Bitcoin has fallen 1.4% today, which considering yesterday's move, is a welcome sign that this retracement may be short-lived. The bears failed to test support at $44,000 and the market has moved back toward our resistance level of $47,500.
The next 4-5 days will be telling: Should we move back above $47,500, then a return to $50,000 is on the cards. With a large liquidation event removing leveraged longs from the market, there is always the chance that, if Bitcoin was to move north quickly, FOMO would kick in and bring them back.
Following yesterday's liquidation, open interest across derivatives has obviously fallen sharply, giving us a clear picture of the damage done to leveraged Bitcoin believers.
This has caused the funding rate to reset to zero.
We will wait to see if exchange balances rise over the next couple of days. Yesterday, the coins that were sold left exchanges and headed off to the wallets of hodlers.
While this is a positive sign, it's too early to tell if this trend will continue, given yesterday's price action.
It's an important 48 hours for the Bitcoin bulls.
We saw a spectacular move lower as bulls were rocked by profit-taking: It is not unusual in the crypto world for these kinds of moves to take place. Many see this as a buying opportunity, but a close below the 200-day MA may see a push toward $42,500 support. Oscillators are resetting lower on the day, but not quite moving into oversold territory just yet. A close below $40,000 will cause us to reassess a technically bullish viewpoint. Otherwise, we are trading back inside the range of the previous 2 weeks.
The Bitcoin flash-crash (effectively giving up a week of gains) and a risk-off sentiment in equities translated into an overall reduction in the crypto market cap (back below 2tn), which was a perfect storm for a 10-12% discount in BTC and Ethereum, with some Alts going down 20%, at time of writing. The bottom of the uptrend channel was taken out overnight at $48,000 and sliced through to the next support at $46,750. Several hours in APAC time-zone were spent defending the 200-day moving average just above $46,000, but this level failed late this afternoon as another wave of selling and profit-taking hit the market. The levels to watch for day traders are supports at $45,300, $44,000, and $42,500, and resistance levels/pivot points at $48,000, $49,530, and $51,000.
On the weekly, we see support at $42,500, $40,000, and $37,350, with resistance at $48,000, 51,000, and $57,500. Oscillators remain unchanged and would require a weekly close below $40,000 before any alarm bells go off.
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It looks like crypto isn’t correlated to traditional markets, at least not during this past session.
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