Connect with us

Bitcoin

Here’s Why Bitcoin Hasn’t Nuked Lower Despite Barrage of Bearish News

Published

on



  • Many analysts and investors have been quite surprised at how stable Bitcoin’s price has been despite a plethora of bear-favoring developments within the markets
  • From a macro perspective, President Trump’s recent viral diagnosis has rocked the traditional markets, which has had a trickle-down effect on crypto
  • Within the crypto market, the recent $150m KuCoin hack, as well as the government’s charges against the BitMEX founders, have both spooked investors
  • Despite all these factors placing pressure on Bitcoin, the cryptocurrency has yet to plunge lower
  • One analyst is noting that there’s a simple explanation for why this is the case

Bitcoin has seen a jarring past couple of weeks, with buyers and sellers both being unable to garner control of its mid-term outlook.

Bears have been attempting to push BTC lower, but so far, they have been unable to push it below any crucial levels.

This has been quite surprising to analysts, as the barrage of bad news seen as of late would have, in previous years, catalyzed far-reaching selloffs.

One analyst is noting that there’s a simple reason for why Bitcoin’s reaction to this bearish news is so different than its reaction in years past.

He points to the low balance of BTC on exchanges, coupled with plummeting open interest on BitMEX, noting that there simply isn’t enough spot crypto circulating to nuke the price.

Bitcoin Sees Consolidation Trend Despite Bearish News 

Throughout the past few days and weeks, Bitcoin has been unable to garner any decisive momentum as its price trades within the mid-$10,000 region, despite an onslaught of bear-favoring developments.

Both buyers and sellers have largely reached an impasse. This has resulted in an incredibly narrow consolidation phase between $10,500 and $10,600 as its volatility evaporates.

Until this volatility returns, it’s unlikely that investors will gain any clear insights into where it will trend next.

Here’s Why BTC’s Price has Yet to Nuke Any Lower

One analyst explained in a recent tweet that the reason why Bitcoin’s price has yet to nuke lower on the recent news is due to a lack of circulating spot BTC on exchanges.

“Since the Bitmex / Trump news came out, Mex has lost 30% of its open interest (mostly longs closing) and price is only down 3%. There’s no spot corn left on exchanges to dump either. There’s almost no way we can dump hard here,” he said.

Image Courtesy of “DeFi Ponzi Fund.” Chart via CryptoQuant.

Because most of the Bitcoin supply is still in cold storage or is being moved off of margin trading platforms like BitMEX, there’s not too much sell-side pressure at the moment.

Featured image from Unsplash.
Pricing data from TradingView.





Source link

Bitcoin

Bitcoin may lose $30K price level if stocks tank, analysts warn

Published

on

By


The ghost of stock market crash is back again to haunt Bitcoin (BTC).

It happened last in March 2020. Back then, the prospect of the fast-spreading coronavirus pandemic led to lockdowns across developed and emerging economies. In turn, global stocks crashed in tandem, and Bitcoin lost half of its value in just two days.

Meanwhile, the U.S .dollar index, or DXY, which represents the greenback’s strength against a basket of top foreign currencies, has now climbed by 8.78% to 102.992, its highest level since January 2017.

The huge inverse correlation showed that investors dumped their stocks and Bitcoin holdings and sought safety in what they thought was a better haven: the greenback. 

More than a year later, Bitcoin and stock markets again wrestle with a similar bearish sentiment, this time led by a renewed demand for the U.S. dollar following the Federal Reserve’s hawkish tone.

Namely, the U.S. central bank announced Wednesday it will start hiking its benchmark interest rates by the end of 2023, a year earlier than planned.

Lower interest rates helped to pull Bitcoin and the U.S. stock market out of their bearish slumber. The benchmark cryptocurrency jumped from $3,858 in March 2020 to almost $65,000 in April 2021 as the Fed pushed lending rates to the 0%-0.25% range.

Meanwhile, the S&P 500 index rose more than 95% to 4,257.16 from its mid-March 2020 peak. Dow Jones and Nasdaq rallied similarly, as shown in the chart below.

Bitcoin, Nasdaq Composite, S&P 500, and Dow Jones rose in sync after March 2020 crash. Source: TradingView.com

And this is what happened after the Federal Reserve’s rate-hike announcement on Wednesday…

Bitcoin and the US stock market plunged after the Fed’s rate hike update. Source: TradingView.com

Meanwhile, the U.S. dollar index jumped to its two-month high, hinting at a renewed appetite for the greenback in global markets.

U.S. dollar index jumped up to 2.06% after rate hike announcement. Source: TradingView.com

Popular on-chain analyst Willy Woo said on Friday that a stock market crash coupled with a rising dollar could increase Bitcoin’s bearish outlook. 

“Some downside risk if stonks tank, a lot of rallying in the DXY (USD strength) which is typical of money moving to safety,” he explained. 

Michael Burry, the head of Scion Asset Management, also sounded the alarm on an imminent Bitcoin and stock market crash, adding that when crypto markets fall from trillions, or when meme stocks fall from billions, the Main Street losses will approach the size of countries.

“The problem with crypto, as in most things, is the leverage,” he tweeted. “If you don’t know how much leverage is in crypto, you don’t know anything about crypto.”

Burry deleted his tweets later.

Some bullish hopes

Away from the price action, Bitcoin’s adoption continues to grow, an upside catalyst that was missing during the March 2020 crash.

On Friday, CNBC reported that Goldman Sachs has started trading Bitcoin Futures with Galaxy Digital, a crypto merchant bank headed by former hedge fund tycoon Mike Novogratz. The financial news service claimed that Goldman’s call to hire Galaxy as its liquidity provider came in response to increasing pressure from its wealthy clients.

Related: Hawkish Fed comments push Bitcoin price and stocks lower again

Damien Vanderwilt, co-president of Galaxy Digital, added that the mainstream adoption would help Bitcoin lower its infamous price volatility, paving the way for institutional players to join the crypto bandwagon. Excerpts from his interview with CNBC:

“Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.”

Earlier, other major financial and banking services, including Morgan Stanley, PayPal, and Bank of New York Mellon, also launched crypto-enabled services for their clients.

Is Bitcoin in a bear market? 

Referring to the question “are we in a bear market?” Woo said that Bitcoin adoption continues to look healthy despite the recent price drop. The analyst cited on-chain indicators to show an increasing user growth and capital injection in the Bitcoin market.

He also noted that the recent Bitcoin sell-off merely transported BTC from weak hands to strong hands. 

7-day moving average of coins moving between strong and weak hands. Source: Willy Woo

Woo reminded:

“My only concern for downside risk is if we get a major correction in equities which will pull BTC price downwards no matter what the on-chain fundamentals may suggest. Noticing USD strength on the DXY, which suggest some investors moving to safety in the USD.”