Bitcoin (BTC) Pulls Relief Rally, Stalls at $36K
The expansion of Bitcoin (BTC) closer to $38,000 continued mid-week, while most altcoins also bounced from the lows. BTC reached $37.994.57, tentatively regaining positions on slow volumes of around $25B in 24 hours. BTC made a hike above $38,000 late on Wednesday, with Ethereum (ETH) above $2,600 once again.
Later, BTC slowed down, moving down to $36,081.09 for a more modest recovery.
The BTC expansion arrived with warnings of a possible bull trap and a renewed price drop ahead of the weekend, based on end-of-month futures expirations. The price trajectory of BTC could hinge on demand and the readiness to rebuild demand.
In the past day, open interest for BTC has shown weakening on the Binance futures markets, underscoring the low-volume recovery and still tentative sentiment. Since the Monday price crash, the Crypto Fear and Greed Index recovered from 13 points to 23 points, alleviating the fear level. However, the index reflects trading behavior and not actual long-term sentiment, thus not removing the risk of another downward move.
The latest price dip has some resemblance to the crashes in the summer of 2021, and possibly the crash of March 2020. In the short term, the market may be sent to panic mode, as with a recent large deposit of BTC to the Binance exchange.
The exact selling pressure may become clearer at the end of January, after the end of month options expiration.
Additional large-scale deposits also include ETH sent to exchanges.
ETH is now steadily under 0.07 BTC with a trend to lose positions against the leading coin. So far, ETH has failed to fulfill expectations of rising above $5,000 or even going to $10,000.
BTC Returns to Accumulation
BTC reserves point that the peak of the cycle led to some selling from whales. The latest price slide, erasing nearly 50% of the price, may be returning buyers to accumulation.
The reserve ratio risk is not definitive for the direction BTC may take, and does not guarantee the price action will play out soon. Historically, the index shows not all buyers are ready to hold and sell near the peak.
The Rainbow chart supports a similar buying behavior, as BTC is considered relatively cheap. However, attacks against the remaining leveraged positions may cause more volatile price moves in the coming days.
Long and short open interest on the Binance exchange has almost evened out its ratio, after a day of more than 70% of long positions. Liquidations can happen in both directions, though the latest hike from $33,000 to $38,000 mostly affected short positions in the past day.
Binance Reopens Deposits for EU Traders
Despite the volatility, the Binance International exchange is still trying to be attractive for retail traders in the EU. Binance has now reopened SEPA deposits, allowing a new entry point and fiat on-ramp for retail traders.
Binance is also the go-to exchange for fast swaps, though often for limited amounts. SEPA transactions open Binance to the Eurozone countries and other affiliated markets. However, local bank restrictions may work against all deposits to Binance bank accounts.
Where is the Market Going Next
Several altcoins continued to boost their positions and grow by leaps from the recent lows. Solana (SOL) is on track to go over $100 again, despite erasing 28% in the past week. Polygon (MATIC) keeps closing in on the $2 level. Other altcoins have short-term volatile moves based on their potential to react more quickly to trading pressures.
The BTC recovery this time went ahead of the altcoin market, with some potential to signal an overall change of price direction at least in the short term.
The dominance ratio of BTC, ETH and altcoins is moving to its previous levels, with ETH also marking a rapid upturn.
This time, however, Terra (LUNA) was slow to recover and turned out to be one of the biggest losers. LUNA moved down to the $63 range, erasing 20% in the past week and continuing with price weakness.
Other big losers included meme coin Shiba Inu (SHIB), which is down another 20%. Dogecoin (DOGE) remains more resilient and is back up to $0.14 after regaining 5%. DOGE is on the verge of abandoning the top 10 of coins and has turned into a cautionary tale after its wild ride in 2021.
Tether (USDT) is now the third-largest coin by market capitalization, after moving above Binance Coin (BNB). BNB sank to $382.98 after failing to recover the $600 range or move higher. BNB remains one of the important assets for DeFi and trading but is not immune to market shakedowns. USDT has not increased its supply recently, with the recent recovery happening on the back of stablecoins currently available on the market.
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