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Surprise Bitcoin Selloff Causes Extreme Greed To Taper

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Blood has been shed as Bitcoin dropped below $60,000 once again and hints at more downside. The first crypto by market cap trades at $60,800, as of press time, with a 5% loss in the daily chart.

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BTC crashing in the 4-hour chart. Source: BTCUSD Tradingview

Although it has seemed some recovery, Bitcoin registers a correction of around 12% from its all-time high as an increase in selling pressure caused the entire crypto market to take a dive.

The general sentiment in the market has flipped from extreme greed to normal greed levels, according to data from Arcane Research. Despite the correction, traders and operators remain optimistic about potential new highs.

This metric could continue to fall as Bitcoin moves at the low of a range between $58,000 to around $70,000 and the market reset. The derivatives sector is likely to be the most affected.

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As NewsBTC reported, Bitcoin futures contracts across the board got overheated as BTC’s price pushed into uncharted territory. This created a lot of liquidity at the lows and a rise in funding rates.

In other words, a lot of traders took over-leveraged long positions expecting more upside, but large investors drove the price below $59,000 to take advantage of the liquidity and fill their orders.

Post-crash, funding rates have returned to neutral territory in almost every crypto exchange platform. Along with the market sentiment provided by Arcane Research, and the fact that the price of Bitcoin held at $58,6000, this suggests a potential bottom has formed, at least for the short term.

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Data provided by CryptoQuant records over $33 million long liquidations in one hour as BTC’s price went below its current levels. The Open Interest (OI) decreased by 2.33% in the past day or about $350 million.

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Source: CryptoQuant

Additional data provided by Glassnode indicates that the OI for Bitcoin Futures contracts has reached a 5-month low of $711,951,837 on crypto exchange Bitmex. As seen below, a dropped in OI during September and October was preceded by more BTC appreciation.

Bloodbath Over, Bitcoin Ready To Moon?

However, Bitcoin whales could try to push the price down one more time to leverage the liquidity concentrated around $57,700, according to data from monitor Whalemap.

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In addition, the apparent indirect correlation between BTC’s price and the U.S. Dollar (DXY Index) could create more hurdles for the bulls. The dollar recently broke above a major resistance zone and stands at a 16-month high.

This rally could have been triggered by macro-economic factors, including the start of tapering by the U.S. FED and the increased risk in the Asian markets due to the Evergrande crisis.

The above adds to an already uncertain market. One thing seems true, BTC’s price must hold at $58,000 if it wants to return to price discovery in Q4, 2021.

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DXY Index
DXY Index on a rally in the 4-hour chart. Source: DXY Tradingview

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Peter Schiff Names Real Reason Behind Bitcoin Drop

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Popular digital assets critic believes that measures against inflation are the real reason behind the most recent market correction

The famous Bitcoin and crypto critic, Peter Schiff, provided his Twitter subscribers with a potential reason behind one of the largest corrections on the cryptocurrency market this year.

According to Schiff, Bitcoin’s correction was tied directly to the Fed’s action toward risk assets like cryptocurrencies and some stocks. Previously, Jerome Powell hinted that tapering might happen sooner than the market expects.

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In addition to the end of the quantitative easing monetary policy, Powell has stated that the point rate may be increased sooner than was expected due to the inflation’s change of nature, which has become a real threat to the country’s economic safety and stability.

All of the actions that the Fed is currently taking are designed to control inflation, which is currently hitting highs previously observed back in the Depression era.

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High-risk assets like Bitcoin and other digital assets were allegedly considered a store of value for those who wished to protect their funds from increased inflation. Schiff is a widely known critic of cryptocurrencies, and he believes they should not be considered an inflation hedge.

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Whales Suddenly Move $320,000,000 in Bitcoin to a Single Destination – Here’s Where the Crypto Is Headed

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Crypto whales just moved over 5,800 Bitcoin (BTC) worth more than $327 million into a single destination, according to a whale-surveilling platform.

Whale Alert tells its 1.8 million followers in a series of tweets that in the last 24 hours crypto whales are relocating thousands of BTC amid a correction that saw Bitcoin tumble to a new 30-day low of $52,416.

Five of the transactions involved shifted BTC from wallets of unknown origins to popular US-based crypto exchange Coinbase. Meanwhile, one transaction moved a large sum of Bitcoin from global crypto exchange Binance to Coinbase.

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Here’s a summary of the BTC transactions:

While crypto investors tend to be concerned that a massive influx of Bitcoin into the crypto exchanges might indicate downward selling pressure, insights firm Into the Block reports that centralized exchanges recorded more outflows than inflows during the past week.

The crypto intelligence platform says,

“Bitcoin recorded nearly $2 billion in net outflows from centralized exchanges, the highest level in five weeks.”

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At time of writing, BTC is down nearly 7.14% on the day to $52,557.

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Ethereum Price Analysis: ETH drops 25 percent from previous swing high, ready to recover?

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  • Ethereum price analysis is bullish today.
  • ETH/USD rejected further downside at $3,600.
  • Previous support at $3,950 is currently tested as resistance.

Ethereum price analysis is bullish today as we expect further recovery to follow after a strong reaction higher from the $3,600 was seen this morning. Likely ETH/USD is set to break above the current resistance, moving to regain even more over the weekend.

Ethereum Price Analysis: ETH drops 25 percent from previous swing high, ready to recover? 1
Cryptocurrency heat map. Source: Coin360

The market has seen strong bearish momentum over the last 24 hours. The market leader, Bitcoin, has lost 17.23 percent, while Ethereum 14.83 percent. Meanwhile, the rest of the market has seen even more substantial losses.

Ethereum price movement in the last 24 hours: Ethereum breaks below $3,950 previous support, rejects more downside at $3,600

ETH/USD traded in a range of $3,739.39 – $4,647.29, indicating extreme volatility in the market. Trading volume has spiked by 113 percent, totaling $41.2 billion, while the total market cap trades around $465 billion, resulting in the market dominance of 21.16 percent.

ETH/USD 4-hour chart: ETH reacts back to previous lows

On the 4-hour chart, we can see the Ethereum price swiftly rejecting further downside after touching the $3,600 mark this morning.

Ethereum Price Analysis: ETH drops 25 percent from previous swing high, ready to recover?
ETH/USD 4-hour chart. Source: TradingView

Ethereum price action saw strong bullish momentum during the first half of the week. After establishing and retesting the new low at $3,950 last weekend, ETH/USD started to move higher on Monday quickly.

Ethereum reached $4,750 resistance by Wednesday, as bulls were eager to move towards the previous all-time high. However, more upside did not follow, leading to a reversal over the next days.

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Another attempt to test upside was seen Yesterday, with the following rejection leading to a strong spike lower. Overnight, the Ethereum price broke past the previous swing low at $3,950, leading to more downside this morning. Strong reaction, preventing further downside, was seen at $3,600, with ETH/USD since moving back towards the previous low.

Ethereum Price Analysis: Conclusion 

Ethereum price analysis is bullish today as we saw a swift drop to $3,600 met with a strong reaction higher this morning. Therefore, we assume ETH/USD has set a new swing low, and further recovery should follow over the weekend.

While waiting for Ethereum to move further, see our articles on the Best Crypto Wallet 2021, Decred Wallet, and Ripple vs SEC.

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