Today the cryptocurrency market experienced a sudden crash, with Bitcoin and Ethereum prices falling. Other major coins also saw a significant fall. Around $100 billion was wiped from the combined value of all cryptocurrencies in just minutes.
In the last 24 hours, Bitcoin experienced a 5% decrease. At the same time, the price of the second-largest cryptocurrency Ethereum has decreased by a similar amount. In addition, Ethereum’s rivals Solana, Cardano, and Avalanche, have reduced by around 3%, while Ripple’s XRP and Terra’s luna lead the significant crypto markets lower.
Related Reading | Bitcoin Collapses By Most In Nearly A Month – Its Golden Days Are Over?
The markets were thrown into chaos on Wednesday after the Federal Reserve announced that they would be hiking their interest rates. The sudden crash came amidst a tech company-led sell-off of stocks in response to this news, which has since spilled over onto other sectors as investors escape towards safer assets.
The U.S. economy could go into recession because of the interest rate hikes and the tightening of monetary policy. Yesterday, Wall Street had a bad day. The Dow Jones Industrial Average lost over 1,000 points, and the tech-heavy Nasdaq fell 5%. Yesterday’s losses preceded big rallies in the previous session.
Bitcoin, which usually moves along with the stock market, has been stuck in a narrow range all year. It has struggled to get back to its high prices from late 2021 amid a broader market sell-off.
Bitcoin Following U.S. Stocks
Bitcoin is not the only thing that is struggling–the S&P 500 has also fallen to a new record low for the year. Sam Kopelman, the U.K. manager for bitcoin and crypto exchange Luno, warned that bitcoin could “slip back into the previously found $36,000-$37,000 support range.”
Kopelman’s outlook on the major coins like Ethereum, Solana, Cardano, XRP, Avalanche, and Luna is less than optimistic, but he does have some hope for bitcoin.
Overall, 2022 has generally seen crypto market participants climbing down the risk ladder. Selling their smaller coins for blue-chip coins like bitcoin.
The market has had a delayed response to the Federal Reserve’s biggest rate hike since 2000, first spiking on Wednesday’s news and leading market watchers to believe the potentially “bearish event” to have been “priced in.”
Related Reading | Over 110,000 Traders Rekt As Crypto Market Sees $120B Shaved Off
On May 3, veteran trader Peter Brandt warned the bitcoin price could fall as low as $28,000.
The completion of a bear channel typically results in a decline equal to the width of the channel, or in this case a hard test of 32,000 or so — my guess is 28,000
This does NOT make me a hater $BTC.
Featured image from Pixabay and the chart from Tradingview.com
TA: Bitcoin Price Moves Higher In Range, $30.6K Still Presents Resistance
Bitcoin remained strong above the $28,500 support against the US Dollar. BTC is rising, but it must clear $28,500 to move into a positive zone.
- Bitcoin started a fresh increase after it tested the $28,500 support zone.
- The price is now trading above the $29,500 level and the 100 hourly simple moving average.
- There was break above a major bearish trend line with resistance near $29,800 on the hourly chart of the BTC/USD pair (data feed from Kraken).
- The pair could continue to move higher towards the key $30,600 resistance zone.
Bitcoin Price Forms Triple Bottom
Bitcoin price extended decline below the $29,500 support zone. However, the bulls were active near the main $28,500 support zone.
A fresh base was formed near $28,600 and the price started a fresh increase. There was a clear move above the $29,200 and $29,500 resistance levels. The price surpassed the 50% Fib retracement level of the downward move from the $30,630 swing high to $28,635 low.
Besides, there was break above a major bearish trend line with resistance near $29,800 on the hourly chart of the BTC/USD pair. Bitcoin price is now trading above the $29,500 level and the 100 hourly simple moving average.
Source: BTCUSD on TradingView.com
An immediate resistance on the upside is near the $30,160 level. It is near the 76.4% Fib retracement level of the downward move from the $30,630 swing high to $28,635 low. The next major resistance is near the $30,600 level. A clear move above the $30,600 resistance level might start a steady increase. In the stated case, the price may perhaps clear the $31,200 resistance zone.
Fresh Decline in BTC?
If bitcoin fails to clear the $30,600 resistance zone, it could start another decline. An immediate support on the downside is near the $29,600 level.
The first major support is near the $29,500 level and the 100 hourly simple moving average. A downside break below the $29,500 support might send the price further lower. The main support is still near the $28,500 level, where the bulls are likely to take a strong stand.
Hourly MACD – The MACD is now gaining pace in the bullish zone.
Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well above the 50 level.
Major Support Levels – $29,500, followed by $28,500.
Major Resistance Levels – $30,150, $30,500 and $30,600.
Investors May Expect Downside For Bitcoin And Ethereum Market For The Next 3 Months
The crypto markets have accepted the depegging of UST and the subsequent downward spiral of LUNA, both of which impacted the price of Bitcoin and the entire digital asset spectrum. According to a recent report by the Glassnode team, the Bitcoin market has been trading lower for eight weeks, making it the ‘longest continuous series of red weekly candles in history.’
Even Ethereum, the most popular altcoin, painted a similar picture. Bearish fluctuations damage returns and profit margins directly or indirectly.
To make matters worse, derivative markets forecast shows more declines in the coming three to six months.
Derivative Markets Hint At More Pain For Bitcoin
According to derivative markets, the prognosis for the next three to six months remains fearful of further fall. On-chain, the report stated that blockspace demand for Ethereum and Bitcoin has dropped to multi-year lows, and the rate of ETH burning via EIP1559 has reached an all-time low.
Glassnode calculated that the demand side will continue to face headwinds due to poor price performance, uncertain derivatives pricing, and extremely low demand for block-space on both Bitcoin and Ethereum.
The report explains:
Looking on-chain, we can see that both Ethereum and Bitcoin blockspace demand has fallen to multi-year lows, and the rate of burning of ETH via EIP1559 is now at an all-time-low.
Coupling poor price performance, fearful derivatives pricing, and exceedingly lacklustre demand for block-space on both Bitcoin and Ethereum, we can deduce that the demand side is likely to continue seeing headwinds.
Both Bitcoin and Ethereum’s price performance over the last 12 months has been disappointing. Long-term CAGR rates for Bitcoin and Ethereum have been impacted as a result of this.
BTC, the largest cryptocurrency, moved in a roughly 4-year bull/bear cycle, which was frequently accompanied with halving events. When looking at long-term returns, the CAGR has dropped from almost 200 percent in 2015 to less than 50 percent as of this writing.
Related Reading | New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate
Furthermore, Bitcoin had a negative 30% return over the short term, implying that it corrected by 1% every day on average. This negative return for Bitcoin is very similar to prior bear market cycles.
When it comes to ETH, the altcoin performed far worse than BTC. Ethereum’s monthly return profile revealed a depressing picture of -34.9 percent. Ethereum likewise appears to be seeing diminishing rewards in the long run.
Furthermore, during the previous 12 months, the 4-year CAGR for both assets has dropped from 100% to only 36% for BTC. Also, ETH is up 28 percent per year, emphasizing the severity of this bear.
To make matters worse, the derivative market warned of future market declines. Near-term uncertainty and downside risk continue to be priced into options markets, particularly over the next three to six months. In reality, during the market sell-off last week, implied volatility increased significantly.
Total crypto market cap stands at $1.2 Trillion. Source: TradingView
The Glassnode analysis concluded by stating that the present bear market has taken its toll on crypto traders and investors. Furthermore, the Glassnode team emphasized that downturn markets frequently worsen before improving. However, ‘bear markets do have a tendency of ending’ and ‘bear markets author the bull that follows,’ so there is some light at the end of the tunnel.
Related Reading | TA: Bitcoin Price Stuck In Key Range, Why Dips Might Be Limited
Featured image from iStockPhoto, Charts from Glassnode, and TradingView.com
Bitcoin Price Could Fall To $8,000, Says Guggenheim CIO
Hearing more negative speculation would be unpleasant for the investors as the recent bloodbath’s catastrophic effects already slowed down crypto markets. But unfortunately, an expert predicted Bitcoin would go far below.
Scott Minerd, Chief officer at Guggenheim Partners, a global investment and advisory firm handling $325 billion under its management, speculated that the Bitcoin price could plummet to $8,000. He is the same man who once said in December that “Bitcoin price should be $400,000.”
Related Reading | XRP Has Broken Below Its Long-Standing Support, What’s Next?
The speculation refers to a nearly 70% drop from today’s price of BTC, fluctuating around $30,000.
BTC Could Fall With The Fed Being Restrictive
Speaking with the CNBC’s Andrew Ross Sorkin in an interview held on Monday at World Economic Forum, Switzerland, he said;
When you break below 30,000 [dollars] consistently, 8,000 [dollars] is the ultimate bottom, so I think we have a lot more room to the downside, especially with the Fed being restrictive.
Minerd highlighted the relationship between BTC price and Fed regulation and tightening policies.
Following its previous high of November 10, when BTC’s price marked $69,044, it decreased by around 58% of its value.
“Most of these currencies, they’re not currencies, they’re junk,” he added, saying that “I don’t think we’ve seen the dominant player in crypto yet.”
Comparing the current situation with the dotcom bubble of the early 2000s, he said;
“If we were sitting here in the internet bubble, we would be talking about how Yahoo and America Online were the great winners,” adding that “Everything else, we couldn’t tell you if Amazon or Pets.com was going to be the winner.”
In addition, he urges that digital currency is required to store value. As well as, become a medium of exchange and a unit of account. “I don’t think we have had the right prototype yet for crypto,” said Minerd.
Investors Seem Hesitant To Buy Bitcoin Dips
The collapse of stablecoins, including TerraUSD (UST) and its fellow token Luna, has caused the market to suffer a severe blow.
Edward Moya, an analyst from the well-known forex and CFD trading platform of America, OANDA, has commented that Bitcoin prices are steadied even with the broad risk rally on Wall Street. He added;
It looks like most crypto traders are hesitant to buy the dip. Which most likely means that the bottom has not been made.
Moreover, Moya talked about the European Central Bank President Christine, who previously said digital currencies are “worth nothing.”
Related Reading | Solana (SOL) Could Register An Upswing, Thanks To This Pattern
“It is unlikely that any head of a central bank will endorse bitcoin or the other top coins. Especially as we are years away from a digital euro or dollar,” Moya stated. “It looks like bitcoin won’t really attract massive inflows. Until investors believe most major central banks are nearing the end of their tightening cycles.”
He speculated that giant coin prices will possibly remain choppy this summer.
Featured image from Pixabay and chart from TradingView.com
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