Why bitcoin may face another 20% plunge in coming weeks, as ‘risk is heightened,’ says prominent technical analyst: ‘We’re watching $37,000.’

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Crypto movers

After the crypto crash?

MarketWatch’s Distributed Ledger spoke to Katie Stockton, founder of technical analysis firm Fairfield Strategies, about the crash in crypto over the past weekend. The declines took bitcoin BTCUSD, -5.49% to around $42,000 and Ether ETHUSD, -6.02% on the Ethereum blockchain to around $3,500 before those digital assets bounced back.

Although Fairlead is fairly bullish long term, over the next six months or so, on the crypto sector, including bitcoin and Ether, Stockton said that some considerable damage had been done to the uptrend in the short to intermediate-term, based on her analysis.

A short-term breakdown in trend was confirmed on Sunday, when bitcoin failed to return to its recent support at $53,000 based on the September high and now that it is hanging well below that level—it was trading at $47,702 on CoinDesk, down 5.6%—another support level of $44,000 needs to be the next point to monitor, with the $37,000 serving as secondary technical support area.

“We feel that risk is heightened near term and even over the next two months or so,” Stockton said.

The popular analyst who uses chart models and gauges of momentum to forecast moves in assets from stocks to crypto said that she feels that the support level for bitcoin at $44,000 will likely be breached and the secondary support level, which defines the recent uptrend in bitcoin, will be a pivotal area for investors to watch in recent trade.

So is there cause to worry about another flash crash? Stockton says that it’s impossible to know for sure but believes that much of the tumble that took place in the wee hours of last Saturday are likely flushed out of the system since it was underpinned by unwinding in derivatives.

Certainly the bulls are hoping that is the case.

Crypto goes to Washington

MarketWatch’s Chris Matthews covered a highly anticipated testimony from some of the biggest names in crypto in front of Washington lawmakers.

Crypto execs, including those from popular digital-asset exchange Coinbase Global Inc. COIN, -8.20%, made the case that their technologies hold promise for the future, and that the growth of their more than $2 trillion industry shouldn’t be impeded by wrongheaded legislation.

The nascent industry is hoping to push Congress to create a new regulatory framework for digital assets that could help them avoid a costly showdown with the U.S. Securities and Exchange Commission.

“A successful policy framework would allow crypto platforms to offer both spot and derivatives trading on crypto assets under one unified system, with one rule book and one technology platform to manage risks related to all trading activity in customer accounts,” said Sam Bankman-Fried, CEO of FTX, told the House Financial Services Hearing on crypto markets.

Officials from Circle Internet Financial Ltd., issuer of a stablecoin crypto, bitcoin-mining firm Bitfury Group Ltd., cryptocurrency-payments system, Stellar Development Foundation, and blockchain firm Paxos Trust Co. also testified.

The Wall Street Journal reported that one of the main concerns among those lawmakers wary of crypto is that its rapid growth poses a threat to financial stability, is rife with fraud and manipulation, and isn’t environmentally friendly since mining virtual coins uses lots of real energy.

Crypto shares

In crypto-related company trading, shares of Coinbase Global Inc. traded down 9% to $287 Thursday afternoon. It was down 1.6% for the past five trading sessions. Michael Saylor’s MicroStrategy Inc. MSTR, -7.02%  traded 6.4% lower on Thursday to $595.58, and was down 5.5% over the past five days.

Mining company Riot Blockchain Inc. RIOT, -9.68% shares fell 9.1% to $26, contributing to an 6.9% loss over the past five days. Shares of Marathon Digital Holdings Inc. MARA, -11.30% were down nearly 11% to 41.72, but were up 0.3% over the past five days. Another miner Ebang International Holdings Inc EBON, -6.99%. fell 7% to $1.33, but was up 2.4% over the past five days.

Overstock.com Inc OSTK, -4.48%.  traded down 3.6% to $78.57. The shares went down 2.6% over the five-session period.

Square Inc.’s shares SQ, -4.12% fell 4.1% to $186.85, paring its week-to-date gain to 3.1%. Tesla Inc.’s shares TSLA, -6.10%  traded down 5% to $1,015, trading flat for the week.

PayPal Holdings Inc. PYPL, -2.84%  fell 2.1% to $192.72, while it recorded a 4.8% gain over the five-session stretch. NVIDIA Corp. NVDA, -4.20% meanwhile, slumped 3% to $308.72, but was looking at a 0.6% advance over the past five days.

Advanced Micro Devices Inc. AMD, -4.92%  was off 4.3% to $139.04 and logged a 3.5% loss over the past five trading days, as of Thursday afternoon.

In the fund space, ProShares Bitcoin Strategy ETF BITO, -6.33% were 6.1% lower to $30.29 Thursday, and was down nearly 11% for the week thus far, while Valkyrie Bitcoin Strategy ETF BTF, -6.25% was down 5.9%, with a week-to-date skid of nearly 11%. VanEck Bitcoin Strategy ETF XBTF, -6.41% fell 6.4% and was showing a nearly 11% weekly drop, as of Thursday afternoon.

Grayscale Bitcoin Trust GBTC, -8.01%  was trading to $37.44, off 7.1% late-afternoon Thursday, heading for a weekly loss of 10.5%.

Read: Grayscale Investment wants its largest bitcoin trust to be an ETF. A miscue briefly made its wish come true.

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