Bitcoin Price Threatens to Drop to $40,000, Similar to 2021?

Bittime -  Andrew Kang, co-founder of Mechanism Capital, predicts that the price of Bitcoin (BTC) may experience a significant decline in the coming months. According to him, many market players do not realize the importance of the potential decline in BTC that has occurred in the last 4 months.  

Current Market Situation Similar to May 2021

Andrew Kang compared the current market situation with conditions in May 2021, when BTC and altcoins experienced parabolic increases. At that time, the crypto market experienced high volatility followed by a sharp decline. 

According to him, similar conditions are forming now, with crypto leverage approaching all-time highs. This comparison shows the potential for a repeat of volatility and significant price declines.

Source: Twitter.com/Rewkang 

Leverage and Market Risk

Additionally, one of the key factors in the analysis is the high leverage of crypto. High leverage can exacerbate market volatility and cause sharp price drops when the market experiences a correction. 

He noted that crypto leverage is currently near its peak, which adds to the risk of a decline in BTC prices. In this scenario, the market has not experienced an extreme “washout,” as happened several times during the 2020-2021 bull market.

Potential Bitcoin Price Drop to $40,000

Andrew Kang initially predicted that BTC prices could fall to around $50,000. However, based on the latest analysis, he said that estimate may be too conservative. 

He now projects more declines extreme to the $40,000 level. This downturn will be very detrimental to the market and require several months of volatility or decline before the uptrend can resume.

Impact of Bitcoin Price Drop on Crypto Market

If Kang's prediction proves correct, Bitcoin's price drop to $40,000 would have a significant impact on the crypto market as a whole. 

Altcoins are also likely to be negatively impacted, as many of them follow BTC price movements. 

A sharp price drop can cause panic among investors and increase selling pressure, which can ultimately exacerbate the price decline.

Strategy for Anticipating Bitcoin Price Drops

Portfolio Diversification

Crypto investors need to prepare themselves for a potential drop in Bitcoin prices. One step that can be taken is to reduce leverage and consider taking defensive positions in the portfolio. Diversifying your portfolio and considering more stable assets can also help reduce risk during periods of market volatility.

Technical Analysis

Close market monitoring and technical analysis can help investors make better decisions. By understanding market indicators and price trends, investors can identify potential entry and exit points, as well as anticipate changes in market conditions. The use of technical analysis tools such as moving averages, RSI, and support/resistance levels can provide better guidance in managing investments.

How to Buy Crypto with Bittime

You can buy and sell crypto assets in an easy and safe way via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Monitor graphic movement Bitcoin (BTC), Ethereum (ETH), Solana (SOL) price and other cryptos to find out today's crypto market trends in real-time on Bittime.