bitcoin has fallen below a key support level that had been halting a slide towards $100,000, amid weakening momentum in technology stocks.
The leading cryptocurrency fell below $106,000 during Asian trading hours, penetrating the level that had offered support several times in recent weeks, according to data from CoinDesk. Top altcoins like ether , and sunny with SOL falling to $157, the lowest level since August 3. Ether also fell to its lowest level since August, with a bearish crossover of key moving averages pointing to strengthening bearish momentum and XRP hitting a three-week low.
The BTC breakout shifts the focus towards the $100,000-$101,000 area, according to Markus Thielen, founder of 10x Research. A breach there could open the door to a deeper test near $94,000, or even a full pullback towards $85,000, the zone of maximum pain that also aligns with strong chain support, Thielen said in a note to clients.
“While such a move would be extreme, the downside risk remains contained as long as Bitcoin remains above its prevailing downtrend line,” he added.
BTC’s severe price action follows declining odds of rapid Fed rate cuts and signs of a bullish shift in the dollar index, which tracks the value of the dollar against major currencies.
Mag 7 Bias Flips
Additionally, there are signs of excess exuberance in the so-called “Magnificent 7” stocks (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla), which is typically seen at the highs of major markets.
“The call option bias on the Mag7 complex reversed for the first time since December last year (i.e. the implied volatility of calls traded over puts). This phenomenon has only occurred a handful of times. The move implies investors are overwhelmingly positioned to continue rallying,” analyst Neil Sethi said at X, citing Goldman Sachs.
“Historically, readings this low have tended to coincide with short-term consolidations or pullbacks as optimism peaks,” Sethi added.
Oracle CDS Surges
At the same time, the Oracle-linked credit default swap (CDS), which measures the cost of insuring against a potential default, has soared following the company’s massive AI investment revelations in the third quarter, reaching levels not seen outside of periods of significant macroeconomic stress.
This, according to some analysts, represents investor anxiety regarding growing spending on AI. AI optimism has been one of the main drivers of the bull market in both stocks and broader risk assets, including cryptocurrencies, since 2023.
Ultimately, bulls would be better off being cautious than overly exuberant.
