bulls at this point could signal a temporary reprieve or a potential bounce. However, the prevailing sentiment is firmly bearish.

Keep an eye on global economic indicators and general market sentiment, as these often influence cryptocurrency prices. Any signs of a broader economic downturn could deepen the crypto slump, while positive macroeconomic news might offer some relief.

Also, observe significant institutional movements. The potential for large-scale selling in the futures market by institutional players, as highlighted by Xanrox, could dramatically accelerate any downward trend. This level of market manipulation would particularly impact retail investors.

Finally, consider your personal risk tolerance and investment strategy. This highly volatile period underscores the importance of a well-thought-out approach, consistent with your financial goals and the ATO's guidance on tax obligations for cryptocurrency assets.