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Why “Low” Capitulation Might Hint At More Pain For The Bitcoin Price

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Why “Low” Capitulation Might Hint At More Pain For The Bitcoin Price

The Bitcoin price is stuck in a tight range following yesterday’s U.S. Federal Reserve (Fed) announcement on monetary policy. Macro forces have taken over global markets increasing the correlation across all asset classes.

For a deep dive into how the Fed 75 basis point hike affected the Bitcoin price, and a look into the crypto market’s internal dynamics, check out the analysis from our Editorial Director Tony Spilotro. Link below:

At the time of writing, the Bitcoin price trades at $18,900 with a 2% and 7% loss in the last 24 hours and 7 days, respectively. The entire crypto top ten by market cap is recording losses on similar time periods with the exception of XRP which continues to trend to the upside with a 29% gain over the past week.

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BTC’s price moving sideways on the 4-hour chart. Source: BTCUSDT Tradingview

Why The Bitcoin Price Needs To See More Capitulation

As NewsBTC reported yesterday, the crypto market has completed every major price catalyzer in the short term with the Ethereum “Merge”. Now, the market is moving in tandem with macroeconomic factors and with traditional markets.

This might provide room for a relief rally or for more downside if major financial indexes trend in one direction or the other. According to Jurrien Timmer, Director of Macro for investment firm Fidelity, there has been “little capitulation” for the S&P 500.

Despite the fact that the equity index has been on a downtrend since reaching an all-time high at 4,819 into its current levels at 3,837, Timmer believes the market has been resilient and might need to see more capitulation before forming a bottom. Via Twitter, the expert said the following sharing the chart below:

It’s surprising how little capitulation there has been in the market. Yes, the sentiment surveys are all negative, but actual flows have not been. This seems consistent with the lack of volatility in the market (…).

S&P 500 is far from its 2020 lows. Source: Jurrien Timmer via Twitter

The above coincides with analyst Dylan LeClair look into previous Bitcoin cycles. The analyst believes BTC forms a bottom following a “final capitulation” of the mining sector. This event might lead to a crash in the network hashrate, which is yet to be seen. LeClair said:

I believe with macroeconomic conditions as the catalyst, something similar will repeat. We’re not there yet.

Will Bitcoin Re-Test Its 2020 Lows?

But how low can the Bitcoin price and the crypto market crash? The benchmark cryptocurrency is already trading 80% lower than its all-time high, $69,000. This has historically marked a bottom for BTC’s price and has formed a barrier against further downside.

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In that sense, rather than a fresh leg down, the cryptocurrency might see more sideways movement across 2022 as the Fed continues to hike interest rates and traditional markets trend to the downside. This thesis might be supported by a potential downside pressure for the U.S. dollar (DXY).

The currency has been trending higher, moving opposite to the Bitcoin price and risk-on assets, but seems to be at a critical resistance area. This might provide the crypto market with room for a relief rally. As seen in the chart below, the DXY Index could be above to see a spike in selling pressure.

DXY Index (U.S. dollar) coming into resistance. Source: Jackis (@i_am_jackis) via Twitter

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Billionaire Hedge Fund Founder Ray Dalio Steps Down As Co-CIO Of Bridgewater Associates

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Billionaire Hedge Fund Founder Ray Dalio Steps Down As Co-CIO Of Bridgewater Associates

Billionaire hedge fund founder Ray Dalio has stepped down as chief executive of Bridgewater Associates, according to a transfer of voting rights on September 30. Bridgewater’s co-chief executive explained on Tuesday that “Ray no longer has the final word,” in regard to the hedge fund’s future.

Hedge Fund Giant and Bridgewater Associates Founder Ray Dalio Steps Down, Co-CEOs Mark Bertolini and Nir Bar Dea to Take Over Senior Management

On Tuesday, October 4, after founding Bridgewater Associates more than 40 years ago, Ray Dalio stepped down as co-CIO. Bloomberg’s Erik Schatzker first reported on the matter after the hedge fund founder relinquished all of his voting rights to the board of directors on September 30. After founding Bridgewater in 1975, Dalio was considered a mogul hedge fund titan and within the first ten years of business, Bridgewater got a $5 million investment from the World Bank.

Schatzker report cites Bridgewater’s co-chief executive, Nir Bar Dea, who told the reporter “Ray no longer has the final word.” Dalio also spoke about his resignation on Twitter and he told the public that today was a special day for him because he “transitioned my control of Bridgewater to the next generation.” Dalio added:

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I feel great about the people and ‘machine’ now in control. This transition moment is the culmination of a 47-year journey.

Dalio is also well known for being a critic of bitcoin (BTC) and blockchain technology. The hedge fund titan has explained on many occasions that he believes governments would eventually outlaw cryptocurrencies.

“I think at the end of the day if it’s really successful, they will kill it, and they will try to kill it,” Dalio said two months before bitcoin (BTC) reached $69K per unit. “I think they will kill it because they have ways of killing it,” he added.

Last February, Dalio noted that he had a “tiny percentage” of crypto in his portfolio because he wanted to “diversify.” However, he further stressed: “It’ll be outlawed, probably by different governments.” As far as Bridgewater is concerned, Dalio explained that the hedge fund’s co-CEOs Mark Bertolini and Nir Bar Dea would be in charge of senior management.

“Hopefully until I die, I will continue to be a mentor, an investor, and board member at Bridgewater, because I and they love doing those things together,” Dalio concluded in his remarks on Tuesday.

Tags in this story

ban bitcoin, Bitcoin, Bitcoin (BTC), blockchain technology, Bridgewater, bridgewater associates, Cryptocurrencies, Erik Schatzker, hedge fund, hedge fund founder, Mark Bertolini, Nir Bar Dea, outlaw BTC, Ray Dalio

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What do you think about Ray Dalio stepping down as co-CIO of Bridgewater Associates? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Analysis

Bitcoin, Ethereum Technical Analysis: BTC Back Above $20,000, USD Hits 2-Week Low

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Bitcoin, Ethereum Technical Analysis: BTC Back Above $20,000, USD Hits 2-Week Low

Bitcoin was back above $20,000 on Tuesday, as the U.S. dollar fell to its lowest point in two weeks versus several G7 currencies. The stronger dollar has impacted purchasing power in cryptocurrencies, and commodities like crude oil, which last week fell to a nine-month low. Ethereum was also up, hitting a five-day high.

Bitcoin

Bitcoin (BTC) briefly rose above $20,000 on Tuesday, as the U.S. dollar continued to decline versus other major currencies.

This has resulted in the world’s largest cryptocurrency climbing to a peak of $20,071.20 earlier in today’s session.

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Today’s high is the strongest point that BTC/USD has traded at since September 30, and is marginally below a ceiling of $20,200.

BTC/USD – Daily Chart

As can be seen from the chart, earlier bulls retreated from the market as BTC neared the aforementioned resistance point.

Overall, the rally began following a breakout of another point of uncertainty, this being the ceiling of 49.00 on the relative strength index (RSI).

The index is now tracking at 52.22, which is slightly below a resistance of 53.00, and this seems to be another reason why BTC has slipped from its earlier high.

Ethereum

Like BTC, ethereum (ETH) also rose to a five-day high in today’s session, moving above a key resistance level in the process.

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Following a low of $1,294.41 to start the week, ETH/USD raced to an intraday high of $1,355.89 earlier in the day.

The move saw ethereum break out of its ceiling of $1,330, with the 14-day RSI also moving beyond a point of resistance.

ETH/USD – Daily Chart

Looking at the chart, the indicator rose above its ceiling of 41.50, and as of writing, is tracking at 44.82.

This is the strongest reading for the index since September 15, when ETH was trading at a high of $1,470.

In order to move back towards those levels, the RSI will need to break out of an upcoming ceiling of 45.00.

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Could we see ethereum hit $1,400 before the end of the day? Leave your thoughts in the comments below.

Eliman Dambell

Eliman brings an eclectic point of view to market analysis, he was previously a brokerage director and retail trading educator. Currently, he acts as a commentator across various asset classes, including Crypto, Stocks and FX.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Analysis

Cardano founder Charles Hoskinson calls for an end to Bitcoin mining

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Cardano founder Charles Hoskinson calls for an end to Bitcoin mining

Cardano founder Charles Hoskinson calls for an end to Bitcoin mining Oluwapelumi Adejumo · 4 hours ago · 2 min read

Hoskinson predicted that more wrapped Bitcoin would be on other blockchain networks in the next five years.

2 min read

Updated: October 4, 2022 at 1:13 pm

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Cover art/illustration via CryptoSlate

Cardano founder Charles Hoskinson explained why he thinks Bitcoin mining should be stopped and all existing units of the assets should be converted into wrapped Bitcoin (wBTC) in an Oct. 3 Twitter broadcast.

Wrapped Bitcoin is BTC on smart contracts-enabled platforms like Ethereum (ETH), Cardano (ADA), and others.

Bitcoin’s PoW is the “gold mine” – Charles Hoskinson

According to Hoskinson, if Bitcoin’s network is shut down, the flagship digital asset can continue to exist as wrapped Bitcoin on other networks. In his view, the industry would not need the proof-of-work consensus mechanism because it is the “gold mine” to get the asset.

Hoskinson pointed out that the Bitcoin blockchain is only optimized for the mining process presently. According to him, efforts to build on the blockchain have recorded little success because it is not designed for that purpose.

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The Cardano founder highlighted that Bitcoin’s “gold mine” consumes a lot of energy, considering that the number of BTC left to mine is less than what is already in circulation. He stated that the continued running of Bitcoin mining is not a good investment of energy.

Meanwhile, Hoskinson conceded that Bitcoin maximalists wouldn’t agree with his idea because they would argue that “[PoW] is the source of truth and a counter-balance to banks.”

Wrapped Bitcoin will broaden BTC usage.

Hoskinson stated that moving all mined Bitcoin to the broader crypto ecosystem through wrapping can help broaden its usage and adoption.

Citing El Salvador’s adoption, Hoskinson said that while Bitcoin is digital gold with real utility and can act as a good store of value, the asset is not a good means of exchange and unit of account because of its volatility.

So, wrapped Bitcoin could be used to create stablecoins that can serve as a means of exchange and unit of account because they are on other smart contracts-enabled networks built for those purposes.

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Hoskinson said:

“[Wrapped Bitcoin] could be used in all kinds of Dapps and smart contracts and potentially be used by nation-states to create a means of exchange and unit of account to actually have a stable currency they could use with a sound monetary policy.”

According to him, the wrapped Bitcoin is still Bitcoin because it would still have all the properties and features of the asset.

Hoskinson predicted that more wrapped Bitcoin would be on other blockchain networks in the next five years.

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