The largest cryptocurrency, significantly weakened after the FTX exchange implosion last week, continues to struggle with fallout.
In what is becoming an increasingly erratic market, investors are unsure what will happen next as more companies sound creditworthiness alarms and regulators step up their investigations into the crypto space.
The mood among the majority is intensely fearful, and even some of the industry’s best-known names warn that it has been brought back several years due to the events of last week.
At the same time, for Bitcoin, it is normal. FTX is not the first debacle of its kind that it has resisted and, under the hood, the net remains as robust as ever.
Cointelegraph examines the factors that will affect BTC’s price action in the coming days, while the average hodler faces major losses and ongoing volatility.
Cryptographic Braces for New FTX Relapses
While little is certain in the current cryptocurrency market environment, it is safe to say that FTX and its aftermath are now the number one source of Bitcoin price volatility.
The weekly chart says it all: a $ -5,500 “red” candle for the seven days through November 13 to the lowest weekly close since mid-November 2020, data from Cointelegraph Markets Pro and TradingView show.
At the time of writing, BTC / USD is still close to that close: $ 16,300 reappearing as a relief rebound after the pair climbed 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 are in trouble.
Therefore, according to commentators’ predictions, there may be repeated performances in the coming days and weeks as the ripple effects will put more and more cryptocurrency names out of business.
Exchanges are particularly on the radar, with Crypto.com, Kucoin and others becoming a source of liquidity suspicion.
That day, it led to a spike in withdrawal transactions on Crypto.com and Gate.io warnings which could be the last exchange to see a “bank run” as investors try to take control of their funds.
Data from on-chain analytics firm CryptoQuant showed 1,500 BTC left Gate.io on November 13, with November 14 currently at nearly 800 BTC and up.
More broadly, the data showed trading BTC reserves at around 2.09 million BTC, CryptoQuant noting that due to the turmoil it may not reflect the true state of affairs.
The last time the reserves were this low was in early 2018.
Bitcoin rebounds from $ 15,700 as Musk places trust in BTC
Against the backdrop of continuing uncertainty, making BTC price predictions is therefore not an easy task.
Turning to the moving average convergence divergence (MACD), analyst Matthew Hyland warned that the 3-day BTC / USD chart was about to repeat a bearish stance, which led to losses both times it appeared in 2022. .
“Bitcoin 3-Day MACD is likely to cross the bearish tomorrow for the first time since April,” he said. he wrote.
“It can be avoided if BTC can get a positive price action before the 3-day close. The previous two crosses over the past year have led to further downside price action. “
Hyland anyway noticed that after the 2014 Mt. Gox hack, it took Bitcoin nearly a year to find a lower macro price after the initial shock.
“It’s not even been 11 days since FTX closed,” he added.
Fellow analyst The Chief of Crypto meanwhile said the market was prepared for a “final capitulation”, which could come sooner rather than later.
This, he said in a series of tweets, would come first in the form of a “bull trap” and then a firm rejection, sending the market to new lows.
For altcoins, he said, the decline would amount to “40-50% on average.”
In shorter time frames, famed Crypto trader Tony feared that even the lowest weekly close of the past two years might not hold support.
“Nice breakout, but if we can’t keep the swing low at $ 16,400 then this was just a fake and look forward to a lower test,” he said. commented on the recovery from intraday lows of $ 15,780.
The move came when Twitter CEO Elon Musk came out in unspoken support.
“BTC will make it, but it could be a long winter,” he said he wrote the day in a Twitter debate.
An additional short-term price catalyst has come in the form of the larger Binance exchange which has chosen to create a dedicated recovery fund to help protect businesses.
The quiet macro week sees the focus on stock correlation
The image outside of cryptocurrencies further underscores the extent to which FTX has marked a “black swan” event for the industry.
While Bitcoin and altcoin were committed to losing more than 25% within days, US equity markets bounced back from losses earlier in the month.
As such, as research firm Santiment notes, there is a clear divergence between Bitcoin and risk assets, which helps to break a correlation that has remained over the past year.
“As the workweek comes to a close, the story of the week is the sharp separation between cryptocurrencies (after FTX’s fall from grace) and stocks,” he says. summary in a tweet last week.
“If $ BTC trader confidence picks up after unfortunate events, a bullish divergence is forming with the SP500.”
Markets commentator Holger Zschaepitz also noted the growing gap in Bitcoin’s performance relative to the Nasdaq.
“Bitcoin’s weekly performance gap declining, which saw the Nasdaq’s largest rally since 2020. The cryptocurrency universe shrank to the equivalent of 1% of global equities,” part of the new comments light in the day.
This declining correlation could come at a macro-useful time as the strength of the US dollar makes some erratic moves of its own.
The US dollar index (DXY), after attempting a rebound above 107, failed before the Wall Street opening on November 14, with the implication that risky assets should rise accordingly.
Any return to recent highs, however, and the picture could quickly look very different.
However, the DXY intraday lows have seen the index return to untested support since mid-August.
Commenting on the long-term performance, however, popular trading firm Stockmoney Lizards said DXY has broken a parabolic curve that has been in place since 2021.
“The fix will be fine for Bitcoin,” part of the Twitter comments added.
Buy-the-Plunge fever hits as miners’ sales slow
While many existing hodlers are attempting to withdraw coins from exchanges or figure out how to cure losses, not all of them stand still.
On-chain data suggests that as BTC / USD hit multi-year lows last week, investors big and small have seized the opportunity to “buy the drop.”
According to chain analyst firm Glassnode, portfolios containing between 1 and 10 BTC have seen a notable increase.
The trend also appears to be manifesting itself in the largest cohort of hodlers, the “mega whales” of Bitcoin. These entities with a portfolio balance of 10,000 BTC or more are also growing and are now nearly 130, Glassnode shows.
“Whales are piling up at a rate never seen before,” popular social media commentator Crypto Rover reacted.
One group firmly not in accumulation mode at the moment, meanwhile, is that of the miners. After a sharp reduction in their reserves last week, the BTC held by the miners followed by CryptoQuant is still trending down.
From 1,858,271 BTC on November 8, miners’ reserves now stand at 1,853,606 BTC at the time of writing on November 14.
Despite this, reserves remain higher than those of early 2022 and recent sales represent an insignificant share of the overall position of miners.
Sentiment data offers a modicum of hope
Predictably, the general sentiment in the cryptocurrency market has taken a hit thanks to FTX, but is it really all that bad?
Related: $ 3 billion in Bitcoin left exchanges this week amid fears of contagion from FTX
According to the Crypto Fear & Greed Index, the industry may indeed be taking the step from the slew of bad news.
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 40/100 peak seen on November 6, marking a higher sentiment level in three months.
However, 2022 saw much lower scores, Fear & Greed only reaching 6/100 over the course of the year.
In the event of further fallout, even a further 50% drop from current levels would only bring sentiment to the area that normally marks the macro price lows for BTC / USD, around 10/100.
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