Bitcoin (BTC) starts a new week on shaky ground after its lowest weekly close in two years.
the biggest cryptocurrencyconsiderably weakened after the FTX exchange imploded last week, still dealing with the consequences.
In what is becoming an increasingly erratic market, Investors are unsure what will happen next, as more companies sound the alarm about solvency and regulators step up investigations into the cryptocurrency space.
The mood among the majority is intensely fearful, and even some of the industry’s biggest names warn that it has regressed several years as a result of last week’s events.
At the same time, for bitcoin, everything remains the same. FTX isn’t the first such debacle it’s come through, and under the hood, the network remains as robust as ever.
Cointelegraph takes a look at the factors that are going to influence BTC price action in the coming dayswhile the average hodler faces heavy losses and continued volatility.
Cryptocurrencies brace for further fallout from the FTX debacle
Although there are few things that are certain in the current environment of the cryptocurrency market, It’s safe to say that FTX and the fallout from its debacle are the main source of bitcoin price volatility.
The weekly chart says it all: there is a “red” candle at -$5,500 for the seven days to November 13, which represents the lowest weekly close since mid-November 2020, as data from Cointelegraph Markets Pro and TradingView show.
At the time of writing, the BTC/USD pair is still hovering around that close; $16,300 resurfaces as a relief bounce after the pair crashed to just $15,780 on Bitstamp overnight.
The story is far from over when it comes to FTX, as companies with exposure to the exchange and related entities find themselves in trouble.
For this reason, the commentators predict that the actions may be repeated in the coming days and weeks. as the effects of the fallout sideline more and more names in the cryptocurrency industry.
Exchanges are particularly on the radar: many are keeping an eye on Crypto.com, Kucoin and others as there are suspicions about their liquidity.
That day, a spike in withdrawal transactions on Crypto.com and Gate.io caused it to be warned which could be the last exchange to suffer a “bank run”as investors seek to take control of their funds.
Data from on-chain analytics firm CryptoQuant showed that 1,500 BTC came out of Gate.io on Nov 13, and on Nov 14 it was almost 800 BTC, and counting.
More broadly, the data showed that the exchange’s BTC reserves are an estimated 2.09 million BTC. CryptoQuant noted that due to the turmoil the true state of affairs may not be reflected.
The last time bookings were this low was in early 2018.
Musk trusts BTC
In the context of current uncertainty, making BTC price predictions is not an easy task.
Going back to the moving average convergence divergence (MACD), analyst Matthew Hyland warned that the BTC/USD 3-day chart was about to repeat a bearish setup, leading to losses both times it appeared in 2022.
“Bitcoin’s 3-day MACD is poised to cross lower tomorrow for the first time since April,” wrote.
“It can be avoided if BTC can get some positive price action before the 3-day close. The previous two crossovers from last year resulted in more bearish price action.”
Hyland he pointed that Following the Mt. Gox hack in 2014, it took nearly a year for bitcoin to find a macro price bottom after the initial shock.
“Not even 11 days have passed since FTX closed,” he added.
For his part, the analyst Il Capo of Crypto argued that the market was poised for a “final capitulation”, which could come sooner rather than later.
As he said in a series of tweets, this would come in the form of a “bull trap” first and then a firm rejection, sending the market to new lows.
For altcoins, he said, the drop would amount to “40-50% on average.”
On shorter timeframes, the popular trader Crypto Tony feared that even the lowest weekly close in two years might not hold up as support.
“Nice breakout, but If we can’t hold the swing low at $16,400, this was just a fake out and we’ll see a test lower,” commented on the recovery from the intraday lows of $15,780.
The move occurred while Twitter CEO Elon Musk came out in tacit support.
“BTC will make it but it could be a long winter”, wrote that day in a discussion on Twitter.
Another short-term price catalyst was the decision of the largest exchange, Binance, to create a recovery fund to help protect companies.
The week focuses on the correlation of equities
The landscape outside of cryptocurrencies further underscores the extent to which the FTX debacle has been a “black swan” for the sector.
While bitcoin and altcoins plunged more than 25% in days, US stock markets recovered from losses earlier in the month.
As the research company Santiment points out, There is a clear divergence taking place between bitcoin and risk assets, helping to break a correlation that lasted throughout the past year.
“At the close of the commercial work week, the story of the week is the clear separation between cryptocurrencies (following FTX’s fall from grace) and equities,” summarized in a tweet last week.
“Should BTC trader confidence recovers after the unfortunate events, a bullish divergence with the SP500 is forming.”
the market commentator Holger Zschaepitz pointed out the growing gap in bitcoin’s performance against the Nasdaq.
“There is a gap in the weekly performance of the drop in bitcoin and the biggest rally in the Nasdaq since 2020. The universe of cryptocurrencies has shrunk to the equivalent of 1% of global equities.” read part of the new comments of the day.
That decreasing correlation can come at a useful moment from a macro point of view, as the strong US dollar makes some erratic moves of its own.
The US dollar index (DXY), after attempting to bounce back past 107, failed before the Wall Street open on November 14, implying that risky assets should rise accordingly.
Nevertheless, if it returns to recent highs, the picture could be very different.
Nevertheless, intraday lows in DXY brought the index back to support not tested since mid-August.
However, when commenting on longer-term performance, the popular trading team Stockmoney Lizards said that the DXY had broken a parabolic curve in force since 2021.
“The correction will be good for bitcoin”, added in comments on Twitter.
“Buy-Down” Rush Comes as Miner Sales Slow
While many who already hold coins are trying to withdraw them from exchanges or figure out how to cure losses, not everyone is sitting still.
On-chain data suggests that as the BTC/USD pair hit multi-year lows last week, investors both large and small seized the opportunity to “buy the dip.”
According to on-chain analytics company Glassnode, wallets containing between 1 and 10 BTC saw a dramatic increase.
The trend also seems to be present in the largest cohort of hoders, the “mega whales” of bitcoin. These entities with a wallet balance of 10,000 BTC or more are also growing, now numbering nearly 130, Glassnode shows.
“Whales are accumulating at a rate never seen before,” reacted CryptoRover, a popular social media commentator.
One group that is firmly not in accumulation mode at present is the miners. After a sharp reduction in its reserves last week, the BTC that CryptoQuant tracked miners holding continues to trend lower.
Of the 1,858,271 BTC on November 8, miners’ reserves now total 1,853,606 BTC at the time of writing, on November 14.
Nonetheless, reserves are still higher than at the beginning of 2022, and recent sales account for a negligible part of the miners’ global position.
Sentiment data offers a modicum of hope
Unsurprisingly, overall cryptocurrency market sentiment took a huge hit thanks to the FTX debacle, but is it really that bad?
According to the Cryptocurrency Fear and Greed Index, the industry is taking the series of bad news in stride.
Over the weekend, the index score hit a local low of 20/100, firmly characterizing the market mood as one of “extreme fear”.
This represents a 50% drop from the high of 40/100 seen on November 6which marked a three-month high in sentiment.
However, much lower scores have been recorded in 2022: The Cryptocurrency Greed and Fear Index reached 6/100 over the course of the year.
In the event of further falls, even a further 50% drop from current levels would only push sentiment into the zone that normally marks price macro bottoms for the BTC/USD pair: around 10/100.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.
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