Bitcoin and altcoins continue to grapple with the fallout, weakening significantly after the stock market’s FTX boom last week. Bitcoin has taken significant damage. But the big names are keeping their faith, as the data shows that investors have had the chance to “buy bearish” in BTC. Let’s take a look at the factors that will affect the price action of BTC and altcoins in the coming days.
Crypto brackets for fresh FTX contagion risk
While little is certain in the current crypto market environment, it is safe to say that FTX and beyond are now the number one source of Bitcoin price volatility. The weekly chart says it all. It shows a ‘red’ candle at $5,500 for the lowest weekly close since mid-November 2020 for seven days through 13 November.
At the time of writing, BTC is still around this close. BTC dropped to just $15,780 overnight on Bitstamp. Later, $16,300 resurfaces as a relief bounce.
The story is not over now, as companies with positions in the stock market and related organizations on FTX find themselves in trouble. As such, on-chain effects are leaving more and more crypto names out of business. Therefore, analysts predict that there will be repeat performances in the coming days and weeks.
In the middle, exchanges are particularly on the radar as Crypto.com, KuCoin, and others become a source of doubt over liquidity. There was a spike in withdrawals on Crypto.com and Gate.io that day. This led to warnings of a ‘bank run’ as it sought control of investors’ funds. Information from on-chain analytics firm CryptoQuant shows 1,500 BTC leaving Gate.io on Nov. 13. Also, on Nov. 14 it is currently at around 800 BTC and bullish.
More generally, the data showed that the claimed BTC reserves were 2.09 million BTC. Additionally, CryptoQuant stated that it may not reflect the real situation due to the chaos. The last time reserves were this low was in early 2018.
BTC bounces off $15,700 as Musk believes in Bitcoin
Against the background of ongoing uncertainty, making BTC price assumptions is therefore no easy task. Turning to the moving average convergence divergence (MACD), trader Matthew Hyland warns that the BTC/USD 3-day chart is about to repeat the bearish trend. He also says that this also led to losses on both occasions when he appeared in 2022. In this context, the analyst makes the following statement:
Bitcoin 3-day MACD is in a position to move into bears tomorrow for the first time since April. BTC can be prevented from getting positive price action before the 3-Day closes. The previous two crossovers last year resulted in more bearish price action.
Yet Hyland, 2014 Mt. Gox states that after the hack, it took almost a year for Bitcoin to find a macro price floor after the first shock. “It hasn’t even been 11 days since FTX was shut down,” he adds.
In the middle, the other analyst, Crypto Capo, argues that the market is ready for a ‘final capitulation’ that will come sooner or later. This, he notes, will come in the form of a ‘bull trap’, followed by outright rejection, in a series of tweets. It also says it will send the market to new bottoms. He predicts the drop for altcoins will be “40-50% on average”.
On shorter timeframes, analyst Crypto Tony fears that even the lowest weekly close in two years won’t hold up as reinforcements. The analyst comments on the recovery from the intraday lows of $15,780:
It’s a nice break, but if we can’t keep the swing low at $16,400 then it’s just a void exit. In this case, we expect a lower test.
The move came as Twitter CEO Elon Musk emerged on the tacit foothold. “BTC will make it, but it could be a long winter,” he wrote in a Twitter discussion that day.
A short-term price catalyst also came from the largest exchange, Binance. Binance has chosen to create a special recovery fund to help defend businesses.
Quiet macro week focuses on stocks correlation
The photo outside of crypto further underscores the extent to which FTX has flagged as a “black swan” event for the industry. Bitcoin and altcoins are busy, falling more than 25% in days. Against this backdrop, US stocks rebounded from losses earlier in the month.
Market commentator Holger Zschaepitz also points to the widening gap in Bitcoin’s performance against the Nasdaq. In this context, he notes:
The gap in Bitcoin’s weekly performance marked the Nasdaq’s biggest rise since 2020. The crypto universe has shrunk to 1% of global stocks.
The strength of the US dollar makes some unsystematic moves on its own. So it’s possible that this diminishing correlation may come at a macro-beneficial time. The US dollar index (DXY) attempted to cross 107 and failed. As a result, there is a belief that risky assets should increase.
However, in the final climaxes the truth is a random turn and the photo can quickly look very different. Still, intraday DXY dips saw the index return to reinforcements that haven’t been tested since mid-August. Therefore, as Santiment points out, there is a clear divergence between Bitcoin and risk assets. This helps break a correlation that has persisted over the past year. Regarding the bet, Santiment made the following statement:
As the trading week closes, the parable of the week has obviously been the divergence in the middle of crypto and equities. If the faith of BTC investors recovers after the unfortunate events, a bullish divergence with the SP500 is formed.
However, Stockmoney Lizards commented on the long-term performance. In line with this, he said DXY has broken a parabolic curve in place since 2021. “The fix will be enough for Bitcoin,” he said in some of his Twitter comments.
‘Buy at the bottom’ fever rises as BTC miner sales slow
Many existing hodlers are trying to withdraw cryptocurrencies from exchanges or figure out how to cover losses. Therefore, not everyone stands still. On-chain data shows that investors alike, large and small, are seizing the opportunity to “buy bearish” as BTC hit several-year lows last week. According to Glassnode, wallets containing 1 to 10 BTC have seen a dramatic increase.
The trend is also about to play out amid Bitcoin’s largest cluster of hodlers, the ‘mega whales’. According to Glassnode, these assets with wallet balances of 10,000 BTC or more are also growing. At present, their number is almost 130. “Whales are accumulating at an unprecedented rate,” says social media commentator Crypto Rover.
Koindeks.com As you can see from , a cluster that is not currently strictly in accumulation mode is miners. Miners saw a sharp drop in their reserves last week. CryptoQuant says that the BTCs held by miners are still in a bearish trend. In contrast, reserves are higher than at the start of 2022. Recent sales make up a worthless portion of the miners’ overall condition.
BTC stock information gives some hope
Predictably, the overall crypto market sentiment has been hit hard by FTX. But is it really that bad? According to the Crypto Fear & Greed Index, probably the industry is actually getting a lot of bad news step by step.
Over the weekend, the Index’s score touched a local baseline of 20/100. Thus, he definitively described the market mood as ‘extreme fear’. This represents a 50% drop compared to the 40/100 peak seen on 6 November. It also marks the highest sentiment in three months.
However, 2022 saw much lower scores for Horror and Greed, reaching only 6/100 during the year. In the event of further declines, even a fresh 50% decline from current levels would bring sensitivity to the area (around 10/100) that normally marks macro price floors for BTC, experts say.