December 9, 2022
Image default
Bitcoin

Is the worst over for Bitcoin and Ethereum?

Marked fall startled the market

After a high that dates back to the end of October 2020, Bitcoin registered a massive correction yesterday, which took the industry by surprise. Although the market has screamed for correction in the past few weeks, when it finally unfolded, the emotional turmoil was fully evident. A total of $ 6.86 billion in longs was paid off, leading to much panic.

Source: TradingView

Many speculators have drawn similarities between the latest decline and the March 2020 crash, but the numbers do not suggest the same. Although we cannot move away from the bearish feeling at the moment, it is imperative that we analyze the market objectively.

Ethereum and alts fell even further; Because?

In 2021, the average market correlation between Bitcoin and the rest of the market was the lowest. Several altcoins were recovering on their own. Many overcame Bitcoin, but it should not be surprising to anyone that BTC’s decline was met with a colossal “altcoin splat”.

A week ago, Ethereum recorded its highest record of $ 4,375 and yesterday it dropped to $ 1,880 at one point. Cardano, Binance Coin, XRP, etc., registered similar movements. However, the duration of the decline, so far, was possibly due to the change in the dominance of the Bitcoin market.

Is the worst over for Bitcoin and Ethereum? 23

Source: TradingView

After months of declining dominance, Bitcoin gained momentum over other assets yesterday. Leading to a further decline in liquidity for altcoins, the current recovery would also depend on the direction of Bitcoin. Once again, Bitcoin will be responsible for a broad market campaign.

The Bitcoin playing field has changed since March 2020

Is the worst over for Bitcoin and Ethereum? 24

Source: Chainalysis

While many are suggesting that the bull run is over, according to Phillip Gradwell, chief economist at Chainalysis, the stakes are much higher for investors now than in March 2020. Looking at the current cost curve, Gradwell suggested that the amount of BTC carried out in May 2021 is significantly higher than in March 2020.

More than $ 410 billion in BTC acquisitions have been made since March 2020, and there are now more incentives to resolve the current market price structure than to sell and liquidate its holdings.

In addition, he mentioned that selling pressure has been more focused on retail, as institutions may have already bought the dip and Bitcoin inflows on exchanges have been relatively low compared to previous sales.

Is the worst over for Bitcoin and Ethereum? 25

Source: BTC / USDT no TradingView

The rapid recovery of $ 30,000 rescued some optimism the day before. However, Bitcoin is not completely off the hook, as the current wave could be a case of “Dead Cat Bounce”. A Dead Cat jump is a market situation where the price momentarily drops, before continuing at another high for another fall.

One of the main narratives that support this direction is the rejection by the 50-period moving average. As highlighted by the chart, Bitcoin has continuously retreated since the MA-50 last week. Therefore, a scenario of Dead Cat Bounce could cause Bitcoin to visit $ 35,000 again, before the price goes up again.

A bullish confirmation would be a sustained recovery of $ 42,200 over the next 24-48 hours. This would invalidate the short-term bearish structure, and the market may move towards the highs once again.

Source: AMBCrypto

Related posts

Crypto.com: Successful update of the exchange, implementation of PayID and additional benefits for new and current users Blocksats

Aparnna Hajirnis

The cryptocurrency lobby wonders what BTC policy will be pursued by the Biden administration –

Aparnna Hajirnis

83% of projects that achieved ATH in 2018 are 90% lost –

Aparnna Hajirnis

Leave a Comment