The Bitcoin price dived below US$20k and experts believe it will plummet further down
The cryptocurrency domain is in a full-on meltdown mode. Even just a few months ago, the crypto market was in full swing as Bitcoin reached its all-time high of over US$68,000. Currently, Bitcoin and most other cryptocurrencies are plunging and major cryptocurrency companies like Coinbase, Crypto.com, and BlockFI are laying off thousands of employees to cut down on costs amid uncertainties and extreme market volatility. Experts believe that major cryptocurrencies like Bitcoin and Ethereum are being hit hard by the same factors that have massively affected stocks and other assets. Consumer prices are increasing at the fastest annual pace in over four decades, and at the same time, the Federal Reserve is hiking interest rates quite ambitiously intending to reduce inflation. The Bitcoin price took a deep plunge again as it fell below US$20k. Crypto critics are now mocking Bitcoin, saying that it would now definitely drop down to US$0.
According to coinmarketcap, the Bitcoin price is currently trading at around US$19,000, at the time of writing the article. The BTC price has risen from its lowest value of US$18,000. The fall of Bitcoin’s price has resulted in deepening the stress within the crypto industry and are piling up against monetary tightening and rising inflation. When BTC fell, it also took down Ethereum, bringing down its value by almost 11% to around US$900, the lowest since January 2021. It seems like the crypto market initially fooled its investors by showing robust potential in generating profits, while it really is an extremely volatile market and the skepticism of the crypto analysts and experts have been accurate all along! Besides this, the higher interest rates are making borrowing costs more expensive for people and other crypto investing companies, which is raising concerns in the economic landscape. Even the global stock market has fallen dramatically, with the broader S&P 500 companies entering a bear market this week.
Bitcoin has fallen below US$20,000 taking down all major cryptocurrencies
The crypto market has suffered one of the most dramatic sell-off seasons that it has seen over the past couple of years. The top cryptocurrency prices have declined as much as over 35% as the investors fear the broader economic market will face more recession in the coming years. The crypto market has massively suffered after the fall of Bitcoin. The sharp fall and breach below the prime support point of US$40k brought BTC in quite close proximity to the Bitcoin death cross, which is, in turn, scaring investors away from the crypto market.
For investors who are unaware of the phenomenon of the death cross, the formation of the death cross indicates the potential for a major sell-off. The death cross measure demonstrates the pattern whenever a crypto’s average price over the last 50 days drops more than its 200-day moving average, a measurement that shows the asset’s downtrend momentum. Bitcoin’s current market movements are evidently indicative that the crypto will soon enter the death cross phase. To make matters worse, the latest crypto market crash has occurred at a time when investors have grown immensely worried about the macroeconomic conditions and the Federal Reserve’s efforts to curb inflation as soon as possible.
Is it the right time to buy the Bitcoin dip?
Experts have suggested investors not buy the dip right now because the price of Bitcoin is at its most volatile stage right now. Bitcoin’s price seems to slide down as soon as it attains stability at a price. Anti-crypto professionals are mocking the crypto as they predict that it might fall as low as US$0, totally disintegrating into oblivion. As the broader financial market seems to be at risk, so are all global investors. A fundamental change is long overdue which might initially enhance the value of the cryptocurrencies.
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Bitcoin: On-chain metrics to consider in this bear cycle before going…
The crypto market has had quite a ride this month after bearish waves struck down major cryptocurrencies. The global crypto market capitalization also fell below $1 trillion leading to failing crypto institutions such as 3AC and Celsius. Bitcoin also suffered heavy drawbacks during the period.
BTC reached its lowest levels since December 2020 after dropping below $17,750. Starting the month at around $32,200, the largest-sized crypto has taken a lot of heat and at press time, it was trading at $21,000. The king coin was up by more than 2% in the past day and was just down 0.05% during the week. This was a good signal of recovery after treading through bearish downturns early in June.
Nearing market bottom
On-chain data analytics platform CryptoQuant released the latest update surrounding Bitcoin. It stated that the current BTC price is undervalued. Most on-chain indicators indicate that we are close to a market bottom for Bitcoin.
BTC’s indicator of Net Unrealized Profit/Loss was hovering around -0.06, at press time. This is the initial signal for nearing a market bottom. In the latest crypto crash, there were many addresses that recorded losses when BTC reached the 18-month bottom of $17,744.
According to CryptoQuant, the MVRV ratio has fallen significantly during the current run. At press time, it was estimated at around 0.93, suggesting an undervaluation of BTC.
There was, however, a little spike in Miner’s Position Index but it was still estimated at -0.6. This means that miners are circulating more than their daily distribution in the moving average of the YTD.
Miners have also increasingly offloaded their holdings to exchanges. This can indicate that some miners’ revenue cannot meet the break-even point.
For many investors, this is a good time to start accumulating again if they want to recoup their losses. With the regulatory proposal for digital assets already in place in the United States, there is still hope for a bullish surge in the coming months.
Bitcoin Whale Presence On Derivatives Still High, More Volatility Ahead?
On-chain data shows Bitcoin whales are transferring large amounts to derivatives exchanges right now, a signal that more volatility could be ahead for the crypto.
Bitcoin All Exchanges To Derivatives Flow Continues To Show High Value
As explained by an analyst in a CryptoQuant post, BTC whale activity on derivatives exchanges still seems to be high.
The relevant indicator here is the “all exchanges to derivatives exchanges flow,” which measures the total amount of Bitcoin moving from spot exchange wallets to derivatives.
When the value of this metric spikes up, it means whales are currently moving a large number of coins to derivatives exchanges right now.
Such a trend usually occurs around lows in the price of the crypto as whales look to get themselves long positions.
Related Reading | Bitcoin Recovery Slows Down As Whale Inflows Remain Elevated
On the other hand, low values of the indicator show whales aren’t moving much coins to derivatives at the moment. This kind of trend has historically lead to tops in the value of the coin.
Now, here is a chart that shows the trend in the Bitcoin all exchanges to derivatives flow over the last couple of years:
Looks like the value of the metric has been quite high recently | Source: CryptoQuant
As you can see in the above graph, the Bitcoin spot to derivatives flow has spiked up recently, suggesting that whale activity is pretty high right now.
In fact, the current value of the indicator is actually the highest ever in the history of the cryptocurrency, implying there is an all-time high rate of whales on derivatives currently.
Historically, the price of the crypto has observed significant volatility whenever the metric’s value has been elevated.
Based on this trend, the quant believes that the value of the coin could still see further fluctuations in the near future.
The analyst also notes that a reduction in the all exchanges to derivatives flow will need to be there, for the volatility to die down.
At the time of writing, Bitcoin’s price floats around $21.1k, up 4% in the last seven days. Over the past month, the crypto has lost 27% in value.
The below chart shows the trend in the price of the coin over the last five days.
The value of the crypto seems to have surged up over the last couple of days | Source: BTCUSD on TradingView
After hitting a low of below $18k a week ago, Bitcoin has been trying to recover. So far, the crypto has managed to break above $21k again, but it’s yet unclear whether this recovery will last.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com
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I’m Tony Spilotro. Behind the pseudonym, I’m a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck – literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn’t yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can’t yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.
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