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Crypto universe may be in for new round of pain: Fundstrat

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Digital currencies have had a tough time over the past year with Bitcoin, the most well-known of the lot, down more than 80 per cent from its December 2017 high.

[SINGAPORE] As if cryptocurrencies haven't been through enough already, they may be poised for yet another leg down.

Digital currencies are on track to retest their fourth-quarter lows in a weak technical position, Fundstrat Global Advisors strategist Robert Sluymer said in a note Wednesday. A proprietary gauge of market breadth in the space shows smaller coins are most at risk, he added.

"The price structure for most cryptocurrencies remains weak and appears vulnerable to a pending breakdown to lower lows," Mr Sluymer wrote. Fundstrat's advance/decline indicator, which measures market breath for 250 small-cap cryptocurrencies, "is at risk of breaking to new lows".

Digital currencies have had a tough time over the past year with Bitcoin, the most well-known of the lot, down more than 80 per cent from its December 2017 high. In a recent report, JPMorgan Chase & Co estimated the cost to create one Bitcoin was US$4,060 globally in the fourth quarter, higher than the US$3,369 level it was trading in Asia on Thursday.

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While Mr Sluymer's own firm has stopped giving price targets for Bitcoin over specific time frames, the key level to watch for the digital currency is US$3,100, he said.

"A break below the fourth-quarter lows at US$3,100 would imply a decline to US$2,270, while a move above US$4,200 is needed to signal Bitcoin is beginning to improve," he said.

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