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Bitcoin price analysis: Bitcoin crashes south of $60k. Has the reversal started?

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  • Bitcoin price analysis is bearish today.
  • BTC flash crashed below the psychological mark of $60,000.
  • Bitcoin continues to look for its supports.

The Bitcoin price analysis reveals a sudden drop in price as BTC went south of $60,000 in a matter of minutes. After hitting the all-time high at $65,984 on 20th October, Bitcoin is on a downward pattern, and yesterday it came down from $63,000 to $60,400. At the start of today’s session, bulls tried to elevate the price, but soon their efforts went in vain as bears started to take over the price function, and Bitcoin crashed spectacularly below the psychological mark of $60,000.

As the speculation goes around, that BTC usually crashes majorly to 50 percent after the ATH, before hitting another ATH almost double of its previous value, which will be in the region of $138,000, but the idea seems far fetched as of now.

BTC/USD 1-day price chart: BTC to find support

Bitcoin continues to find support as it is falling down at a faster pace. The nearest support is present at $57300. The Bitcoin is trading hands at $58,726 at press time, reporting a loss of 6.22 percent in value over the last 24 hours and a loss of eight percent over the past week. The market cap has suffered by 5.9 percent during this time. However, the trading volume has increased by 32 percent.

Bitcoin price analysis: Bitcoin crashes south of $60k. Has the reversal started? 1
BTC/USD 1-day price chart. Source: Tradingview

The volatility is mild as the volatility indicator, the Bollinger bands showing slow convergence, and the Bitcoin has stepped below the support of the mean average of the Bollinger bands, which is present at $59,776, turning it into resistance.

The relative strength index (RSI) shows a steep downwards slope from yesterday as Bitcoin’s south journey continues. The RSI indicates an intense selling activity going on in the market.

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Bitcoin price analysis: Recent developments and further technical indications

The 4-hour Bitcoin price analysis shows that the price breakup was upwards at the start of today’s session, as the price recovered during the first four hours, but then selling pressure started again, and BTC price started falling.

Bitcoin price analysis: Bitcoin crashes south of $60k. Has the reversal started? 2
BTC/USD 4-hours price chart. Source: Tradingview

The volatility is again increasing on the 4-hour chart as the price function is oscillating down at a high pace, with the price even going below the lower Bollinger band, which was the lowest technical support level in the current situation. The RSI is near the under-sold region at index 32 after taking a dip, as selling pressure is overwhelming.

Due to the recent bullish behavior of Bitcoin, the technical indicators are mostly neutral, as some short-term indicators just gave the call for a selloff, including the MA10 and the momentum oscillator. On the other hand, the mid-term indicators still support the buying decisions, as some of them are lagging indicators based on historical data.

Bitcoin price analysis: Conclusion

A situation like a flash crash was observed just a few minutes back when the Bitcoin sunk below $60,000, as today’s Bitcoin price analysis suggests. Currently, Bitcoin is testing the 8th May 2021 support and if it falters, then next in line is the recent support of $57300. Chances are there for a retest of the later support as well, as the price may continue to descend in the coming hours.

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Wen moon? Data shows pro traders becoming more bullish on Bitcoin price

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MicroStrategy’s purchase of 7,002 BTC might have helped boost Bitcoin price today, but derivatives data also shows that pro traders are becoming more bullish.

The $4,700 Bitcoin (BTC) price spike on Nov. 29 was likely a great relief for holders, but it seems premature to call the bottom according to derivative metrics. 

This should not come as a surprise because Bitcoin price is still 15% below the $69,000 all-time high set on Nov. 10. Just 15 days later, the cryptocurrency was testing the $53,500 support after an abrupt 22% correction.

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Today’s trend reversal was possibly encouraged by MicroStrategy’s announcement that it had acquired 7,002 Bitcoin on Monday at an average price of $59,187 per coin. The listed company raised money by selling 571,001 shares between Oct. 1 and Nov. 29, raising a total of $414.4 million in cash.

More bullish news came after German stock market operator Deutsche Boerse announced the listing of the Invesco Physical Bitcoin exchange-traded note or ETN. The new product will trade under the ticker BTIC on Deutsche Boerse’s Xetra digital stock exchange.

Data shows pro traders are still neutral-to-bullish

To understand how bullish or bearish professional traders are positioned, one should analyze the futures basis rate. That indicator is also known as the futures premium, and it measures the difference between futures contracts and the current spot market at regular exchanges.

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Bitcoin’s quarterly futures are the preferred instruments of whales and arbitrage desks. Even though derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, the most notorious benefit is the lack of a fluctuating funding rate.

Bitcoin 3-month futures basis rate. Source: Laevitas.ch
The three-month futures typically trade with a 5%–15% annualized premium, which is deemed an opportunity cost for arbitrage trading. By postponing settlement, sellers demand a higher price and this causes the price difference.

Notice the 9% bottom on Nov. 27, as Bitcoin tested the $56,500 support. Then, after Monday’s rally above $58,000, the indicator shifted back to a healthy 12%. Even with this movement, there is no sign of excitement, but none of the past few weeks could be described as a bearish period.

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Lending markets provide additional insight

Margin trading allows investors to borrow cryptocurrency to leverage their trading position, therefore increasing the returns. For example, one can buy Bitcoin by borrowing Tether (USDT), thus increasing the exposure. On the other hand, borrowing Bitcoin can only be used to short it or bet on the price decrease.

Unlike futures contracts, the balance between margin longs and shorts isn’t necessarily matched.

OKEx USDT/BTC margin lending ratio. Source: OKEx

When the margin lending ratio is high, it indicates that the market is bullish—the opposite, a low lending ratio signals that the market is bearish.

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The chart above shows that traders have been borrowing more Bitcoin recently, because the ratio decreased from 21.9 on Nov. 26 to the current 11.3. However, the data leans bullish in absolute terms because the indicator favors stablecoin borrowing by a wide margin.

Derivatives data shows zero excitement from pro traders even as Bitcoin gained 9% from the $53,400 low on Nov. 28. Unlike retail traders, these experienced whales avoid FOMO, although the margin lending indicator shows signs of excessive optimism.

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Bitcoin, Ethereum and Two Smart Contract Competitors Are the Winners Among Institutional Investors, According to Crypto Asset Manager CoinShares

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Leading digital asset manager CoinShares says institutional investors have a strong appetite for Bitcoin (BTC) and three leading smart contract platforms.

According to the firm, the overall crypto market correction has left investors hungry for more.

“Digital asset investment products saw inflows of US$306m last week suggesting [a] continued appetite for digital assets.”

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As usual, BTC led all digital assets in terms of capital inflows, this time in the wake of a new exchange-traded product (ETP) set to launch on the Deutsche Borse exchange.

“Bitcoin saw the largest inflows in 5 weeks totaling US$247m following the launch of another investment product in Europe. This brings the 11 week run of inflows to US$2.7bn.”

BTC is trading at $58,475 at time of writing, up nearly 6% on the day.

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The leading smart contract platform Ethereum (ETH) concluded a strong month of inflows with a week totaling over $23 million.

“Ethereum saw inflows totaling US$23m last week, marking its 5th consecutive week of inflows.”

This week’s big winners in inflows relative to assets under management (AuM) also include the scalable smart contract platform Solana (SOL) and the interoperable blockchain Polkadot, which is designed to support multiple layer-1 smart contract protocols.

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“In terms of inflows relative to AuM, Polkadot and Solana continue to be the winners, with inflows representing 8.6% (US$11.5m) and 5.9% (US$14.6m) of AuM respectively last week.”

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Source: CoinShares

Ethereum is currently trading at $4,453.79, up 7.5% in the last 24 hours. SOL and DOT are trading at $211.48 and $36.82, respectively, at time of writing.

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Nayib Bukele sends cryptic response to Bank of England over Bitcoin law criticism

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  • Nayib Bukele questions England love for El Salvador over Bitcoin adoption.
  • England expreses concern over El Salvador Bitcoin law.
  • Outside England IMF also criticized El Salvador over Bitcoin law.

After he expressed concerns over Bitcoin adoption in the country, El Salvador President Nayib Bukele has sent a cryptic response to the Governor of the Bank of England, Andrew Bailey.

Over the weekend, Bailey said he is not a fan of bitcoin or its growing adoption in countries like El Salvador. He expressed concerns while speaking at Cambridge University, asking if Salvadorians are aware of Bitcoin’s volatility.

“It concerns me that a country would choose it as its national currency,” Bailey said in response to a question at an appearance at the Cambridge University student union on Thursday. “What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.”

Bank of England is not the only international body to express concerns over Bitcoin adoption by El Salvador. Since June, when the Central American country announced its Bitcoin intention, numerous global financial organizations have tried to warn the country not to do it.

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Outside the Bank of England, the IMF also criticized the move by the country.

Nayib Bukele’s cryptic, Ironic response

While addressing Bailey’s most recent comments, President Bukele responded in a tweet pointing at the “genuine” concerns that the BOE has for the people of El Salvador.

“Bank of England is “worried about El Salvador’s adoption of Bitcoin? Really?

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I guess the Bank of England’s interest in the well-being of our people is genuine. Right?

I mean, they have always cared about our people. Always.

Gotta love Bank of England,” he wrote.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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