Bitcoin (BTC): Has it Seen the Worst of the Price Drop
Bitcoin (BTC) answered with a deep crash to the news of Russia’s operations in Ukraine. Overall, global markets backtracked on the unknown effects of the conflict. BTC dipped to $34,500, only to regain some of its positions to $36,063.03 late on Thursday.
BTC also managed to shoot up within minutes and rally to above $38,619.19, showing that the most recent dip was a temporary phenomenon and the markets remain well-supported.
BTC trading also turned to a higher activity range, after a few sluggish days, ranging to $37B in 24 hours. For some, this was a rush to either sell or buy the recent dip and potentially benefit from the coming recovery.
Ethereum (ETH) returned above $2,400 again, with only 7% daily net loss. Altcoins that rallied in the past few days also retreated slightly, waiting for a potential return to stability.
Binance Marks Heightened Activity
The Binance International exchange noted potential trading anomalies, possibly linked to heightened demand. The market operator this time does not expect traffic disruptions.
The Binance emergency happened days after a tester discovered a potentially fatal flaw with Coinbase Pro, where users could place token orders and perform trades without depositing the actual assets.
Sentiment Shifts Back to Extreme Fear
BTC trading sentiment shifted again to “extreme fear” at 23 points on the Crypto Fear and Greed Index. BTC sank in the past week after touching neutral sentiment.
The next direction of BTC is still contingent on upcoming closing levels and end of the month settlements.
However, more bearish expectations see BTC sink under $20,000 for the first time since 2021, dragging down other major assets in a worst-case scenario.
In the short term, the presence and attacks on leveraged positions may continue, and exchanges currently have ample stablecoins to provide liquidity and rapid price moves.
Liquidations in 24 hours during the crash to $34,000 reached more than $566M for all assets, with $41.2M in BTC liquidations. Despite this, spot buying showed a strong instance of buying, revealing confidence that the BTC price weakness may be temporary.
Now, the story for BTC may return to the available liquidity and levels where buying is readily available. Not all positions are well-supported by liquidity, potentially leading to rapid price drops.
This is one of the reasons potentially BTC may not be done with the bear cycle. Some predictions see BTC taking around 50 days to recover from the news of armed conflict. At this point, it is uncertain how economic sanctions for Russian banks would affect BTC. Just days before the Ukraine situation, Russia set out to heavily regulate BTC buying, limiting most users to just small purchases.
BTC Holding Continues
Despite price drops, the latest crop of buyers may be more willing to wait out losses instead of selling at the low points. Currently, more than 76% of BTC is held for the long term. Around 33% of all coins have been acquired at prices that led to unrealized losses.
Buying also happened near the daily lows, with significant demand not seen since the end of 2021.
The BTC rainbow chart holds the sign of still cheap prices, though not a real accumulation level bargain. BTC is now stuck in the zone between buying more and potentially holding through turbulence.
ETH Remains Bearish
ETH may continue with a bearish trend, with extreme lows seen around $1,000. ETH has the potential to have deeper repercussions for DeFi and related projects.
ETH may test the resilience of projects and their potential to create value, as most DeFi projects prefer an appreciating underlying asset.
Terra (LUNA) remains one of the strongholds of decentralized finance. LUNA prices still have the support of regular burns and staking.
LUNA Resumes Trek to $70
The specific nature of LUNA and its ecosystem may be helping the asset appreciate over time, while resisting a bear market.
LUNA slid to around $54 before making a rapid recovery. Within less than an hour late on Thursday, LUNA climbed to $63.34. Solana (SOL) also stabilized at around $91.92. Avalanche (AVAX) also traditionally gained positions, rising to $78.72.
One altcoin indicator, the price of Dogecoin (DOGE) also showed resilience. Despite the drop, DOGE stabilized at around $0.12 with significant social media hype and activity.
Overall, altcoins are yet to recover fully. The dominance of BTC expanded to 42.3%, while ETH and most altcoins lost positions in Satoshi terms. However, a BTC rally may also trigger a renewed altcoin season.
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In Part 1 of the guide we look at the stochastic oscillator, relative strength index and moving averages
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